Top of The Pyramid 2011

Net worth of India’s ultra HNHs to grow 5 times to ` 235 trillion by 2015-16
T.O.P. India - Decoding the ultra HNI

What sets the ultra HNI as a class apart?
The power they wield
Value and size of assets
Networks of influence
Social visibility and hierarchy
Scale and visibility of spends

FOREWORD
Ultra high net worth individuals (ultra HNIs) are the crème de la crème of society, in virtually all respects – be it
in terms of riches, power and status, or even lifestyle. In India, over the past few years, the economic boom has
propelled many already-rich people, and a few other first-time entrepreneurs and technocrats into this
exclusive club, and resulted in a significant burgeoning of the number of ultra HNIs. One barometer of this is
the growing number of Indians who figure in the Forbes Billionaires list that is released every year.
Barring unforeseen circumstances, there is no turning back of the clock on the spectacular India growth story.
As the ultra HNI segment grows, wealth managers will inevitably feel the need for greater knowledge on the
segment, particularly in terms of its behaviour on spending and investments, so that they can provide
suitable, timely advice. So will marketing and strategic managers of companies that specialise in ultra luxury
products and services. Many others will benefit as well.
It is therefore an appropriate time to try and understand the ultra HNIs, in particular their behavioural aspects
when it comes to issues such as spending and investing. This report does just that, revealing new unexpected
trends, debunking some lingering myths and reaffirming some well-known beliefs about the super rich.
Kotak and CRISIL are extremely proud to present this inaugural edition of their report ‘Top of the Pyramid.’ Our
choice of the title is a reflection of who this report is about: the finest of the finest, the best of the best –
The ultra high net worth individual.
Happy reading.
C Jayaram Roopa Kudva

Executive Director Managing Director and CEO
Kotak Mahindra Bank Ltd. CRISIL Ltd.
INSIDE THE REPORT
About the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 01
Executive Briefing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04
Key findings of the report
Graphical Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07
Visual snapshot of the research findings
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Profiling: The Inheritor, the Self-made and the Professional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

1. What sets ultra HNIs apart from other classes of Indian society?
2. What are the different routes to earning wealth?
3. How can we classify ultra HNIs based on their motivation towards
creating wealth, spending and investing?
4. What are their attitudes towards leaving wealth for their family
and contributing to charitable causes?
Spends: Attitudes, Motivation and the Ultra Wealthy Lifestyle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

1. What proportion of their income do ultra HNIs spend?
2. What products do they prefer to spend on?
3. What motivates their spending on luxury brands?
a. Travel
b. Luxury watches
c. Jewellery and precious stones
d. Luxury cars
e. Household electronics
f. Apparel and accessories
Investing: Risk, Return and Wealth Preservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

1. What proportion of their income do ultra HNIs invest?
2. What are their investment goals?
3. How do attitudes towards risk and return shape their investments?
4. What asset classes do they prefer?
5. How do they manage investments?
ABOUT THE REPORT
The phenomenal growth in the number of the super rich has laid the CRISIL Research is India’s largest independent research house,
foundation for an unprecedented expansion of the wealth providing comprehensive research coverage to more than 1,200 Indian
management industry in India. Inevitably, it is also driving the entry and global customers.
and growth of luxury brands that cater exclusively to the tastes of the
ultra high net worth individuals (UHNIs). This report is based on two main strands of research.
For both wealth managers and luxury brand companies, one major 1) A series of interviews were conducted with senior personnel at
hurdle to their effective functioning and growth is the almost major global luxury brands, art gallery owners, product dealers
remarkable dearth of information on the earning, spending and and industry body representatives.
investing trends of the ultra wealthy.
2) We commissioned a market survey of 150+ ultra HNIs, with
In this report, the first of what will be an annual edition, we have laid the conversations lasting up to one hour. The respondents were
broad framework and detailed the methodology to define who an ultra spread across the three major metros, namely Mumbai, Delhi and
HNI is. Considering the attention that they have been getting in recent Bengaluru, as well as Hyderabad, Ahmedabad, Chennai, Pune, and
times, it was also quite tempting to focus on what their numbers are Kolkata (referred to as Other cities in this report). A majority of the
and who has how much wealth. respondents (77 per cent) were from the three major metros. The
survey took place between December 2010 and February 2011.
Instead, the spotlight in this inaugural year is on behavioural aspects,
such as what drives these individuals, what their priorities or motives CRISIL Research then undertook an extensive analysis of the results of
are when it comes to spending or investing, and whether there is any the survey, and every conclusion was subject to the same analytical
homogeneity in their actions as a class. rigour and review process that is the hallmark of all CRISIL Research
reports.
The conclusions are extremely revealing, and a lot of meaningful
insights, some even positively surprising, have emerged from the This report would not have been possible without the co-operation of
analysis. We believe that the takeaways gleaned from this report will be all the survey respondents and the interviewees. We thank them for
invaluable for people who manage the wealth of the ultra rich, and will their invaluable support, the time they put at our disposal, and the
help niche companies operating in the segment to come up with more insights they offered.
innovative marketing or distribution strategies for their products.
Kotak and CRISIL seized the opportunity to create a report that analyses About Kotak Group
and tracks these trends year on year with specific reference to the Completing a successful 25 year run, Kotak is a leading banking and
Indian market. Kotak is a pioneer and leader in the private banking financial services organisation in India, offering a wide range of
space in India. Its Wealth Management team caters to over a quarter of financial services that encompass every sphere of life. From services
the 100 most wealthy (as per the Forbes India Rich List - 2011) in India. like Family Office for ultra HNIs, to Wealth Management for HNIs, to
T.O.P. India - Kotak Wealth & CRISIL Research | 01

commercial banking, car finance, stockbroking, asset management, life Our offering is customised, based on the client’s profile and investment
insurance, investment banking, the Group caters to the financial needs objectives.
of individuals and corporates.
The Kotak Wealth umbrella also includes Family Office Services.
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company, was given the licence to carry on banking business by the host of value-added services such as Estate Planning Services, tax
Reserve Bank of India (RBI). This approval created banking history since optimisation, etc.
Kotak Mahindra Finance Ltd. was the first non-banking finance
company in India to convert itself into a bank as Kotak Mahindra Bank Kotak Wealth Management was recently awarded the ‘Best Private
Ltd. Banking Services Overall, Best Family Office Services - India’, in the
Euromoney’s Private Banking Poll - 2011 and ‘Best Private Bank - India’ in
The Group has a net worth of ` 109.63 billion and a distribution network FinanceAsia Country Awards - 2010.
through branches and franchisees across the country and offices in
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The Kotak Group offers the understanding, the experience, the to offer the widest range of solutions for the client.
infrastructure and most importantly the commitment to deliver
pragmatic end-to-end solutions.
About CRISIL Limited
CRISIL is a global analytical company providing ratings, research, and
About Kotak Wealth risk and policy advisory services.
Kotak has one of the oldest and most respected Wealth Management
teams in India, providing solutions to high net worth individuals. We are India’s leading ratings agency. We are also the foremost
provider of high-end research to the world’s largest banks and leading
Over thirteen years, a wide range of wealth management solutions has corporations. With sustainable competitive advantage arising from our
made Kotak Wealth Management the largest player. Our client base strong brand, unmatched credibility, market leadership across
ranges from entrepreneurs to business families to employed businesses, and large customer base, we deliver analysis, opinions, and
professionals. solutions that make markets function better.
On the investment scenario, we believe that no one asset class tends to Our defining trait is our ability to convert data and information into
perform consistently over a long period of time. Therefore, an HNI expert judgements and forecasts across a wide range of domains, with
needs to be given access to various asset classes, investment styles, deep expertise and complete objectivity.
themes and tenures. Thanks to this focus of the Group, we have built
a formidable suite of products and services straddling this spectrum. At the core of our credibility, built up assiduously over the years, are our
02 | T.O.P. India - Kotak Wealth & CRISIL Research

values: Integrity, Independence, Analytical Rigour, Commitment and
Innovation.
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industries and capital markets. We leverage our unique research
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to over 1,200 domestic and global clients, through a range of research
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solutions.

EXECUTIVE BRIEFING
0.03 per cent of the total households in India, but is poised to more than
Seeds of a luxury revolution
triple to 219,000 households by 2015-16.
In slightly under two decades, India has undergone a radical
transformation from being a largely agrarian economy with a modest
What sets ultra HNIs apart from other classes of individuals in the
growth rate into one of the world’s most dynamic economies. Its GDP
country is the sheer value and size of the assets they own. The dramatic
has grown at an average of over 8 per cent per annum over the past
increase in personal wealth has also brought about a change in
three years and is estimated to have grown by 8.6 per cent in the most
attitudes towards spending; public displays of opulence, which would
recent fiscal year, making the country the second-fastest-growing
have been unthinkable a few years ago, are now not uncommon.
economy in the world, next only to China.
Although this is creating exciting new opportunities for wealth
Propelled by this economic boom, there has been an unprecedented
managers and luxury brands, their ability to perform effectively is
level of wealth creation. Average income levels have risen manifold and
being hindered by the absence of adequate information on ultra HNIs,
many individuals have suddenly become millionaires. The resultant
in terms of their attitudes to investing and spending.
quantum increase in money available for spending, and the country’s
increased integration with the global economy have widened the Kotak Wealth and CRISIL Research undertook a survey to gauge various
population’s exposure to major global luxury brands and triggered aspects of ultra HNI behaviour and uncover important trends therein.
a luxury revolution.
Entrepreneurship is clearly the dominant source of domestic wealth, Key trends

but fast-growing service industries such as technology and financial
We found that today’s ultra HNI is not, in general, a reclusive individual.
services have also catapulted many hitherto middle-income group
On the contrary, he is more likely to be a constant feature on television
individuals into the ultra high net worth individual (ultra HNI) bracket.
channels or on Page 3 of newspapers, and is comfortable in (some
might even say seeks) the limelight.
CRISIL Research has defined an ultra high net worth household (ultra
HNH) as one having a minimum average net worth of ` 250 million,
They are the cream of society, know that they are, and seek to maintain
which, as per our proprietary tool ‘IDeA’ (Income and Demographics
a lifestyle in keeping with their social standing. Consequently, they are
Analysis), gets mapped to a minimum income of ` 35-40 million.
highly brand conscious, and in some cases, have strong brand loyalties.
In many cases, therefore, price is not the only consideration guiding a
The total net worth of Indian ultra HNHs is expected to reach ` 235
purchase.
trillion in 2015-16 from an estimated ` 45 trillion in 2010-11.
In absolute terms, they are very heavy spenders, be it on high quality

At present, there are no validated estimates of the number of ultra
homes, food, clothing, or the luxuries of life in entertainment,
HNHs in the country. Kotak Wealth and CRISIL Research estimate that
education, travel and family vacations. They are also finding new ways
there are around 62,000 ultra HNHs in India as of 2010-11, with a
to splurge, such as on buying art and artefacts, yachts, and islands, or
minimum net worth of ` 250 million. This number represents a meagre

even on underwater weddings, chartering aircraft to go on holidays or Interestingly, today’s ultra HNIs would typically include business
watch sports, entertainment events, and partying. people who own enterprises with a turnover of ` 750 million or above,
corporate executives, established professionals, politicians, traders,
Contrary to the belief in some quarters that they are highly builders and agricultural landowners, unlike before Independence
individualistic, our survey revealed strong family bonds and when they were more likely to be the upper classes or the nobility.
dependence, when it comes to decision-making on spending or
investments. Based on the results of the survey, Kotak Wealth and CRISIL Research
have classified India’s ultra HNIs into three groups:
The spending on, and choice of big ticket items such as holiday
packages, luxury watches, diamonds and jewellery, household • Inheritors
electronics (which include premium mobiles and high-end cameras), • Self-made
and home décor is carried out in consultation with the family. The • Professionals
family plays an important role in, for instance, identifying a holiday
location, or choosing a home theatre brand. Appeal and price are, Inheritors are born with a silver spoon, and have inherited high net
therefore, important considerations in planned purchases. worth; Self-made are first generation entrepreneurs whose success in
business turned them wealthy; and Professionals are qualified, highly
It is only on items such as apparel, accessories, or liquor that an ultra skilled professionals who gained wealth because the companies that
HNI’s personal predilections and impulses come into play. Impulse employed them grew big.
purchases are usually done at the airport (duty-free shops) or while
travelling, and purchases are made largely on how eye-catching the The wealth dynamics and behavioural traits of each of these groups
product is, in addition to the brand, the newness of the product and are unique, and wealth managers and luxury brands will face diverse
exclusivity. The need for the product is not a factor in impulse challenges in their dealings with them.
purchases; but having cash in hand is.
Likewise, while making investments, ultra HNIs take advice from family, Conclusion
close friends, trusted advisors and professionals such as chartered Most people agree that barring unforeseen circumstances, the long-
accountants and lawyers. Legacy for the spouse and children, social term India growth story is intact. As noted earlier, this will result in a
security and regular income are important factors that guide their significant increase in the number of ultra HNIs in the country.
investments. Possibly because of this, they are willing to take far lesser
risk on their investments compared with what they are willing to take For wealth managers and luxury brands, this will mean an appreciable
in their business. increase in their addressable market. This will necessitate not only an
increase in the type and nature of products that they offer to this
Most ultra HNIs are distinguished individuals in social networks of segment, but also greater awareness about behavioural trends with
power and influence. Their long-standing network of elite contacts regards to spending and investment by ultra HNIs. This will allow
gives them differentiated access to business opportunities, and they wealth managers and luxury brands to evolve more innovative
try to put it to good use to further expand their wealth.

marketing strategies and target their products in better, more effective
ways.
It is also evident that the segment of high net worth individuals will
spawn the next wave of ultra HNIs. Wealth managers and luxury brands
who are able to engage this segment productively and establish
profitable (in every sense of the term) long-term relationships will find
that they will have a first mover advantage when these people
transition from being high net worth individuals into ultra HNIs.
This will entail development of a greater range of products,

consistently high standards of quality of service and, critically, the
right pricing. Here, to avoid familiar pitfalls, some of the new luxury
entrants would do well to analyse the experience of multinational
companies in India.
Some of the multinational companies that forayed into India have

become successful because they jettisoned pre-conceived notions and
strategies that worked elsewhere and adopted techniques that took
into account the local ethos, culture, and tastes to build lasting brand
loyalties.
Kotak Wealth and CRISIL Research believe that this report will be a
useful tool in the hands of both wealth managers and luxury brands. It
will help them to engage more effectively and productively with their
ultra HNI clients while making investment decisions and may also
enable them to gain invaluable insights that will help them increase
their business.

GRAPHICAL SUMMARY
Overview
219,000 ultra wealthy households in India by 2015-16

If we consider a household with a minimum net worth of ` 250 million,
there are around 62,000 ultra HNHs in India as of 2010-11.
219,000
2015 -16 P
62,000
2010 -11 E
E: Estimated P: Projected
Source: T.O.P. India - Kotak Wealth & CRISIL Research
From 3 to 55: The rising number of Indian billionaires in the Forbes rich list
Net worth ( ` billion )
India now has a record number of 55 billionaires*. The

country is next only to the United States and China in the
number of billionaires.
55
Indians
8 = 1,157
Indians billion
=
3 = 212 11,090
Indians billion
billion
1996 2004 2011

* Forbes India Rich List - 2011

Net worth of India’s ultra wealthy households to increase by more than 5 times over the next 5 years
The total net worth of Indian ultra HNHs, is expected to
reach ` 235 trillion in 2015-16 from an estimated ` 45
trillion in 2010-11.
Net worth of
UHNHs
2010-11 E 2015-16 P
` 45 trillion ` 235 trillion

UHNH: Ultra high net worth household

Spending patterns
Ultra HNIs prefer to spend more on products meant for the family
A significant portion of overall expenditure goes into customised holiday
packages, luxury watches, jewellery, and household electronics.
Vintage
spirits
52
Art /
Artefacts
36
Home
decor /
Crystals Luxury
57 writing
Household instruments
electronics 56
90
Luxury watches Apparel /

Accessories
98
Jewellery / 73
Precious
stones
90
Exclusive
holiday packs
100
Note: The data values have been indexed to Exclusive holiday packs.
Big-ticket spends are planned in advance, often with family involvement

In most purchases, such as holiday packages, luxury watches, jewellery, household electronics, and
home décor, the family plays a paramount role, considering the huge spends involved.
Exclusive Household Jewellery / Home decor / Vintage spirits / Apparel / Luxury

Precious stones Luxury watches Accessories writing instruments Art / Artefacts
holiday packs electronics Crystals Liquor
82% 67% 57% 56% 54% 42% 41% 39% 38%
17% 28% 37% 43% 44% 58% 58% 61% 59%

1% 5% 6% 1% 2% 1% 3%
Planned Impulse Both

Investment
Ultra HNI's investing strategy has been simple so far...
Ultra HNIs invest one-fifth of their income

for growing their wealth
But they put a greater proportion back into their business to fuel
the engine of wealth creation. This stems from a desire for a sense
of control. Most ultra HNIs would rather invest in their own
business rather than in instruments where they have no control.
37.2% 33.1% 20.4% 9.3%
Real estate Equity Debt Alternate assets

Investment in
28.4% primary business
...but their investments in more complex assets are poised to rise
2009-10 E 2010-11 E 2011-12 P
22.4%
20% Expenses
Alternate assets
9.5% 9.3% 11.2%
20.8% 20.4% 18.2%

19.7% Savings Debt
Investment
19.3% for growing
personal wealth
Equity
31.6% 33.1% 30.1%
6.3%
Charity / Philanthropy
3.9%
Others
Real estate 38.1% 37.2% 40.5%

INTRODUCTION
The Land of Maharajas is hardly a stranger to opulence and luxury. and encouraged capital and wealth creation. As the country’s GDP
Before Independence, some of India’s rulers and landed gentry were growth zoomed towards the high single digit mark, growth was
among the richest in the world. If the Nizam of Hyderabad was a legend, unleashed in the ITeS (information technology enabled services)
who can forget his family of prime ministers, the Salar Jung family. Their sectors, capital markets opened up, average income levels rose
family property was so vast that a museum, named after the household, multifold and many suddenly found themselves to be millionaires –
houses the biggest one-man collection of antiques in the world, that of first rupee millionaires and then dollar millionaires. Suddenly, there
the last prime minister. were riches everywhere and money in the pockets waiting to be spent,
even as the country’s increased integration with the global economy
But post-Independence, such opulence had become anathema and widened the population’s exposure to major global luxury brands.
consumerism was a dirty word in the Indian lexicon. So, what caused
this turnaround and what is driving this luxury renaissance in the It was, and continues to be, a situation tailor-made for the luxury
country? revolution.
The answers to these questions are not difficult to find. The collapse of So, for instance, a Mumbai-based builder is offering exclusive homes,
the Soviet Union in the late Eighties ended the Cold War and coincided in the nation’s financial capital, each with a private swimming pool and
with a global revolution in information technology, a segment that the whose interior will feature some of the world’s leading luxury brands
Indian corporate sector embraced and gained a leadership role in. such as Bulthaup, Antonio Lupi, Dornbracht, Gessi, and Villeroy and
Boch.
Simultaneously, successive Indian governments unleashed a series of
economic reforms that freed the economy, promoted entrepreneurship,
From 3 to 55: The rising number of Indian billionaires in the Forbes rich list
Net worth ( ` billion )
55
Indians
8 = 1,157
Indians billion
=
3 = 212 11,090
Indians billion
billion
1996 2004 2011

* Forbes India Rich List - 2011

The apartments are being offered at a whopping base price of nearly All this does, therefore, beg the question: who are these ultra high net
$1.5 million, and the really top-end ones are expected to go at 10 times worth individuals (ultra HNIs)? And what drives their spending and
that. That price is comparable to the really high-end homes in exotic investment behaviour? Are there any lessons therein, for luxury brands,
locations in Manhattan, Beverly Hills and Florida. wealth managers and others?
India now has a record number of 55 billionaires, according to the

Forbes India Rich List – 2011. The country is next only to the United Defining ultra high net worth households
States and China in the number of billionaires. The combined wealth Wealth is often measured in terms of assets and money. But defining
of India's 55 richest is $246.5 billion, much higher than last year's total wealth solely on the basis of assets would be arbitrary. Wealth today is
of $222.1 billion. It is also more than the combined GDPs of Pakistan also about attitudes and lifestyle. It is, thus, also important to factor in
and Sri Lanka. the variations in standards of living around the world, as they serve as
indicators to define the luxury and privilege that a household’s wealth
Today, an Indian holds the distinction of owning what is believed to can purchase. Relative perceptions of wealth also differ according to
be the world’s most expensive residence – the Antilla in Mumbai, which the geographical locations, because economic factors, cost of living
took seven years to build, is bigger than the Palace of Versailles in and concentration of wealth differ from city to city. Even within a city,
France. these differences can be substantial.
It is a sign of the times that hardly a day goes by without the Consequently, Kotak Wealth and CRISIL Research believe that
announcement of the entry of a global super luxury brand into India. If international yardsticks to define a high net worth individual are not
yesterday it was the Bugatti Veyron, today it is the Koenigsegg Agera suitable in the Indian context. For instance, inheritance is not a primary
and the Maserati. Exotic cars such as the Veyron and the Agera cost in wealth forming segment in India, unlike in Europe that has been rich for
excess of ` 120 million each. Contrast that with 25 years ago, when it over 25-30 decades. Also, India has always had plenty of enormously
needed a Ravi Shastri and his heroics in the World Championship of wealthy people such as landlords, royalty, rich farmers and traders, who
Cricket in Australia to make known the Audi in India. do not discuss their assets with financial institutions. This is because of
deep-rooted cultural moorings of keeping money matters strictly
A few years ago, such public displays of opulence would have been private. India’s wealth dynamics are unique and need to be explored
unthinkable. But attitudes are changing and that trend is unlikely to appropriately.
reverse, because, barring any unforeseen circumstances, there is near-
consensus globally that the India growth story will endure in the long Keeping this context in mind, and for the purpose of this report, CRISIL
run. Research has defined an ultra high net worth household (ultra HNH) as
one having a minimum average net worth of ` 250 million (as of 2010-
According to some projections, by 2050, an average Indian’s standard 11) accumulated over the past 10 years, which as per our proprietary
of living would be what it is in Spain today. More importantly, the tool ‘IDeA’ (Income and Demographics Analysis) gets mapped to a
country would be possibly home to the largest number of billionaires in minimum income of ` 35 to 40 million.
the world, with the possible exception of China.

The total number of households which lie above this minimum average Size of ultra HNHs in India
net worth of ` 250 million form a meagre 0.03 per cent of the total
In less than two decades, India has been transformed from a slow-
households in India as of 2010-11. Households above this threshold
growing agrarian country into one of the world’s most dynamic
net worth would provide a sizable addressable market for luxury
economies. The country’s GDP has grown at an average of more than
brands and services in other cities as well, in addition to Mumbai and
8 per cent annually over the past 3 years and is estimated to have grown
Delhi, which makes it easy to gauge city-wise patterns of attitudes and
by 8.6 per cent in the most recent fiscal year, making India the second-
behaviour for these households. For these reasons, Kotak Wealth and
fastest-growing major economy in the world. This economic boom has
CRISIL Research have used ` 250 million as the base net worth for
led to an unprecedented level of wealth creation.
defining an ultra HNH.
Net worth of India’s ultra wealthy households to increase by more than 5 times over the next 5 years
Net worth of
UHNHs
2010-11 E 2015-16 P
` 45 trillion ` 235 trillion

UHNH: Ultra high net worth household

The total net worth of Indian ultra HNHs is expected to reach ` 235
trillion in 2015-16 from an estimated ` 45 trillion in 2010-11.
If we consider a household with a minimum net worth of ` 250 million,

there are around 62,000 ultra HNHs in India as of 2010-11, estimates
Kotak Wealth and CRISIL Research. Although this number represents
a meagre 0.03 per cent of the total households in India, it is poised to
more than triple to 219,000 households by 2015-16.
219,000 ultra wealthy households in India by 2015-16

If we consider a household with a minimum net worth
of ` 250 million, there are around 62,000 ultra HNHs in
India as of 2010-11.
219,000
2015 -16 P
62,000
2010 -11 E

Profiling:
The Inheritor,
the Self-made
and the Professional
PROFILING
It is raining billionaires in India, never mind the fact that a major chunk Wealth is power is no empty adage. Most ultra HNIs are distinguished
of the country's huge population still grapples with poverty. And these individuals in social networks of power and influence. Their long-
billionaires come from diverse backgrounds. standing network of elite contacts gives them differentiated access to
business opportunities.
Consider, for instance, a well-known industrialist, and a Forbes
billionaire. In 2010, Forbes estimated his net worth at US$1.0 billion, One interesting aspect of this class today is heterogeneity; they come
making him one of India’s Top 50 richest persons. A farmer's son, he got from all social backgrounds, unlike before Independence when they
his first break in his uncle's construction business in Hyderabad. The were more likely to be the upper classes or the nobility.
first project that he handled was to build a dam. He then started his own
construction venture. Subsequently, however, he left India to set up a Today’s ultra HNIs would typically include businesspeople who
factory to manufacture laminated particle boards in the US. He own enterprises with a turnover of ` 750 million or above, corporate
returned to India in 1992, attracted by opportunities to help build executives, established professionals, politicians, traders, builders,
India's infrastructure. He quickly moved into the power industry, and agricultural landowners. In that sense, evidently, wealth is a
building India's first power plant in the private sector. He made news in great leveller.
2006 by winning the bid to modernise the Mumbai airport, a project
headed by his son. He also has interests in hotels in partnership with a Entrepreneurship is clearly the dominant source of wealth in India,
leading luxury hotel chain in India. but fast-growing service industries such as technology and financial
services too have catapulted many hitherto middle-income group
Obviously, what sets ultra HNIs apart from other classes of individuals in individuals into the ultra HNI bracket.
the country is the sheer value and size of the assets they own. After all, it
is not every day that one goes and buys an island to fulfill a whim, With such a variegated mix of people, it is interesting to delve into how
maybe, but there are a few Indian ultra HNIs who have done precisely they behave as a class, if at all they do. Or, are there innate differences
that. that are triggered or governed by more latent aspects of behaviour?
Kotak Wealth and CRISIL Research ventured to study precisely that.
The era of socialism has ended, at least as far as public displays of wealth We concluded that ultra HNIs fall into two broad categories:
are concerned. Today’s ultra HNI is not, in general, a reclusive individual.
On the contrary, he is more likely to be a constant feature on television • Old money: This is essentially inherited money and comprises
channels or on Page 3 of newspapers, and is comfortable in (some people who have inherited wealth or businesses.
might even say seeks) the limelight.
• New money: This includes the newly rich who come from all walks
In absolute terms, ultra HNIs are also very heavy spenders, be it on high of life and those who have made money through mega salaries,
quality homes, food, clothing, and the luxuries of life in entertainment, bonuses and stock options, and those who have started their
education, travel and family vacations. businesses on their own and made their fortunes.

Based on the results of the survey, Kotak Wealth and CRISIL Research 3) Spending patterns
have classified ultra HNIs into three groups:
The expense structure or spending pattern of ultra HNIs is determined
• Inheritors by factors such as the prevalent lifestyle and standard of living in a
• Self-made particular city, in addition to individual and familial preferences of ultra
• Professionals HNIs in terms of products and brands.
Inheritors are born with a silver spoon, and have inherited high net 4) Investing patterns
worth; Self-made are first generation entrepreneurs whose success in
business turned them wealthy; and Professionals are qualified, highly Compared with the risks they are willing to take while acquiring wealth,
skilled professionals who gained wealth because the companies that ultra HNIs are typically conservative with the level of risk when it comes
employed them grew big. The wealth dynamics of each of these groups to their investments in stocks and shares, bonds, property,
are unique. commodities such as gold, and in alternate assets, such as antiques
and art. Increasingly, however, as they gain greater knowledge,
If the way in which they made their money is interesting, even more understanding and confidence about alternate asset classes, many
noteworthy is the finding that these three types of ultra HNIs differ ultra HNIs are investing in vehicles that are generally considered to be
markedly in their patterns of spending and investment. To understand at the riskier end of the financial spectrum, such as hedge funds, private
these three ultra HNI profiles better and deeper, we have examined equity, structured products and derivatives.
them in terms of several factors.
5) Attitude to ‘giving’
1) Sources of wealth
There are a multitude of reasons why today’s ultra HNIs give to charities.
Along with the traditionally wealthy business class who have For one, today’s ultra HNI is more socially aware and feels a sense of
generated significant wealth from an inheritance, a new breed of ultra responsibility to give back to society. Another factor is that today’s ultra
HNIs, who have earned their money through their job (in thriving HNIs feel that they can make an impact on some of the global causes by
sectors such as telecom, IT / ITeS and financial services) or through giving to charities.
ownership of business, has emerged.
6) Perpetuation of wealth
2) Motives for wealth creation
The passing on of wealth from one generation to the other is a common
‘Spend on the present and save for the future’ are clearly the motives for human trait; some are more privileged to get substantial inheritances.
wealth creation for most ultra HNIs. For many, financial security in Although average wealth has gone up and entrepreneurship has
retirement is paramount, followed by a better personal lifestyle, while grown, financial legacy for dependents still remains an important
for some others, the financial security of children and family is a priority, motivating factor for ultra HNIs.
apart from philanthropy.

Decoding the DNA of the ultra HNI
Inheritance;
Sources of wealth Entrepreneurship entrepreneurship
Self-recognition Self-actualisation
Motives for wealth creation Wealth
preservation
Attaining
luxurious living Value
Drivers of spending Maintaining
luxurious living
Informal
Approach to investing Organised Professional
Compassion; gives
money, less time
Attitude to charity Responsibie and conscious;
gives money and time Empowerment;
rarely gives time
Wealth is for family,

Wealth is but they must strive
Attitude to perpetuation of wealth to merit wealth Wealth needs to
unconditionally for remain within the
immediate family extended family
The Inheritor The Self-made The Professional

appears to be either for nostalgic reasons or because of the mental
The Inheritors
comfort associated with similar purchases abroad in the past, or in
The original connoisseurs, this group comprises of people who have
some cases because their longer period of association with luxury
inherited wealth or businesses from their forefathers.
brand marketers gives them access to privileged or customised
services. And they are likely to combine shopping abroad with holidays
Being born into an ultra wealthy family gives them an enhanced
overseas with family.
standard of living and access to a distinct set of privileges such as
education in prestigious institutions, financial capital to start their own
Because they are so wealthy and successful, and recognised in their
business, and access to influential social networks.
social niche, they do not feel the need to make any style statements,
even though they tend to identify themselves very closely with a brand,
And, not to mention, unique, rather expensive tastes. “I travel to London
and view it as a means to reflect their social standing.
to watch opera twice a year,” one of our respondents said, matter-of-
factly.
So, for every one of them who dangles a Patek Philippe or a Breguet
watch, or maybe even a Franck Muller or an Audemars, there will also be
There is a flip side to this, though. Untold inherited riches can bring
a “I proudly wear the watch which my 11 year old daughter presented
along with it incalculable pressure – the pressure of preserving, if not
(purchased for ` 690) with her pocket money” type.
multiplying, inherited wealth; the pressure of making a mark in life and
proving themselves worthy of the inheritance, and ensuring that the
In general though, Inheritors are highly evolved brand users;
next generation sustains the family’s hard-earned wealth.
consequently, they have higher propensity to experiment with brands
or be among the earliest in their circle to adopt a new brand. Therefore,
“I don’t know how capable or interested my kids would be taking over
they remain clued on to the latest trends in styles and brands in their
the business,” one of them wondered aloud. “Having built so much, I
social circles.
want to pass it on into capable hands.”
Because of their strong brand affinity, price is not really a criterion for
Inheritors relish challenges, tend to remain actively involved in their
Inheritors for owning a brand, again a trait that they share with the Self-
business and believe that they need to keep working hard to grow their
made.
wealth, a trait they share with the Self-made.
Our survey indicated that, for the Inheritors, the top spends on self are
Apart from inheritance, the Inheritors surveyed for this study cited
luxury watches, designer clothing, personal accessories, and luxury
success in their primary business and economic investments – notably
writing instruments. But the big-ticket spending is reserved for the
in real estate and equity markets – as the main contributors to their
family; the major spends are on exclusive holiday packages, jewellery
wealth.
products and household electronics.
They are the cognoscenti, used as they are to luxury and luxury brands.
Inheritors are generally impulsive when it comes to spending on
Interestingly, many of them prefer to purchase their favourite
themselves, with exclusivity and brand popularity primarily guiding
international brands from abroad even if they are available in India. This

their impulse buying. They plan their spending on family in advance. They strongly believe that possessions are a hallmark of those who
Although family members are equal participants in planned spending, have succeeded and those who haven’t.
Inheritors keep an eye on exclusivity. Our survey indicates that they are
also great followers and collectors of art, and not purely for investment Responding to our survey, a majority of the self-made entrepreneurs
purposes. listed success in their primary business, investment in real estate and
diversification of their business as the top three contributors to their
A standout feature that was revealed in the survey was that although wealth. They actively engage in running their day-to-day business and
they take risks to acquire wealth, Inheritors are far more risk-averse intensely involve themselves in their spending and investing decisions.
when it comes to investment. The Self-made are calculated risk-takers, highly driven individuals and
are constantly on the lookout for new ways to grow their wealth.
They distribute their investments across asset classes, with a greater
emphasis on real estate – about 40 per cent – and equity – about 30 per Having made their wealth through success in their primary business,
cent. Their real estate investments are diverse – villas, apartments, the Self-made believe that entrepreneurship is the road to sustaining
resorts and holiday homes, commercial buildings (which could be for their wealth. So they tend to own multiple businesses.
their own use), agricultural land and plantations, and vacant land.
“You will never see me as a retired person; we have already earned
Just as they utilise the services of professionals to run their businesses, enough to maintain our status and now work gives us pleasure,” one of
the Inheritors also take the services of professionals such as wealth them, who qualifies to be in this group, said.
managers, chartered accountants, financial planners, and lawyers to
manage their investment portfolio. The Self-made attribute their success in business to hard work and
effective networking. They divide their time between running their
The traditionally wealthy tend to have established systems for business and networking with their business contacts. They always
succession of wealth, and mechanisms for passing wealth from one tend to look for occasions for networking and making new business
generation to another. These systems, however, seem to be contacts.
progressing with the times. Inheritors are still most likely to transfer the
family estate to an heir. While they would retain business ownership To renew their popularity in business and social circles, they are most
within the family, they could leave the onus of running the business to likely to try new themes or unique venues for entertaining their friends
professionals, a relatively newer practice. and business associates. They value personal contacts and people
more than they value organisations.
The Self-made For the Self-made, life revolves around their work, and they have very
This group comprises ultra HNIs who started on their own and have little time for anything else. According to our survey, the Self-made
worked diligently to make a name in their business circles. They are tend to have a latent desire to enjoy life to the fullest. However, their
constantly in search of avenues to increase their wealth and have an challenging work schedule is sometimes a hindrance in the way of their
inherent desire to be recognised as rich. fulfilling that desire, as also their other goal of making time for family.

The Self-made are highly receptive to product innovation and are, developing personal equations with specific chartered accountants,
hence, a delight for marketers of luxury products and services. They are wealth managers, private financial advisors, friends and family and
typically the earliest adopters of new devices or gadgets in their circle, seek their advice on critical matters.
which sets them apart as trendsetters in their social circles.
They also tend to take calculated risks with their investments. For
“I change mobiles every six months. I like to upgrade them always,” one instance, they are likely to have the highest proportion of investments,
of the respondents said. among the ultra wealthy, on alternate assets such as private equity
stake in businesses. They balance such investments with relatively less
The Self-made typically tend to use brands as a means to fulfill their risky instruments such as fixed deposits and insurance policies. As a
aspirations, and show the strongest propensity for owning customised rule, they invest only in instruments that they best understand. Their
products. They are, therefore, plum targets for products based on tendency to take measured risks is also apparent in their choice of real
cutting-edge technology or products tailored to their needs. estate assets – they are more likely to own a mix of real estate assets
such as holiday homes, commercial buildings and agricultural land and
Being active networkers, and inquisitive by nature, the Self-made gain plantations, apart from apartments and villas.
access to information on the latest brands, styles and trends in the elite
parties they attend. With a number of major luxury brands making their
entry in the Indian market, the Self-made do most of their shopping The Professionals
from luxury retail stores within the country as their tight schedule of These are people who happened to be in the right industry at the right
business engagements does not always give them the time to shop time. Their numbers have grown significantly in the last couple of
abroad. They are likely to be the biggest spenders on designer clothing, decades, having worked their way to wealth, in service industries such
personal accessories like handbags, wallets and leather products, and as information technology and financial services, benefitting from
designer mobile phones. They are also amongst the biggest spenders handsome salaries, hefty bonuses, end-term benefits and stock
on luxury watches. Spending on family is confined to holidays abroad, options. Others are self-employed. Doctors, lawyers and accountants
jewellery products and household electronic products. Frequency of are the other kinds of professionals for whom expertise
travel abroad is relatively much lesser than the other categories of the is their originator of wealth.
ultra HNIs, probably because they spend more time on business.
Compared with the other two types, Professionals are less possessed by
Compared to the other categories of ultra HNIs, the Self-made deploy the idea of continuing to work hard to grow their wealth over time. They
the lowest proportion of their income on investments for growing their are more likely to view hard work as a means to extend their capabilities
wealth. They are also likely to be the most involved, among the ultra further, and view wealth as an outcome of those enhanced capabilities.
rich, in planning their investments. It is this focus on growing their expertise that allows them to choose
between working, consulting, advising or mentoring. Professionals are,
The survey finds that the Self-made are more comfortable with people therefore, able to diversify the routes to creating and maintaining
than with organisations. This is perhaps why many of them believe in wealth.

Professionals have a greater proportion of their total income available Professionals route three-fourths of their investments into financial
for spending and investing than other ultra HNIs. As most of them do assets, primarily equity and debt. Our survey reveals that they clearly
not run a business, a relatively lesser portion of their total income is try to inject more safety in their investments and diversify risk by
marked for business investments. Professionals, therefore, spend and investing across a variety of asset classes.
invest a greater proportion of their income than other ultra HNIs.
Although Professionals may not have as much organised scale to
Spend they do, but wisely. “To me, in any purchase, usability is of utmost manage investments as the traditionally wealthy Inheritors, they are
importance. If I want to splurge on a beamer (BMW luxury car), I will ask the most inclined to pay for investment advice compared with other
myself do you really need one. If I am convinced then I will buy,” a ultra HNIs.
Professional stated.
Our survey found Professionals to be the biggest users of professional
For them, their preferred brand has to be unique and has to have its help, consulting wealth managers and financial planners for their
own USP (unique selling proposition). For instance, when questioned investing decisions.
on the kind of cars they aspire for, most Professionals interviewed for
the survey confessed a weakness for sports utility vehicles (SUVs), “Investing is a passion for me , it is fun to get information from different
crossover SUVs, ultra luxury cars, and sports cars, convertibles, wealth managers,” a Professional disclosed.
roadsters – all of which are big-ticket vehicles.
In view of their background, Professionals are most concerned about
They invest primarily for growing rather than protecting their wealth. social inequality than other ultra HNIs, and take time to give back to
As their absolute income level and also income as a proportion of net society. “It is a way of life for me,” one of them said. “It (charity) should go
worth is far lesser in comparison to the other ultra HNI categories, they hand in hand with life,” opined another. They prefer to channel their
have a greater need to grow wealth. In their investing, Professionals giving through charitable institutions rather than contribute at an
are concerned about social security and regular income, according individual level.
to our survey. “Once you are 50, all your money should be easy to
(be made) liquid,” one of them quipped. Most Professionals believe that a solid foundation of values, education
and effort will stand their children in better stead than exposing them
The Professionals, as our survey indicates, spend time on self- to the luxuries of life. The same logic applies to leaving behind a legacy
enrichment by pursuing their hobbies and following their passions for children. Professionals would rather have their children make their
closely, like travelling. Professionals tend to travel extensively to pursue mark in life through merit.
personal interests. Befitting this passion, high-end cameras find a
unique position in Professionals’ spending preferences. “Most of my wealth I want to give to charity. I want my son to create
wealth the way I have,” one of the Professionals concluded.
“I love wild life photography and invest in upgrading the lenses, I spend
quite a bit of money on this. I choose my travel accordingly,” one
respondent said.

Spends:
Attitudes,
Motivation and
the Ultra Wealthy
Lifestyle
SPENDS
In February 1992, while presenting his second budget as finance So, is it that the ultra HNIs, despite their millions and billions, are
minister, Dr. Manmohan Singh had said, “To realise our development burdened with the same worries and concerns that trouble most
potential, we have to unshackle the human spirit of creativity, idealism, ordinary folk? Or is Rockefeller just an exception to the breed? Our
adventure and enterprise that our people possess in abundant survey on spending threw up a few surprises to this, and other
measure.” questions related to the spending behaviour of the wealthy.
Today, nearly two decades later, it would be fair to say that the First, as a proportion of total income, it is the Professional – and not,
economic reforms of the early 1990s did indeed unleash a wave of as popular wisdom would suggest, the Inheritor or the Self-made –
industrialisation and growth. This fuelled increased levels of income who, well, splurges the most, if one can call it that. This can probably
and wealth among many sections of Indian society. be explained by the fact that Professionals derive their income
predominantly from a job, unlike the Inheritors and the Self-made,
Critically, what has changed radically due to this accumulation of both of who generate their income principally from their businesses.
wealth by more and more Indians has been their attitude towards
spending. Until the 1990s, leaving aside some regional cultural Not surprisingly, the latter two plough back nearly a third of their
differences, the average Indian was far more circumspect in spending, income into their primary businesses. All the three – the Inheritors, the
particularly on items or services that are generally perceived to be Self-made, and the Professionals – save (cash savings) nearly a fifth
crassly consumerist. of their total income, and invest another one-fifth to multiply their
personal wealth.
That is no longer the case. The average individual is today bombarded
through all forms of media by focused sellers intent on peddling a In a pattern that can be explained on the basis of widely acknowledged
variety of goods. Moreover, due to the explosion of information fuelled regional cultural traits, ultra HNIs in the North tend to be a bit more
by the Internet, and increased global travel, there is greater awareness expansive with their money compared with their counterparts from
of global brands. And there is willingness to spend because things are the South.
within reach and the pockets are loaded.
The comparison across age groups coughed up what, at first glance,
appeared to be a bizarre statistic: The relatively younger ones appear
Ultra HNIs and spending to be far more conservative in their expenses. This is antithetical to the
Anecdotal or apocryphal, there is this story about America’s first perception that the old are generally thrifty compared with the young.
billionaire John D Rockefeller. One day, Rockefeller made a call from a
pay phone – and lost his quarter. When the machine did not refund the But it is not so remarkable if one considers that most of the younger lot
money, he called the operator who expressed regret over the incident are passionate about their businesses, and are highly motivated by the
and asked for his name and address so that the amount could be desire to grow their businesses aggressively, enhance their wealth and
returned to him. "My name is John D...," Rockefeller began. "Oh, forget it. gain recognition. Consequently, a greater percentage of both their
You wouldn't believe me anyway!" income and time is invested in their businesses.

The Professional – not the Inheritor or the Self-made – spends the most, as a proportion of total income
Inheritors Self-made Professionals
Expenses
21.5% 20.0% 28.8%
Investment in
primary business 30.2% 32.6% 15.9%
Savings
19.0% 20.1% 20.8%
Investment for growing

18.9% 18.6% 21.6%
personal wealth
6.2% 4.3% 10.4%
Others 4.2% 4.4% 2.5%

Not so the older generation of ultra HNIs. Their passion for propensity to spend on luxurious items. But even here, caution rules:
reinvestment into their businesses wanes as they grow older. This, the motto is “value for money”.
perhaps, is because after they become well-known and their
businesses become established, and are increasingly turned over to By contrast, for Inheritors, luxury has always been a way of life, and
professionals or the next generation of family, they are left with both brand is often associated with societal status, and hierarchy and even
time and money to indulge themselves on cravings they probably familiarity – as one of them said, “I plan purchase of only high-value
sacrificed in their younger days. (read brand) items. It should reflect my status” – and price quite often
plays secondary fiddle in their purchase decisions.
Our survey numbers bear this out. Ultra HNIs who are active or very
active in their businesses spend nearly a fifth of their income on regular Overall, the survey revealed, ultra HNIs as a class spend a significant
or occasional expenses, and reinvest nearly 30 per cent of their portion of their overall expenditure on customised holiday packages,
earnings in their primary business. luxury watches, jewellery, diamonds and precious stones, and
household electronics. Following closely are items such as domestic
By contrast, the semi-retired ultra HNI is far more laidback: he reinvests and international branded wear, high-end cameras, and luxury leather
only 18 per cent of his income in his primary businesses, and spends products.
nearly 28 per cent of his income on vagaries such as luxury travel
packages, a luxury watch, or even high tech gadgetry. Ultra HNIs prefer to spend more on products meant for the family
A significant portion of overall expenditure goes into customised holiday
packages, luxury watches, jewellery, and household electronics.
It would be inappropriate to conclude from all this that the Professional
is a squanderer. According to the results of our attitudes survey, unlike
Vintage
the Inheritors and the Self-made, Professionals are not as spirits
52
Art /
overwhelmingly consumed by the desire to build up wealth that their Artefacts
36
children can inherit; based on their own experiences, they place far Home
decor /
greater premium on success through good education and hard work, Crystals Luxury
57 writing
and are quite willing to let their progeny come good on their own. Household instruments
electronics 56
90
Equally, we found, the Professionals are acutely conscious of the Luxury watches Apparel /
Accessories
environment they come from and are far more inclined towards charity 98
73
Jewellery /
than the others. Quite distinct from their regular or occasional spend, Precious
stones
the Professionals bequeath nearly 10 per cent of their income towards 90
noble causes, markedly higher than 6 per cent for Inheritors and
Exclusive
around 4 per cent for the Self-made. holiday packs
100
On the flip side, as noted earlier, while putting away a reasonable

Note: The data values have been indexed to Exclusive holiday packs.
percentage of his income as savings, Professionals also show greater

For the most part, price is not really a primary consideration for the
Planned versus impulse purchase
Inheritor and the Self-made, whereas value for money is a major factor
Our survey grappled with one key question: what is the nature of ultra
for the Professional, the older and semi-retired.
HNI spending? The answer: Largely planned. In most purchases, such as
holiday packages, luxury watches, diamonds and jewellery, household
There are certain distinct factors that guide a planned purchase.
electronics (which include premium mobiles and high-end cameras),
Because they tend to be big-ticket items and involve consensus
and home décor, the family plays a paramount role, considering the
decision making in the family, appeal and price are important factors in
huge spends involved.
such purchases.
For instance, an overwhelming 88 per cent of the Inheritors said the

Planned buying is usually led by need; therefore, there is a tendency to
choice of destination and the length of the holiday was determined in
also deliberate on factors such as quality and durability of the product,
consultation with others in the family, and the numbers were similarly
particularly in Indian climates, exclusivity, brand and newness of the
high for Professionals and Self-made at 85 per cent and 79 per cent,
model.
respectively.
Although the preference is for well-known brands, the ultra HNI is not
In fact, the influence of the spouse or the children on such purchases is
averse to bargain purchases.
so profound that many of the respondents could not recall what their
last such high ticket purchase was, because it was not a purchase driven Apart from these categories, most buying is impulse-led. “Most
by their own particular whim or fancy, but was more the result of family purchases are spontaneous, something catches the eye and I pick it up.
deliberations. I can’t recall the purchase time and price,” one respondent observed.
Big-ticket spends are planned in advance, often with family involvement

In most purchases, such as holiday packages, luxury watches, jewellery, household electronics, and
home décor, the family plays a paramount role, considering the huge spends involved.
Exclusive Household Jewellery / Home decor / Vintage spirits / Apparel / Luxury

Precious stones Luxury watches Accessories writing instruments Art / Artefacts
holiday packs electronics Crystals Liquor
82% 67% 57% 56% 54% 42% 41% 39% 38%
17% 28% 37% 43% 44% 58% 58% 61% 59%

1% 5% 6% 1% 2% 1% 3%
Planned Impulse Both

Impulse purchases are spur-of-the-moment buying, guided by a mix of The Inheritors are the most comfortable doing online shopping,
appeal and whim. among the three categories. Additionally, across categories, it appears
to be more popular among the younger lot.
New York Herald founder James Bennett once discovered – and began
to frequent – a restaurant in Monte Carlo that he said boasted a perfect
mutton chop. One evening, Bennett arrived to find someone seated at Travel
his favourite table. All work and no play makes Jack a dull boy. True to adage, the ultra HNIs,
many of whom have slogged it out, or continue to toil hard, in the
His solution? He immediately purchased the restaurant (for $40,000), workplace to reach the heights that they have, ranked vacationing as
asked the diners at his table to leave (even though they were only their topmost priority.
halfway through their meal), finished his meal (mutton chops), and
returned the restaurant to its previous owner. Professionals have a penchant for travel
Impulse purchases are usually done at the airport (duty-free shops) or

while travelling and purchases are made largely on how eye-catching
the product is. Other factors guiding impulse buying are the brand, the
newness of the product, and exclusivity. Critically, need for the product
143
is not a factor; but having cash in hand is. Professionals
100
Overall
Despite ease of use and convenience, whether goods can be purchased 94
Inheritors
online or not is not a major determinant while shopping.
91
Self-made
The online route is overwhelmingly used by all – nearly 90 per cent of

Note: Data values for the three ultra HNI profiles are indexed to Overall.
Inheritors, Self-made and Professionals replied in the affirmative – in Source: T.O.P. India - Kotak Wealth & CRISIL Research
purchasing of air tickets, and holiday bookings. To a lesser extent, it is

also used for purchase of hi-tech gadgetry, apparel and Unlike the Inheritors or the Self-made, who own businesses and
accessories. perhaps employ others in large numbers to run them, workplace
burnout is an indisputable factor of the Professionals. Perhaps
One major dissuading factor for online purchases is the fear of credit reflecting this dichotomy, nearly 67 per cent of the Professionals
card fraud. So, even in the case of booking of travel tickets and holiday confessed that their biggest weakness was exclusive luxury holiday
packages, a majority of the respondents said that to feel safer during packages, as compared to 65 per cent and 54 per cent respectively, for
online purchases they tend to use their corporate credit cards rather both the Inheritors and the Self-made.
than their personal cards.
A majority of the ultra HNIs travel at least twice a year, while about 15-
20 per cent of the Inheritors and the Self-made travel thrice or more

annually. For the Inheritors and the Self-made, the most common
Ultra HNIs in Mumbai spend far lesser on travel reasons for travel abroad are family functions, business purposes, or
leisure, not necessarily in that order. For the Professionals, it is mostly
either conferences, business trips or vacations (including leisure, sports
or entertainment events).
The average stay of travel overseas, particularly if it is for sightseeing, is

Other cities 1-2 weeks. Weekends or short 3-4 day breaks are increasingly being
116
All India
used for quick getaways within the country, even within familiar
100
surroundings, if only to take a break from the monotony of routine
Bengaluru
99
Delhi work.
99
Mumbai
91 “Sometimes, we just move to the Taj over the weekend and chill out. My
kids carry their cycle and toys. It is good fun. Completely disconnected
Note: Data values for the cities are indexed to All India.
Source: T.O.P. India - Kotak Wealth & CRISIL Research from work, but you are still in familiar surroundings,” a Mumbai-based
ultra HNI remarked.
A majority of ultra HNIs travel abroad at least twice a year
%
33
54% 13
%
36%
8%
10%

Average duration of stay is 1-2 weeks, regardless of the frequency of overseas travel
More than No fixed

Once a year Twice a year Thrice a year thrice a year frequency
1-2 days 11.1%
3 days - 1 week
24.2% 30.0% 15.4% 41.7% 22.2%
1 - 2 weeks
54.5% 59.2% 76.9% 41.6% 33.4%
More than 2 weeks

15.2% 8.3% 7.7% 16.7% 11.1%
Not fixed
6.1% 22.2%
2.5%

Interestingly, economy class appears to be the most preferred mode of “If I am visiting my daughter, my holidays last for a month; otherwise, in
travel overseas for both the Inheritors and the Self-made; while nearly other destinations, it is usually a couple of weeks,” according to another
70 per cent of the Inheritors and 64 per cent of the Self-made said they ultra HNI.
travel economy class, nearly 70 per cent of the Professionals said they
travel business class. The potential market size of the luxury vacationing industry (includes
hotels, fine dining and travel) was estimated to be ` 234 billion as of
That may appear a trifle peculiar, but is nonetheless easy to understand 2010-11. An average ultra HNI takes at least two holidays per year – one
if one considers that the Professionals travel mostly for conferences or short and one long. During these holidays, he spends money on
business purposes, which is generally paid for by the company. business or first class air travel and best-in-class luxury hotels.
Moreover, the economy class is favoured for short flights overseas,
whereas the business class is the preferred choice for long flights. For
short holidays within the country, most ultra HNIs choose to drive to Luxury watches
their destinations. Associated as they are with wealth, premium lifestyle, and brands, it
should come as no surprise that luxury watches are a coveted item for
Besides, in the case of the Inheritors, accustomed as they are to setting ultra HNIs. Even in this high-tech age, luxury watches still easily outrank
the standards, there really is no one that they need to emulate or look expensive electronic gadgetry such as luxury mobile phones in terms
up to. Even after he became America's first billionaire, John Rockefeller of aspiration.
chose to operate from a very spartan office. When a curious visitor once
asked him how he expected to impress anyone with an office such as For those born into wealth, a luxury watch is a thing to be flaunted; a
his, Rockefeller retorted: "Who do I have to impress?" status symbol, the hallmark of a complete man. It is marginally less so in
the case of a professional, and the numbers reflect that.
The motives for vacationing are diverse. Many of them, particularly
those who are still active in their businesses, want to get away, Nearly 74 per cent of the Inheritors and 55 per cent of the Self-made
anywhere, to relieve themselves of the tedium associated with work professed their inclination to buy a luxury watch, whilst only one-third
and come back rejuvenated, while others, particularly the younger of the Professionals did so. Predictably, the preference appears to
ones, indulge individual tastes such as scuba diving, photography, decline with age, with only 33 per cent of those above 55 years
landscape and the environment and choose the locale accordingly. spending on it compared with 74 per cent of those under 40.
Ostensibly, even among the supra-rich, the motivation to display and
“I chose a wine chateau in France for my holiday. Staying and driving impress diminishes as one grows older. A majority of those surveyed,
along the countryside was a wonderful experience,” one of the said they owned 2-5 or more luxury watches. Rolex, Omega, Rado,
respondents recalled. Cartier, Piaget, Breguet, Jaeger Le Coulture, and Girard Perregaux are
sought-after brands .
For some others, it is the sheer pleasure of gambling. “Every time I travel,
if there is a casino, I gamble. I have made my share of profits there. Why India’s potential luxury watch market was an estimated ` 15 billion in
not?” 2010-11. A majority of luxury watch purchases in the country take place

Luxury watches are a coveted item for Inheritors Jewellery – a traditional fascination for Inheritors
96
109
Self-made
73
Inheritors
100
Professionals
Overall
Professionals 80
93 Self-made
Inheritors
110
in Mumbai or Delhi, although the aspiration for them is quite high in

100 Overall
other Tier I and Tier II cities.
Jewellery and precious stones Source: T.O.P. India - Kotak Wealth & CRISIL Research
Indians, regardless of age, class, or wealth, have always been enthralled

by jewellery. Because of its dual utility as an investment, the fascination
with it has not shrunk remarkably even during times of economic Ultra HNIs in Delhi are relatively the biggest spenders on jewellery
turmoil. Delhi
111
Bengaluru
Weddings and special occasion purchases and the ability of high value 91
diamonds and jewellery to act as a store of value make this market a lot
more resistant to ups and downs. Other cities
109 Mumbai
93
The ultra HNIs are no exception to this. All India
100
Wearing jewellery is the most common form of display of wealth and

social status. It is, therefore, not surprising that the Inheritors and the
Self-made spend more on jewellery than the Professionals. The more Note: Data values for the cities are indexed to All India.
prosperous you are, the more the jewellery on your person.

The potential market size of luxury jewellery was estimated at ` 229 In February last year, in Aurangabad, while working out at a gym, a city-
billion in 2010-11. According to industry estimates, luxury jewellery is based property developer shared with a couple of friends his
almost 15 per cent of the total diamond jewellery market. childhood dream of owning a Mercedes. He suggested that all his
friends should also join in.
The really top end of the luxury jewellery market, dominated by leading
family jewellers and independent jewellery designers, would be large "We laughed it off as we were not sure of even 11 people joining the
high-quality solitaires (over 3 carat) and high-end, diamond-studded bandwagon. But he continued to pursue the idea wherever and
jewellery (over ` 1 million per piece). whenever he got an opportunity," reminiscences one of the buyers.
Major global brands such as Cartier, Chopard, and Tiffany have been in The initiative burgeoned into a deal with Mercedes that was negotiated
the country for a while now. However, given their limited range, lack of at the company’s headquarters in Germany. The result: Last October,
custom-made designs and reluctance of Indians to pay a premium for 150 Mercedes were sold on one single day to a group of buyers in the
designer jewellery, their impact on the market has so far been muted. city comprising doctors, builders, industrialists and professionals.
Today, however, there is an increased awareness and focus in the Indian The aim, in this instance, was to showcase the city’s wealthy while
jewellery industry on design; apart from designers, theme-based simultaneously availing of discounts pursuant to the mass booking.
collection designers too are drawing clientele. Top family jewellers, in
particular, focus on this segment a lot more. The jewellery industry in Most ultra HNIs own a number of cars to suit their diverse needs.
the country has traditionally operated on the basis of trust, and those Some of the popular brands, our survey revealed, were Honda,
having historical relationships with wealthy families do have a Toyota, Mercedes, BMW, Audi, Skoda, and Hyundai. On an average,
significant advantage. the Inheritors own 3-4 cars, while the Self-made and the Professionals
own 1-2 cars each.
Driven by the complementarity of the luxury jewellery market with the
apparel market, fashion designers have increasingly turned their For regular use in cities, Japanese cars are preferred because they are
attention to the former segment. The demand for luxury jewellery in trusted for Indian roads. Among the younger Self-made, luxury cars are
the country is virtually insatiable, and unlike other luxury products, this a definite style message.
market is more evenly distributed, with demand high in cities such as
Kolkata and Chennai. In terms of “aspirational” cars, an overwhelming favourite is the SUV
(sports utility vehicle) or the crossover SUV, perhaps in part because of
the rugged, macho image associated with it, coupled with the fact that
Luxury cars it is ideal for short family holidays in nearby locales. Another sought-
Although owning a car is now a necessity, a luxury car such as a after model is a sports car or a roadster. Interestingly, the Professionals
Mercedes or BMW is still used to send out an “I have arrived” lifestyle showed the greatest desire to own an ultra-luxury car, while the
statement. Luxury cars are those with an on-road price of ` 2.3 million younger Self-made ultra HNIs prefer an SUV.
or above.

Japanese brands – the most trusted cars for Indian roads
64%
SUZUKI
HONDA TOYOTA
52% (MARUTI) 36%
Other brands
HYUNDAI SKODA MERCEDES MAHINDRA

31% 17% BMW
12% 11%
24%
CHEVROLET 11% FORD VOLKSWAGEN TATA

6% MITSUBISHI
5%
9% 6%
Note: Ultra HNIs have multiple car ownership. Hence, the percentage values do not add up to 100.
The potential size of the luxury car market was estimated at ` 140-150 instance, Audi has enhanced its dealer network to more than 15 dealers
billion as of 2010-11. Luxury car sales have grown at a CAGR of 22 per with BMW having more than 20 dealers across the country as of
cent over the last three years (2008-09 to 2010-11). This growth is 2010-11. This has aided the growth of the luxury car market
mainly attributed to the entry of new luxury car players in India, considerably.
increasing spending propensity of the customers, easy availability of
finance and improving economic scenario. India being a growth The growth in the luxury car market has also been driven by a number
market, players have focused on increasing sales in the country and of new model launches, and an increase in the spending propensity of
thereby have enhanced their dealership network considerably. For customers has led to high demand for luxury vehicles. Also, attractive

equated monthly installments (EMI) schemes by financiers that help
Ultra HNIs in Bengaluru relatively the lowest spenders on household electronics
reduce the EMI for customers has led to easy availability of finance,
thereby leading to high growth in the luxury car sales. Other cities
109
Bengaluru
96 Mumbai
Household electronics 98
In today’s high-tech era, marked by rapid changes in technology and Delhi
100 All India
constantly evolving products, it is obvious that many high-priced items 100
that enhance and complement personal lifestyles will hold sparkle for
those who can afford them.
Although it would be fair to say that all ultra HNIs spend a great deal of
Note: Data values for the cities are indexed to All India.
money on high-end electronics, the Professionals stand out in this Source: T.O.P. India - Kotak Wealth & CRISIL Research
respect; their spend on household electronics is next only to

holidaying. This is ostensibly because of their familiarity and ease with appliances and gadgets at home can be operated through remote
technology; due to their education and work profile, many of them control.
have encountered or own similar products and are seeking to upgrade
them to match their lifestyles. The potential luxury electronics market in India was estimated at ` 51
billion in 2010-11. Although the market in India for luxury mobile
Born into the information age, the younger generation is particularly
comfortable and hands-on with technology, and that is reflected in
Household electronics resonate more with Professionals
their higher spend on such items. The older ultra HNI is more likely to
purchase them as gifts to family or friends, rather than for personal use. 100
“As you age you don’t want to spend on frivolous things. You are more
into buying things which will last for long, you want to spend more on
having good experiences like holidays,” one older ultra HNI 109 133
underscored.
86
nals
In India, household luxury electronics is a vast segment that includes

ade
s
Professio
itor
Overall
Self-m
high-end home entertainment systems – 55” or larger television and

Inher
sound systems from brands such as Bang & Olufsen; custom-built

entertainment rooms or theatres costing upwards of ` 1 million and
high-end mobile phones from luxury brands such as Vertu. An Source: T.O.P. India - Kotak Wealth & CRISIL Research
emerging trend in this sector is that of home automation, wherein

phones is still niche, albeit a growing one, there is huge demand for “The same international brands in India don’t have the same range,
home entertainment units, whose demand is closely correlated to the so I pick them up when I travel overseas. Also, apparel, especially
demand for luxury homes. It has been observed that people who international, better to buy them abroad. The range, the cut, the finish,
purchase large homes or bungalows typically convert one of the rooms is better there, even the price.”
into an entertainment centre with the assistance of interior designers
who also help source the various components such as the television, The Professionals spend a relatively lower portion of their income on
audio systems, blu-ray players and gaming consoles, as well as design dressing, and they show no particular proclivity towards either
the aesthetics of the rooms. domestic or international brands.
This market extends beyond the metros to emerging Tier I cities such as The Self-made mirror the mindset of the Inheritors to some extent,
Bengaluru, Chennai, Hyderabad, and Ahmedabad. Although although the younger ones among them, for reasons such as greater
purchasing behaviour varies from place to place, buyers in the larger networking, are bigger spenders on clothing and accessories
cities or metros are more brand-aware and engage in a lot of due compared with the older lot.
diligence before buying these products. In smaller cities, purchases are
driven more by the ‘I want one too’ attitude. The three big segments of the fashion luxury apparel market are the
international branded apparel, Indian designer wear, and accessories.
There is a high import duty on such goods, due to which grey market The market is segmented on the basis of wear occasions.
purchases in the segment are appreciable.
International brands cater to casual wear, formal western wear, and
accessories, while Indian designers cater to the traditional, ethnic wear
Apparel and accessories market. International brands, with the exception of Canali, have by and
Dressing nattily is a common human trait, and the degree of spending large stayed away from the Indian wear market.
on them differs only on the basis of individual preferences. Inheritors,
having grown up in an atmosphere of luxury, are more knowledgeable Ultra HNIs in Mumbai are bigger spenders
on apparel and accessories
about international designer brands and tastes are sometimes
developed at a far earlier age. Delhi
84
Bengaluru All India

Price is never the dominant consideration for Inheritors while buying a 100 100
dress; brand is. Most of our respondents from the Inheritor category
indicated that they were drawn towards, and more aware of,
international designer brands and utilise their overseas visits to
Other cities Mumbai
purchase their favourite brands. “I have not shopped in India for the last 92 119
10 years,” one of them remarked. Note: Data values for the cities are indexed to All India.

Indian designers have experimented with western formal and casual There are some multi-brand players as well – The Collective by Madura
wear, but their success rate is hardly anything to write home about. Garments, for instance. Most of these brands have ventured out of five-
There are no major success stories among global brands in India as yet star hotels, which was their first footprint, into luxury malls and the high
either, although the general perception is that the chances of being street. Market growth has been aided by the presence and expansion of
successful are closely related to the awareness of the brand. these brands.
In contrast to mature markets, the apparel market in India for men is The industry sees the success of certain brands as an indication of the
much larger, constituting around 50 per cent, and has seen the entry of maturing of the consumer, and the latent demand for luxury apparel,
several brands including Louis Vuitton, Burberry, Gas, Versace, and which is being buoyed by fashion shows, new luxury store launches
Armani. Some of them forayed into the country in collaboration with and end-of-season sales, and price competitiveness (compared with
more active Indian partners such as Murjani Group, Sachdeva Group, international prices).
Raymonds and DLF, and the results of these brands have been mixed –
while some have been fairly successful, some have exited as well. The potential market for apparel and accessories in India was estimated
at ` 64 billion as of 2010-11, and its mainstay is Indian traditional wear,
Professionals show the lowest inclination to spend on sarees and designer wear, particularly for weddings and personal
branded apparel and accessories collections. Most designers today have their own exclusive boutiques,
either in five-star hotels or even in luxury malls.
Accessories are a very attractive segment of this market, and its

potential is huge. Because of the standard nature of these products –
such as handbags, belts, sunglasses and cuff-links, which are fast
moving items – certain global brands have done well in the domestic
107 market.
Inheritors
New trends in spending

100 100
Self-made Overall
77 As people grow richer, they are finding newer ways to splash their
Professionals
money around.
And where do Indians like to spend the most? The Big Fat Indian
Wedding, where else! The wedding planner has arrived in India, and in a
big way. And destination and theme weddings are the in-thing on the
Note: Data values for the three ultra HNI profiles are indexed to Overall. circuit. So, marriage in Canada, reception in Morocco, and honeymoon
in Thailand is not a novelty anymore.

Even losing has its virtues, apparently. One ultra HNI talked about how
Ultra HNIs in Mumbai relatively the highest spenders you can be an angel investor, invest in a number of companies, and
on home décor
then boast at parties about how much was lost in the ventures!
Delhi Mumbai Other cities All India Bengaluru
91 118 107 100 83
Further, partying has also become more frequent. People are not
averse to having weekday parties, with larger groups and “on the
house” parties. “Earlier, people used to spend on expensive liquor for
small gatherings or for close friends, but now even if there are 3,000
people attending, vintage wines and expensive spirits are being
served,” one of them commented.
Owning aircraft and yachts has also become popular, although

Note: Data values for the cities are indexed to All India. teething infrastructural problems such as ports for berthing, and
bureaucratic hassles are discouraging factors. One of India’s billionaires
Destination weddings, in fact, are a hot favourite with the super rich, owns four yachts. Another is believed to have purchased some islands
and event management companies are combining with the super rich in Lakshwadeep, and a luxury mansion on a secluded island off the
to make it an affair to remember, never mind the expense. coast of Cannes.
“My friend had a wedding abroad, and for guests who couldn’t travel Some of our respondents said they had even spent a considerable
with them (the wedding party), arranged for live video streaming,” one sum of money on storing their stem cells.
of them said. Another attended a wedding on a ship in Australia.
In short, the dictum is: Have money, will spend.
Theme weddings too are an interesting variant. The Trang underwater
wedding ceremony in February in Thailand is one such, or the sky- Ultra HNIs in Delhi and Bengaluru spend relatively less
jumping wedding. Or even a beach wedding in Hawaii, or wedding on luxury writing instruments
celebrations spread over different days in different venues.
The wedding ceremony of a model and actress with a hotel magnate

was spread over 10 days in three different cities in India. The multi-
million dollar celebration involved 600 guests from 26 countries being
ferried around on chartered jets.
All India Delhi Mumbai Bengaluru Other cities
100 85 114 85 120
Chartering aircraft is not confined to weddings alone. In a cricket crazy
nation, friends sometimes charter flights in groups to attend cricket Note: Data values for the cities are indexed to All India.
matches, such as the World Cup semifinal between India and Pakistan
in Mohali.

Investing:
Risk,
Return and
Wealth Preservation
INVESTMENT
Driven by a slew of factors, the number of ultra HNIs in India has It is interesting to note from our survey that the key source of personal
leapfrogged in the last decade or so. And so has their wealth. wealth is success in primary business; 72 per cent of the respondents
cited it as a key influence on wealth accumulation. This is followed by
The average rise in the income of ultra HNIs has been much stronger investment in real estate (63 per cent of the respondents). And there is a
than that of an average Indian, having grown in the high double tie for the third spot with 43 per cent of the respondents each stating
digits over the past 5 years due to ESOPs and other innovative salary that inheritance and investment in equity were the next key influencers
structures, strong corporate performances, buoyant capital markets, for wealth creation.
and the considerable return on investments.
Around 78 per cent of the Inheritors and 91 per cent of the Self-made
There is another aspect that sets the ultra HNIs apart from the average cited success in primary business as the major factor. Moreover, for
individual. Even though they may be supremely wealthy by normal 73.5 per cent of the Inheritors, 58 per cent of the Self-made, and
standards, ultra HNIs carry their unquenchable (corporate) thirst for 44 per cent of the Professionals, investment in land and properties
growing their business into their personal wealth too. But our survey on has been the key source of wealth.
investment patterns revealed a very interesting dichotomy: as a class,
the ultra HNIs uniformly exercise a far greater degree of caution when Earlier, inherited and landed assets dominated the wealth landscape;
it comes to their investments compared with the kind of risks they today, it is enterprise and business ownership that have emerged as
are willing to undertake in their businesses. The difference among the dominant source of riches. In India, though, enterprise culture is
them is only in terms of degree, when it comes to risk aversion. a more recent phenomenon.
So, a businessman willing to bet millions of dollars on purchasing a Some of the new ultra HNIs are those who have sold businesses and
failing business is unwilling to show the same gumption when never felt the need to work again. It is not only in the perceived boom
it comes to investing his own wealth in riskier asset classes. This is areas, such as information technology and telecom, that big money
probably because the primary motive, our survey found, behind is being made; pharmaceuticals, shipping, manufacturing which are
investment (including, perhaps, tax planning aspects) is legacy for the some of the most traditional industries in the world, have also made
family, social security and regular income; growth comes later, quite people wealthy.
unlike in business, where growth, and not protection, is the
chief objective. Not surprisingly, in view of the stated primacy they attribute to
protection of wealth, all the three ultra HNI profiles – the Inheritors, the
With the safety of their personal wealth paramount in the minds, it is Self-made, and the Professionals – save nearly a fifth of their total
but natural that many of the ultra HNIs reiterate their desire to maintain income, and invest close to another one-fifth to multiply their personal
close control over their assets. wealth.
“I would rather invest in my own technology-related business or real The choice of asset classes, of course, varies, in accordance with the
estate; why should I put money in something where I have no control,” requirement. “It depends on what stage you are in your life cycle. For
one of our respondents commented, when queried about this example, if your kids are small, you invest mainly because you have
perceived risk aversion. to provide for their education, luxury lifestyle and marriage. Once you

Enterprise, business ownership and a successful career have emerged as the dominant sources of wealth
Inheritors Self-made Professionals
100
Inheritance / Rich benefactor
Success in primary business 88 103

29
Investing in land and property

83 65 50
Investing in equity 55 33 59
By diversifying into different / allied business 35 40 13
Income through job / salary 32 8 97
Consistent saving in low-risk investments 27 15 17
33 13
Income from sale of business 23
Agricultural / Tea plantation income 17 8
Lottery / Gambling 5 3 4
Others 3 3
ESOPs in the company 3 67
Note: Indexed to Inheritance income for the Inheritors


are comfortable having saved enough, then your goals are totally
Ultra HNIs invest one-fifth of their income different,” one of those surveyed elaborated.
for growing their wealth
But they put a greater proportion back into their business to fuel
the engine of wealth creation. This stems from a desire for a sense This is not to suggest that ultra HNIs are conservative when it comes to
of control. Most ultra HNIs would rather invest in their own investing. Far from it. Vis-à-vis others, the ultra HNI is generally willing to
business rather than in instruments where they have no control.
take more risks in the hope of better returns. The difference, as noted
contextually earlier, is only in terms of degree.
In recent times, possibly due to increased exposure to a greater variety

Investment in of investment products, many ultra HNIs have displayed the propensity
28.4% primary business to be more sophisticated in terms of the breadth of their investments.
More ultra HNIs are also now investing in vehicles that are generally
considered to be at the riskier end of the financial spectrum, such as
hedge funds, private equity, structured products and derivatives.
22.4%
20% Expenses
Of the three, the Inheritors tend to protect their wealth by diversifying
their holdings. Inheritors interviewed for the survey indicated that
they distribute their investments across asset classes, with a
greater emphasis on real estate – about 40 per cent – and equity –
19.7% Savings about 30 per cent. Probably because they are very comfortable relying
on professionals to run and grow their business, the Inheritors readily
take professional advice on their investments. They have teams of
wealth managers, chartered accountants, financial planners and
Investment lawyers to manage their investment portfolios.
19.3% for growing
personal wealth
The Self-made, on the other hand, deploy the lowest proportion of
6.3% their income on investments to grow their wealth. According to our
market research, while both the Inheritors and the Self-made deploy
3.9%
Others around 19 per cent of their income on investments, the Professionals
deploy around 22 per cent. In terms of being involved in planning their
investments, the Self-made are also likely to be the most involved,
among the three types, in planning their investments, followed by
the Professionals and the Inheritors. As they are more comfortable
with people rather than organisations, the Self-made develop personal
equations with specific chartered accountants, wealth managers, and
Source: T.O.P. India - Kotak Wealth & CRISIL Research private financial advisors and take their advice.

Compared with the others, the Self-made also tend to take calculated
risks with their investments. For instance, they are likely to have the Professionals put the largest chunk of investments in
highest proportion of investments on alternate assets such as private financial assets
equity stake in businesses. However, they balance such investments Inheritors Self-made Professionals
with relatively less risky instruments such as fixed deposits and
insurance policies.
The Self-made largely invest only in instruments that they best

understand. “God has stopped making land, so property is where Equity
one should invest,” one Self-made ultra HNI said. 31.9% 31.0% 39.7%
Their tendency to take measured risks is also apparent in their choice of

real estate assets – a mix of real estate assets such as holiday Debt
homes, commercial buildings and agricultural land and plantations,
19.3% 18.8% 25.8%
apart from apartments and villas.
For the Professionals, our survey reveals, social security and regular
Alternate
income are key investing goals. They route three-fourths of their assets
investments into financial assets, primarily equity and debt. They have 8.5% 11.1% 8.1%
the largest proportion of investments in equity. The remainder one-
fourth is invested in real estate, a pattern which they share with the
Self-made.
Real
Our survey showed interesting trends in the investment preferences estate 40.3% 39.1% 26.4%
and future investment plans of ultra HNIs. The survey compared
the assets in which respondents are currently invested in with their
investments over the past one year and their planned investment
over the next one year.
In terms of the current investment pattern of ultra HNIs, 37.2 per cent
of the investable surplus is deployed in real estate, followed by
Two trends were noteworthy.
33.1 per cent in equity, 20.4 per cent in debt and the balance
9.2 per cent in alternate assets.
1) There is expected to be a cyclical move away from equities.
2) Respondents expressed a desire to increase their exposure
The Inheritors have a distinct preference for real estate with 40 per cent
towards alternate or less traditional asset classes, such as hedge
of their investments in this asset class. This is markedly different from
funds, private equity, and derivatives.
the investment pattern of the Self-made and the Professionals who

currently have just a little over a quarter of their investments in real investment is in real estate followed by Bengaluru at 37 per cent) as
estate. In terms of the investment pattern a year ago, the Self-made indicated by their current investment pattern, whereas the ultra HNIs
have pruned their real estate investments significantly from 42.7 per in Mumbai are far more likely to put money in equity (37.2 per cent of
cent then to 26.5 per cent currently. ultra HNI investment in equity).
Our survey also suggests that regional biases to investment still Risk averse they well may be, but ultra HNIs can spot an opportunity
remain. Wealthy investors in Delhi and Bengaluru are more focused if they see one. Unsurprisingly, therefore, ultra HNIs of all hues have
on amassing portfolios of property (Delhi - 50 per cent of ultra HNI been drawn to less traditional asset classes, even if they do not quite
understand them, given the proliferation of such products in recent
times. Hence, the growing popularity of hedge funds, private equity,
Land and property hold greater attraction for
derivatives and the like.
ultra HNIs in Delhi
Delhi Mumbai Bengaluru Despite this appetite for alternate asset classes, only around half of
the respondents professed confidence in their knowledge and
understanding of them.
32.8% Around 55 per cent of the interviewees said they were comfortable
37.0%
Real with leaving the more mainstream aspects of personal finance, such as
estate Real
50.1% estate estate planning or retirement planning, to their wealth managers.
Real
estate Risk-return profile of asset classes
Private
8.8% Wealth equity
Alternate 7.9% advisory
Alternate Return
assets
assets
Portfolio
Mutual
9.3% fund Equity
management
Alternate 21.2% services
assets Debt 22.8% Bullion Real
Debt estate
Fixed
17.4% deposit
Debt
Debt
Cash Risk
37.2% 32.2%
23.2%
Equity Equity Source: T.O.P. India - Kotak Wealth & CRISIL Research
Equity

Ultra HNIs investments in alternate assets to increase Investment advice from professional sources is
most sought after
55.0%
Wealth
2009-10 E 2010-11 E 2011- 12 P managers
50.4% Self
Alternate assets 42.7%

9.5% 9.3% 11.2% Friends / Family
39.7%
Chartered accountants
34.4%
Private financial advisors
19.1% Media
20.8% 20.4% 18.2%
Debt 13.0% CFO
12.2% Broker
9.2% Others
6.1% 8.4% Lawyers

Family office
Note: Ultra HNIs rely on a multi-profile team of advisors. The percentage values of the
Equity
31.6% 33.1% 30.1% various categories therefore do not add up to 100%.
brokers, chartered accountants, or tax consultants. Also, traditionally,

the wealth management market in India was served by those that
cross-sold mutual funds and banking products to the rich.
One reason for this is structural – most of these investments carry a

minimum investment that is sufficiently high to restrict them to the top
Real estate 38.1% 37.2% 40.5%
wealth brackets. Another reason is diversification of risk. Adding some
private equity, hedge fund or derivative exposure to a portfolio can
help to diversify overall levels of risk by spreading it across a wider
range of assets. More interestingly, these specific financial instruments
This lack of knowledge is perhaps the reason for the increased are expected to deliver better financial returns and help cushion
willingness to seek advice from professional investment managers. investors against volatility in the market.
Previously, most ultra HNIs invested in a few asset classes, using local

The Professionals, however, believe that it is not a good idea to leave
Blood thicker than water?
large sums of money to dependents; only 47.6 per cent of them agreed
In an era in which entrepreneurship and enterprise are becoming
that leaving a legacy for the family and kids is an important motivation
increasingly well-trodden routes to wealth, and in which ultra HNIs
for them.
such as Warren Buffett and Bill Gates have decided to leave the vast
majority of their estate to charitable causes, it may be tempting to
High profile cases aside, philanthropy seems to be only a moderate
conclude that the desire to leave wealth for the next generation is
motivation for investing. For the ultra HNIs who have inherited from a
becoming less prominent. Such temptation, our survey indicates, is
long lineage within their family, they feel (and are often legally)
misplaced.
restricted with what they can do with it. As a result, they give very little
away. Our survey suggests that less than 15 per cent of the ultra HNIs
While a minority contended otherwise, the desire to preserve wealth
who have inherited wealth would want to give back to society. Some of
for the future and transfer wealth to the family was fairly universal. And
them had pretty strong views.
it probably always will be.
“I don’t believe in donating. My wife though does a lot of charity. I don’t

“It is important in case of a family business. You would want your ideals,
believe in it. Instead of giving a fish to eat, teach someone how to fish,
legacy to continue with your blood only,” one of the Inheritors
you will be feeding him for life,” opined one.
commented.
On the other hand, the Professionals are more likely to shy away from
Others were not quite so certain. While one said, “Having put in so much
passing wealth to their children; instead they are more apt to spend it
hard work on building something, you need to know who will use it
during their lifetime, and are increasingly keen to apply their business
finally,” another individual was more forthright. “My company is a
acumen (and wealth) to the charity sector. Close to 29 per cent of the
professionally run firm, they can always hire a new CEO,” he quipped.
professionals stated philanthropic causes as a goal for wealth creation
and protection.
Slightly under 60 per cent of the interviewees agreed that they want to
make sure they have enough money so that they can pass it to the next
“I believe that when you are comfortable you should ensure a few more
generation. This is followed by social security (53 per cent of the
are also comfortable,” one Professional said.
respondents) and the need for regular income (47.5 per cent).
For this group, philanthropy has often been based more around giving
Our survey suggests that the motivation to ensure financial security for
time rather than money. Further, the tendency to shy from public
children is the highest among the Self-made, with 65 per cent of them
recognition and a clear desire for privacy characterises these
stating it as one of the prime motives for them to create wealth. This
benefactors.
perhaps has to do with the fact that they are the first-generation rich.

Legacy and social security are the two most important goals of wealth creation for ultra HNIs as a whole
Inheritors Self-made Professionals Overall
Legacy for
the family 60.7% 65.0% 47.6% 59.8%
Social
security
54.1% 47.5% 61.9% 53.3%
Regular
income
37.7% 70.0% 33.3% 47.5%
Charity
14.8% 15.0% 28.6% 17.2%
Note : As the respondents gave multiple responses, the percentage values do not add up to 100%.

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Net worth of India’s ultra HNHs to grow 5 times to ` 235 trillion by 2015-16

T.O.P. India - Decoding the ultra HNI

The power they wield

Value and size of assets

Social visibility and hierarchy

Scale and visibility of spends

C Jayaram Roopa Kudva

About the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 01

Profiling: The Inheritor, the Self-made and the Professional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Spends: Attitudes, Motivation and the Ultra Wealthy Lifestyle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Investing: Risk, Return and Wealth Preservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

T.O.P. India - Kotak Wealth & CRISIL Research | 01

02 | T.O.P. India - Kotak Wealth & CRISIL Research

CRISIL’s majority shareholder is Standard and Poor’s (S&P). Standard &

We empower our customers, and the markets at large, with

About CRISIL Research

T.O.P. India - Kotak Wealth & CRISIL Research | 03

Entrepreneurship is clearly the dominant source of domestic wealth, Key trends

In absolute terms, they are very heavy spenders, be it on high quality

04 | T.O.P. India - Kotak Wealth & CRISIL Research

T.O.P. India - Kotak Wealth & CRISIL Research | 05

This will entail development of a greater range of products,

Some of the multinational companies that forayed into India have

06 | T.O.P. India - Kotak Wealth & CRISIL Research

219,000 ultra wealthy households in India by 2015-16

India now has a record number of 55 billionaires*. The

1996 2004 2011

T.O.P. India - Kotak Wealth & CRISIL Research | 07

` 45 trillion ` 235 trillion

08 | T.O.P. India - Kotak Wealth & CRISIL Research

Luxury watches Apparel /

Big-ticket spends are planned in advance, often with family involvement

Exclusive Household Jewellery / Home decor / Vintage spirits / Apparel / Luxury

82% 67% 57% 56% 54% 42% 41% 39% 38%

17% 28% 37% 43% 44% 58% 58% 61% 59%

Planned Impulse Both

Source: T.O.P. India - Kotak Wealth & CRISIL Research

T.O.P. India - Kotak Wealth & CRISIL Research | 09

Ultra HNIs invest one-fifth of their income

Source: T.O.P. India - Kotak Wealth & CRISIL Research

20.8% 20.4% 18.2%

Real estate 38.1% 37.2% 40.5%

10 | T.O.P. India - Kotak Wealth & CRISIL Research

1996 2004 2011

T.O.P. India - Kotak Wealth & CRISIL Research | 11

India now has a record number of 55 billionaires, according to the

12 | T.O.P. India - Kotak Wealth & CRISIL Research

` 45 trillion ` 235 trillion

T.O.P. India - Kotak Wealth & CRISIL Research | 13

If we consider a household with a minimum net worth of ` 250 million,

219,000 ultra wealthy households in India by 2015-16

14 | T.O.P. India - Kotak Wealth & CRISIL Research

16 | T.O.P. India - Kotak Wealth & CRISIL Research

T.O.P. India - Kotak Wealth & CRISIL Research | 17

Wealth is for family,

The Inheritor The Self-made The Professional

T.O.P. India - Kotak Wealth & CRISIL Research | 19

20 | T.O.P. India - Kotak Wealth & CRISIL Research

T.O.P. India - Kotak Wealth & CRISIL Research | 21

22 | T.O.P. India - Kotak Wealth & CRISIL Research

24 | T.O.P. India - Kotak Wealth & CRISIL Research

Inheritors Self-made Professionals

Investment for growing

Others 4.2% 4.4% 2.5%

Source: T.O.P. India - Kotak Wealth & CRISIL Research

T.O.P. India - Kotak Wealth & CRISIL Research | 25