India's rich yet not ready to share wealth

If you think that altruists like Warren Buffet and Bill Gates might have changed the perception on transfer of wealth by the super rich to their wards, well, you are mistaken. They still believe in the proverb, 'blood is thicker than water', preferring to hand over their wealth to their wards than giving it away for a cause.

While one is tempted to believe that the crusade of the two business barons from the US could have brought some change in the mindset of India's super rich , "such temptation is misplaced," said a study done by Kotak Wealth and Crisil Research.

"While a minority contended otherwise, the desire to preserve wealth for the future and transfer wealth to the family was fairly universal," the study titled, Top of the Pyramid - Decoding the Ultra HNI (High Networth Individual), revealed.

"It is important in the case of a family business. You would want your ideals, legacy to continue with your blood only," one of the inheritors, interviewed for the study, said. The study classified UHNIs into three categories - inheritors, self-made and professionals, for further research.

The study estimated that there were around 62,000 ultra HNIs or households in India in 2010-11, with a networth of about Rs 45 lakh crore. It defined the UHNI as a person or household worth Rs 25 crore or above. It has projected that the number of UHNIs will triple in the next five years to 219,000 by 2015- 16, accounting for about Rs 235 lakh crore in wealth.

About 60 per cent of the over 150 UHNIs interviewed for the study agreed that they want to make sure they have enough money so that they can pass it on to the next generation. This is followed by social security (53 per cent of the respondents) and the need for regular income (47.5 per cent).

About 80 per cent of this super rich are living in three metros cities-Delhi, Mumbai and Bangalore-while 10 per cent live in 10 next- tier cities, while the remaining residing in other parts of India.

The study has also proved to be a myth buster on several counts.

It found that UHNIs as a class exercise a far greater degree of caution when it comes to their investments compared with the kind of risks they are willing to take in their businesses. "The difference among them is only in terms of degree, when it comes to risk aversion," it said.

The general feeling is that the super rich lavish more on personal enjoyment than family entertainment. The study found that the top spends of the inheritors of wealth on self include luxury watches, designer clothing, personal accessories and luxury writing instruments. But the big ticket spending is reserved for the family-exclusive holidays, jewellery products and household electronics.

The self-made are highly receptive to product innovation and are the earliest adopters of new devices or gadgets in their circle, which sets them apart as trendsetters in the social circles. Professionals, on the other hand, would spend, but wisely, weighing the pros and cons.

Courtesy: Mail Today