Financialization of Savings: Rising Demand from India’s Mass

Introduction

India’s wealth ecosystem has been undergoing a rapid transformation driven by the expansion of the mass affluent segment—households holding investable assets ranging between ₹25 lakh and ₹5 crore. This cohort is becoming a powerful force shaping the wealth management industry as their numbers and financial sophistication increase. The growth in their disposable income and evolving financial aspirations have created a rising demand for customized investment solutions that offer both liquidity and flexibility, beyond traditional products.

Growth of the Mass Affluent Segment in India

According to Goldman Sachs Research, India’s affluent population, inclusive of the mass affluent, is set to grow from approximately 60 million in 2023 to 100 million by 2027, reflecting a compound annual growth rate (CAGR) exceeding 12%. Deloitte projects that the wealth held by this mass affluent group will increase significantly, with total wealth reaching approximately USD 2.3 trillion (₹19.4 lakh crore) by 2029, propelled by factors such as rising GDP, increased foreign direct investment, startup growth, and inheritance.

Further, upward socio-economic mobility, urbanization, and increasing financial literacy have contributed to this segment’s expansion, backed by 11% yearly growth in working populations earning over USD 10,000, and rapid digital adoption enhancing access to investment channels.

Characteristics and Investment Preferences

The mass affluent differ from the ultra-high-net-worth individuals (UHNWIs) and high-net-worth individuals (HNWIs) in their dual need for wealth creation and preservation with regular liquidity. Unlike UHNWIs who often prefer long-term and illiquid alternative assets, the mass affluent seek personalized, risk-aligned portfolios that integrate multiple asset classes like equities, mutual funds, fixed income, and real estate with sufficient liquidity to meet life events and market opportunities.

This segment increasingly values:

• Tailored wealth advisory that aligns with personal goals, risk appetite, and life stages.
• Flexibility to reallocate assets quickly amid volatile markets.
• Integrated tax planning and retirement solutions.
• Access to Wealth Tech platforms for real-time portfolio analytics and seamless execution, reflecting the tech-savvy nature of modern Indian investors.

Demand for Customized Wealth Solutions

The one-size-fits-all models are becoming obsolete. Wealth managers in India are pivoting towards customized portfolios, leveraging data analytics and AI to offer hyper-personalized strategies encompassing:

• Goal-based investing aligned with clients’ unique financial timelines.
• Discretionary and advisory hybrid models combining expert guidance with digital convenience.
• ESG-focused investment options responding to growing ethical concerns.
• Cross-border investment opportunities to diversify and hedge risks.

The competitive landscape includes established banks, family offices, registered investment advisors (RIAs), and Mutual Fund Distributors, all focusing on expanding their reach into India’s tier 2 and tier 3 cities where the mass affluent population is burgeoning.

Some Statistics:

• India’s mass affluent segment accounts for about 5-6% of the population but wields approximately 40% of the country’s wealth, a signifier of concentrated economic power in this group.
• The mutual fund industry’s asset under management (AUM) has grown at 16.2% annually, reflecting increased investor participation from this cohort.
• Private wealth management AUM, including portfolio management services (PMS), has seen robust growth—from USD 149 billion to USD 405 billion between FY17 and FY24—driven largely by mass affluent and HNW clients.
• Digital penetration, including broadband and mobile connectivity, has increased at over 15% annually, enabling direct access to sophisticated financial solutions.

Conclusion

The rapid expansion of the mass affluent segment in India is set to provide far-reaching benefits for the broader Indian economy. As these individuals transition from basic savings to diversified, bespoke investment products, their choices fuel greater domestic capital formation, invigorate financial markets, and stimulate consumption across multiple sectors. Increased participation in professionally managed investments leads to deeper capital markets and supports innovation within banking, insurance, fintech, and asset management industries.

The expansion of India’s mass affluent segment represents a significant growth engine for the country’s wealth management industry. Customized wealth solutions with enhanced liquidity and flexibility are no longer optional but essential to meet the evolving needs of this demographic. Wealth managers who integrate technology, personalization, and holistic advisory services will be best positioned to serve this dynamic and growing segment, contributing to a more inclusive and diversified financial ecosystem in India.