financialtreat – will explain about Sharia-Based Wealth Management Business Prospects that you will get in the following article. Let’s look at this article carefully!
Wealth management is important. Good economic growth will encourage the growth of the rich. Economic growth is derived from how much consumption is done by the private sector and government, as well as how much investment and productivity in the region.
When people’s wealth begins to increase, automatically the need for wealth management services will also increase. According to the 2007 Asia Pacific Wealth Report released by Capgemini and Merrill Lynch in March 2007, the Asia Pacific region has 2.6 million wealthy people with $1,000,000.000 dollars in funds.
The number of HNWIs (High Net Worth Individuals), hereinafter referred to as HWNI, in the Asia Pacific is up 8.6 percent from 2005 and higher than the average global growth of 8.3 percent in 20063.
Sharia-Based Wealth Management Business Prospects
Indonesia has the third fastest growth of the rich at 16% in 2006. On top of that is Singapore ranked first with a growth rate of 21.2 percent and India as second with a growth rate of 20.5 percent. In Russia, more and more people have become rich lately. The number of wealthy citizens continues to increase thanks to oil and other natural resources.
From the above presentation explained about the data and illustrations of the number of rich people, how to get rich. Indonesia, which is the country with the most Muslims, can certainly see this as an opportunity for the development of Sharia-based wealth management services. Therefore, the question that will be discussed in this paper is whether the concept of wealth management in syarîah and how to apply these service products in An Islamic manner.
Definition of Wealth Management
In English dictionary terms wealth management comes from the word wealth which means wealth6 and management means managing. Thus, both words have the intention of managing wealth.
According to Paul Hersey, management is the process of working with and through people and groups to achieve organizational goals. In more detail, Oey Liang Lee defines management as the art and science of planning, organizing, directing, coordinating, and controlling rather than human and natural resources — especially human resources — to achieve predetermined goals.
In the bank concept, wealth management is a service provide to the targete group of customers (HNWI) to remain loyal customers so that all their desires can be serve easily including in the management of their wealth. As is known, many rich people cannot manage their wealth well so that in the end they will no longer become rich when he is not working or getting an inheritance.
Wealth management is a bank business with a segment of people who are already classifie as rich. This business carries the concept of how to protect, develop, and wisely inherit existing wealth for a better life for wealth owners.
The Need for Wealth Management
Wealth management is indispensable to everyone, whether rich or not. The emphasis in this business is to become knowledgeable about finances or finances. Many rich people do not know how to manage their wealth so that even though they are rich but in their hearts there is still a sense of worry, lest the more days his wealth is getting ghiturous due to ignorance in his management.
As reporte by Rudolfo Maldonado Executive VP & Retail Banking Head Danamon that every Danamon invites its customers to attend a seminar on investment or finance must be the room provide fille with customers. The attendance rate is more than 90 percent. Thus, many people feel hungry for financial information that will be use in making the decision to place the funds.
Several statements in Olympus Publisher confirme the importance of managing wealth. For example, “very little knowledge of how the market works). Therefore, it is very important that we know how the market works. The next statement is, “they want to know where their funds flow, how they are protecte, and what will be done to those funds over a long period of time”.
Factors That Make a Wealth Management Business Bright
Number of wealth management customers in one of the banks in Indonesia. Bank Mandiri amounts to 0.4% of the total customers, but controls 40% of the total funds in the bank.
With the data, it is clear that the priority is people who have large funds because if the wealthy people’s funds move to other banks or even abroad because they do not believe in the situation in Indonesia, then the Indonesian state will be accommodate let alone the bank, although in this case we underline that building the economy in this country is not only in favor of those who have large funds but all the people of the country.
There are a number of factors that make this business bright. First, following the global financial market began to occur convergence and cross selling (cross selling) of financial products, such as insurance, multifinance, capital markets and banking. Because the financial market in Indonesia is dominate by banking, the center of convergence1 is in the bank.
Second, as interest rates fall, customers can no longer rely on traditional bank products such as deposits. Because interest rates are falling customers cannot rely on products such as deposits because the real value of the funds is falling as well. Therefore, banks must provide something that makes its customers remain loyal to the company as well as providing capital market products in the form of stocks and bonds that will later provide higher yields when compare to depositing funds.
Third, the increasingly fierce competition makes banks think hard about how to keep their customers loyal. In the service of the old model bank that if the service is good the customer will remain loyal to the bank.
Wealth management in sharia concepts
All the wealth obtaine in the world should be use for the benefit of man, where in fact Islâm told his people to prosper the earth so that human welfare was achieve born and mind, world and aherat. This effort is done by utilizing all the potential available to be processe efficiently for human benefit. The ultimate goal of it all is how if our wealth can lead us to the happiness of the world and the afterlife.
To realize the happiness of the world and the afterlife, the management of wealth must be base on sharia or the four main foundations of Islamic economics, namely:
Tawhid
This principle affirms that Allâh is the God of the creator, regulator, and owner of the universe with everything in it. This universe can process and operate because Allâh has laid down His laws and rules. No religious life of this world, including human life, can escape His rules and laws.
Caliphate
The principle of the khilâfah affirms that man’s position in this world is the representative of God on earth, with the aim of living only to worship Him and to prosper the world in accordance with the rules he has outline. To this end, Allâh subjugates everything for the benefit of man.
Justice
In this case, all efforts in building an economy should refer to the fair and equitable allocation. And distribution of wealth and income. Although Islâm tolerates economic inequality and individual wealth,27 but Islâm provides retribution obligations through zakat, shadaqah. And other charities to help bridge the two social classes that have different abilities.
Tazkiah
This principle asserts that economic development should not lead to the fulfillment of mere material aspects. So as to exclude religious spiritual aspects or principles that balance between mathematical aspects and spiritual aspects. The four foundations must be in the sharia-base wealth management so that the purpose of living in the world. And akherat is achieve well if you do not wait for the punishment of Allâh SWT.
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Syarî’ah-Base Wealth Management Business Opportunities in Indonesia
The majority of our population who are Islâm is very important to think about by us together so that the person is willing to invest his funds in this country. Therefore, below we present several opportunities that will bring the syarî’ah-base wealth management business to its existence, namely:
First, the decline in interest rates resulte in the composition of securities on mutual funds more diverse. Ranging from stocks, government bonds and corporate bonds. Second, the Sukuk Law has been passe and the government will issue it in the second half of 2008. With the issuance of the sukuk Law, the brighter the syarî’ah-base mutual funds compete with conventional mutual funds. Syarî’ah-base mutual funds are superior because what is investe is halal so that the results obtaine will be clean.
Well, that was the explanation of the Sharia-Base Wealth Management Business Prospects. Good luck!