How this adviser wins the trust of high net worth clients

By Ravi Samalad |  29-06-20 | 
 
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About the Author
Ravi Samalad is Assistant Manager - Editoral for Morningstar.in.

According to Knight Frank, India had 5,986 ultra-high net worth individuals in 2019, which is likely to reach 10,354 by 2024.  Since demonetisation, there has been a clear shift towards financial assets from HNIs. This presents an ocean of opportunities for advisers catering to the HNI segment.

Bengaluru-based Abhimanyu Sharma sensed this opportunity and struck out on his own in 2016 by floating Swarn Wealth Management. In less than four years, he has built assets under advisory of Rs 250 crore. Read on to find out from Abhimanyu what it takes to cater to HNIs.

You worked for over a decade with Bank of America Merrill Lynch’s Bengaluru division. What were your key learnings from this stint which helped you when you ventured out on your own?

I am grateful to BoAML because I have learned a lot from them. I started as a trainee in 2007 before I was heading wealth division for Bengaluru. I had an opportunity to learn from basics including the products, processes, risk management, compliance and a holistic approach to the business with ethics and clients always being in the center and the main focus. They had brought the best practices from across the world and had the sharpest minds working for them.

The model followed by them was an absolutely entrepreneur model, where the firm supported you with the brand, research, and processes but you would have to get and generate business independently.

This was a blessing in disguise for me when I started my own practice. From client acquisition, business development, advising and reviewing the portfolio was something that I was doing for a long time. A lot of best practices that I learned then, I have incorporated in my business now, keeping the clients as the focus and asset allocation as the foundation.

What are the unique expectations and aspirations of high net worth individuals, or HNI families?

The expectations are different for every HNI family. So it is difficult to draw a common thread but one common point is that their expectations are an extension of themselves. A lot of it comes from their background, their work, their family set up, the past experiences of an asset class, the stage of their life and keep in mind their expectations keep on changing from time to time.

How does one win the trust of HNI families? How can an adviser who has no contacts in this segment make inroads?  

This is a business that needs patience. Only if you think long term can you help the families that you work with to preserve and grow their wealth.

For winning the trust of any client this is what I practice:

1. Client First: Anything and everything that I do, clients are the most important focus.

2. Ethics: This is non-negotiable.

3. Time: There is no substitute for this. The longer one works endlessly for the clients and delivers for them; chances are more the clients will trust you.

4. Transparency: Whatever is known to me should be known to the clients.

5. Competence: One must deliver the results. And if it is consistent even in bad times, the clients respect you more.

6. Maintaining the Trust: Easier said than done. One has to continue practicing this day after day. Because even if it takes years to build that trust, it doesn’t take long for it to be broken.

Besides mutual funds, what kind of products do HNIs show an inclination for? Have you seen HNIs increasingly shifting their preference from physical assets like real estate to more towards financial assets?

Real estate still happens to be an asset class where clients have the largest exposure even today. Yes, there a big shift that has happened now and most of the new exposure is to the financial asset class. In my opinion, products that are simple and non-complicated are what the clients like.

What kind of industries/businesses HNI families prefer when it comes to private equity or venture capital funding?

I think most HNIs, where they understand the business domain of the start-ups, they are keen to evaluate the options. For example, a client who is in the logistics business would have more comfort for a start-up in the same space.

Are Indian HNIs showing interest in Environmental, Social and Governance, or ESG investing?

Yes, there is definite interest in ESG investing but I think it is still early days and will take a little more time before clients practice it completely for their investments.

You are competing with large banks, family offices and wealth management firms who also cater to HNIs. Do HNIs prefer brand names or they would rather work with someone who is trustworthy and a solo practitioner?

When I started almost 3.5 years ago, most of my clients had around 2-3 wealth managers including the larger well-known firms. But now, 90% of them have transferred their complete portfolio to me. My take is that to start a relationship is a little more challenging but once you have an opportunity to work with the clients and continue doing the right things, it is a matter of time that the clients will work more with you.

What tools and platforms do you use to provide research and technological ease to your clients?

I have been using Morningstar Adviser Workstation for research since the time I started my business. I use AWS to create investment proposals that help me tailor and present individualized investment strategies for each client. The portfolio builder feature allows me to create a portfolio by using a saved model, incorporating securities from the current portfolio, or creating one from scratch. Another useful tool that I use extensively is the Hypothetical Illustration that shows the client exactly how the proposed portfolio performed over a selected historical time period. I send the brief fund reports to clients. Seeing these reports and the depth of data and research, clients really see that I’m adding value.  I believe AWS is a must for advisers who are catering to HNIs and savvy clients.

 I also use Investwell as a back-end technology partner.

Can you give us a breakup of your AUM mix in different products?

I manage Rs 250 crore worth assets across products. A majority (70%) of which is in mutual funds and another 10% in bonds and 20% in direct equities.

How do you see your practice evolving in the next three years?

I absolutely love my work! I want to continue working closely with clients, preserving and growing their wealth. I see technology playing a bigger role in my practice. But the overall practice will be driven and will evolve keeping the client’s requirements in mind. I will continue doing the right work in the right way and everything else should follow.

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