Chanchal Agarwal, CIO at Credence Family Office, has extensive experience across various industries including family office, offshore investments, wealth management, and investment banking. Recognized as one of India's top 100 women in finance in 2020, she has also appeared on Audible Suno's 'Show Me the Money' talk series.
In a conversation with Women Entrepreneurs Review magazine, Chanchal talks about the new age changes driving shifts from traditional ways of investments. She also emphasizes on the importance of AI and digitization to meet the future needs of wealth management sector.
In the current volatile market, how do you see the role of cultural shifts, such as the rise of digital wealth management platforms and changing client expectations, influencing traditional wealth management strategies?
In the last three months, only 39% of the NSE 200 companies have seen earnings upgrade, while 77% have seen price movement. This presents a massive valuation fringe in the market. Despite this, optimism is high, with gold indicating global issues. The market faces challenges in asset allocation due to the rise of tech and AI. The AUM for robo advisors has grown 4.5x from 2020 to 2022, and AI can help make the investment journey smarter. However, firms face cost pressure due to competition and low interest rates. To build efficiency and scalability, simplifying tech architecture is crucial.
Wealthy families in India are expected to double in the next five years, necessitating specialized services. Tech can help manage formal trades, but it's essential to balance traditional asset allocation and portfolio management infrastructure with AI and machine learning solutions.
With the evolving needs of ultra-high-net-worth families, particularly in the context of intergenerational wealth transfer, how do you envision family offices adapting their investment approaches? Are there any cultural or societal shifts that are driving these changes?
The next generation of multi-generational businesses is challenging traditional infrastructure and focusing on newer, disruptive ventures. HNIs are now investing in building up the new India, challenging traditional 60-40 norms and focusing on private equity firms and startups. The PMS or AIF space in India has grown significantly in the past decade, with 109 deals in 2023. Government incentives, such as 100% FTI into the global sector and Fame II subsidies, are also driving growth in green themes. The future of Indian industries and companies will see new-age companies taking leadership.
With the increasing integration of AI and big data in wealth management, how do you foresee the cultural shift towards tech-driven solutions affecting the role of human advisors? How should firms navigate this balance to maintain trust and personalization?
Machines are not replacing humans, but rather taking non-core tasks away. They provide smart reports through ChatGPT and data crunching. While they can help in portfolio planning, humans still need to understand the underlying logic. Machines are an additive, providing smarter reports and cutting down on time spent on specific activities. They are more like an add-on to the wealth management industry, not a significant change.
How do you think cultural shifts towards gender diversity are reshaping the wealth management landscape? What steps should the industry take to ensure these shifts lead to sustainable change, beyond tokenism?
Everyone has a fair opportunity to prove themselves, regardless of gender. Despite a male-dominated panel, women are increasingly dominating the space. The quality of advice and planning comes from bringing more quality to the table, and it's essential to build on this. Gender isn't the only factor, as everyone deserves a fair opportunity.
How are cultural shifts, particularly among younger generations, influencing the focus on philanthropy and legacy planning within family offices? How should wealth management strategies evolve to accommodate these changes in priorities?
Legacy planning is crucial for the next generation, as it simplifies the transfer of wealth without debarring assets from kin businesses. This is not related to taxation, but rather to simplifying the transfer of wealth. Organizations are now taking philanthropy more seriously, with dedicated funds and individuals looking at a specific portfolio. This shift from paper-based to structured approaches is a result of the importance of estate planning and legacy in the future.
Message to Readers
I think behavioral management is more important and don't get into formal trades because that could not be the right way of managing a portfolio at this point.
