Competition has intensified in the wealth management space with the surge of affluent people in the country—India has 870,000 dollar millionaire households, up 90% from 460,000 lakh in 2021, according to the Mercedes-Benz Hurun India Wealth Report 2025.

This resulted in all wealth managers fighting for the same target clients, each vying to attract high and ultra high net worth individuals by offering tailored advisory services and comprehensive wealth solutions.

India’s wealth-management assets are estimated to grow at a pace of 12%-14% annually through FY27 to ₹47 trillion from ₹33.3 trillion in FY24, according to a March report by CRISIL and Jainam Broking.

The net income margins of the leading players in the 360 ONE’s margins have slipped from 33.3% in FY23 to 30.8% in FY25, while Nuvama Wealth, a relatively new player, has seen its margin moderate to 23.7% from a high of 48.3% in fiscal 2022.

“Competition is helping investors to benefit from reduced costs that leads to margins seeing some suppression at the wealth manager’s end,” said Vinay Ahuja, co-CEO, 360 ONE Wealth. “This trend could continue for a while”.

Net income margins showed mixed trends across listed wealth managers in Q2 of this fiscal year. 360 ONE saw margins fall to 28.3% in Q2 2026 from 28.62% a year earlier. Anand Rathi Wealth improved to 33.41% from 31.39%. Nuvama Wealth also declined to 22.4% versus 24.51%, though still above its Q2 FY2024 level.

Regulatory changes haven’t helped. The introduction of total expense ratio, or TER, slabs in 2018 by markets regulator Securities and Exchange Board of India (Sebi) and a proposed revamp of these slabs to cut investor costs this year is expected to hurt the industry.

The effect of the recent proposal for revamping TER would be about ₹20-25 crore on revenue annually on his company, said Ashish Kehair, managing director and CEO of Nuvama Wealth Management on an earning call after the September quarter earnings.

A peer said the way out was through more efficient operations. “The TER changes may lead to a 5-10% drop in revenue, but will be countered by productivity,” said Ankur Punj, managing director-national head at Equirus Wealth.

Doubling down on customer relationships

To deal with the rising competition and regulatory changes, wealth managers are pushing to expand business by aggressively hiring relationship managers (RMs) who would help onboard more clients and expand into tier-II and III cities while also making their own products.

At 360 ONE, this is reflected in the payroll. Employee costs at the Mumbai firm jumped to ₹285 crore in Q2 FY26, an 80% jump from the same quarter two years ago. Other listed wealth managers had a similar pattern of employee expenses, driven by an aggressive hiring cycle for RMs. Firms are poaching seasoned private bankers and replacing lower-productivity RMs with costlier but more productive cohorts.

“Employee expenses form the largest component of our cost structure and a substantial share of that is attributable to our relationship managers. RM salaries typically account for around 70-75% of our total employee cost,” said Feroze Azeez, joint CEO at Anand Rathi Wealth.

Nuvama added 337 RMs in the past 12 months to a total RM capacity of over 1,300 today, according to its latest quarter earnings call. The wealth manager aims to double this pool further over the next three to five years. Similarly, 360 ONE operates with about 240-250 RMs but plans to scale to 340 in the coming years.

“RMs from various firms including HDFC, Julius Baer, Anand Rathi, ASK and Kotak have joined us in the last 12-15 months. RM hiring is at an all-time-high with focus on adding more team leaders,” said 360 ONE’s Ahuja.

Bespoke products; push to tier-II, III cities

Part of the race to scale also includes providing in-house products to clients. For instance, Nuvama Wealth Management and ASK Asset & Wealth Management Group have received the regulator’s nod this year to launch their mutual fund business.

“Wealth managers are also producing their own products to protect margins. If managers can create bespoke products, they can earn an edge over many other players in the market,” said Punj of Equirus Wealth.

The impact of these investments shows in cost-to-income ratios. 360 ONE’s cost to income ratio increased to 49.2% over the past year from 48.4%. Nuvama’s remains the highest among listed firms at 57% in Q2 FY26 after improving to 53% last year.

CIR is the percentage of a company’s operating income that is consumed by its operating expenses, showing how efficiently it runs its business.

Wealth platforms are simultaneously widening their presence in Tier 2 and Tier 3 cities where affluent households are growing faster than at the metros. Many of these cities prefer hybrid advisory models, allowing firms to push both digital platforms and curated proprietary products.

“Tier II,III, and IV cities are going to be the drivers of the wealth industry,” said Punj. “The systematic investment plan (SIP) stoppage ratio in tier I (cities) is higher. If you look at tier II, tier III, tier IV cities, the number of SIPs which are specially five years or above is far higher,” added Punj.

Several wealth managers such as Ionic Wealth and Equirus Wealth have expanded into smaller towns, seeking the newly rich. The increase in penetration of wealth managers into such cities is expected to help drive growth, given more than 40% of the ultra high net worth individuals live in non-metros, and their wealth is majorly managed by independent financial advisors and chartered accountants, according to the CRISIL- Jainam report.

Though wealth managers fight to have a piece of the pie, margins are expected to remain compressed as investors look for lower-cost alternatives. The massive RM hiring is expected to only materialise over the course of the next few years, leading to stress on short-term profitability.

“Competition will get higher in the future and will not recede in the near term. We are still some time away from relief,” said Prayesh Jain, an analyst at Motilal Oswal Financial Services. “⁠A significant scale up in flows if market does well can be an offsetting factor for margins. But we are a bit far from that for now.”