Of course, a company can afford to do this — encourage their clients to speak to one another — only when it has been able to deliver a strong performance. Weaving, and benefiting, from this social web isn’t possible if a firm had disgruntled, unhappy clients.
References can have a dramatically negative influence as well. It is like a game of dominos — every block extends and grows the pattern but even as it does so, it continually exposes the whole structure to the weakest link, and its potential to be a game-destroyer.
“I hope you are paying these guys well, they are so good.”
In the context of references, senior corporate executives have proved to be extremely worthy assets for the company — their professional networks, beyond their own companies and industries, are strong and varied. Their references often carry more weight than, for example, that of the promoter of a family business even if they have much larger asset portfolios, wealth managers say. Usually, successful corporate professionals are also more willing to speak about their wealth advisor relationships.
In many ways, the professional rich represent the biggest structural change for the wealth management industry. They are new entrants to the wealth game and the group is likely to sustain over the next several years because their attitude to wealth, and managing it, are fundamentally different from business families. They have simpler portfolios, usually demand lesser face-time, and usually track and monitor their investments better.
IIFL Wealth caught early on the advantages and business potential of the professional rich. They actively chased industry stalwarts and well-recognised senior corporate professionals to add to their dossier of client relationships.
Keki Dadiseth, former chairman, Hindustan Lever Limited, the Indian subsidiary of the FMCG giant Unilever, was somebody the IIFL Wealth founding team was determined to bring on as a client. On the board of more than thirty five organisations, including Britannia Industries, Siemens and The Indian Hotels Company, Dadiseth has enviable credibility in Mumbai’s business circles.
Nirmal Jain had worked in Hindustan Lever as a management trainee after his MBA from IIM-A. Jain, who knew Dadiseth from his years in HUL, introduced him to Yatin and Karan soon after IIFL Wealth started.
Dadiseth was fond of Jain and remembered him well as a young management trainee. The introduction, however, didn’t cut much ice. Convincing him was an uphill task. Used to working with marquee banks and firms, Dadiseth was unwilling to engage a brand with little vintage and one helmed by a young team he had not heard of.
IIFL Wealth kept up the chase, clearing ground slowly by meeting him once a month for over eighteen months to chip away at the hesitation. It took Dadiseth nearly ten meetings to even agree to share his portfolio with them. Determined to not let that slim window of opportunity go to waste, IIFLW did a thorough diagnostics on his portfolio, pointing out where he was losing money with his current advisors, comparing its returns to others of the same size and laying out better tax planning solutions.
The thorough homework surprised Dadiseth. Although impressed by their report on his portfolio, he told the IIFLW team that he would sign only an advisory agreement with them. This was limited to listening to their ideas and acting on them independently if he felt they were right. He would neither move his assets to their custody nor open his demat account with them.
‘That they agreed to give me advice irrespective of the amount of business I was giving them impressed me. That is a very, very powerful way of working with clients if you can convince them that you are really interested in what is good for them, not just what is good for you,’ said the 81-year-old, when I met him in his Malabar Hills office in Mumbai in April last year.
‘They surprised me. Their creativity is difficult for others to replicate,’ he adds.
Since then, Dadiseth has become one of the firm’s most cherished relationships, encouraging of their efforts and generous in his support to them. ‘After every meeting, when we would be leaving his office, Mr Dadiseth would call Nirmal and tell him. “I hope you’re paying these guys well, they are so good,”’ Yatin recalls with a chuckle.
He has also introduced the IIFL Wealth team to several senior professionals and industry leaders. With his towering credibility, an introduction or endorsement by him packs quite a punch, says Yatin.
As one of the country’s most senior bankers, Keki Mistry, vice chairman and CEO of HDFC, commands respect not only in the developer community but across financial services and other industries for being at the helm of a brand as formidable as HDFC, which he had joined as an assistant accounts manager in 1981.
When it came to Mistry, Bharat Parajia, who heads IIFL Holdings institutional sales team, introduced the senior banker to the IIFL Wealth team in May 2012. It was rare for Parajia to introduce clients to them. In fact, he cautioned them from pitching products or doing a hard-sell when they met Mistry.
Instead, they requested Mistry’s wife, who is actively involved in managing his portfolio, for his demat account and presented an in-depth analysis. Just as that approach had worked with Dadiseth, it worked with Mistry too. He gradually began executing his transactions with them. Fastidious, Mistry, who is also on the board of several companies beyond the HDFC Group such as IL&FS, The Great Eastern Shipping Company and Bombay Stock Exchange, pushed the IIFL Wealth team to improve on its reporting systems.
Getting Mistry on as a client, the IIFL Wealth team says, is a huge testimony to their efforts considering that someone like him can command access to absolutely the best in the industry.
Winning clients was only half the battle. For a young team, being able to sustain relationships through the ups and downs was going to prove trickier.
Chapter 19
Rules of engagement
The aggression and ability to keep bringing marquee names and clients on board has certainly caught the attention of their competition. While they concede that this is an impressive achievement, many wonder how IIFL Wealth has “really” managed.
In fact, the abiding criticism about them from a cross-section of the competitors I spoke with is that its robust acquisition of clients is driven by a low-margin game that cuts the industry. In some cases, competitors allege, to bring a new client on board, IIFLW actually waives off the client fee or “passes back” to clients the commissions it earns on the investment products it distributes, a hawkish move that makes it impossible for others to have a fair shot at winning business.
The founders dismiss these charges, saying that they understand wealth management is a long haul, multi-generational game. It is almost myopic, if not completely unrealistic, to think of only short-term profits from clients.
They add that their competitors’ charge wasn’t just unfair to them; it was an inadequate portrayal of investors, in general. It is unlikely that their clients, most of whom are commercially smart and successful people with access to a gamut of advisors would choose to stay with somebody solely on the basis of lower fees.
Going beyond the call of duty to cement relationships, Yatin says, is an important way of demonstrating their eagerness to do a good job. Smart sales people know that they can differentiate themselves and leave an impression on occasions when someone has a problem they need a solution to.
Retaining an existing client is more cost-efficient than gaining a new one in this business. The relationship managers at IIFL Wealth say that they keep their eyes and ears open for opportunities to show their clients — however well entrenched they might have become in the system — that they want to go beyond contractual obligations.
‘We look out for such occasions and have a very sharp eye for them,’ says Japhia Walker, who heads the firm’s client servicing vertical. She recalls an incident about a client whose octogenarian parents needed their passport documentation to be set in order and visa applications done to travel abroad. Her team took care of the entire process. The client was travelling overseas for an extended period of time and couldn’t have managed this alone.
That IIFL Wealth pitched in with help when he needed it, and did so beyond the scope of their mutual contract, made an impression on him, Walker adds.
‘These moments help us stand out and show our client orientation,’ Walker explains.
Ten Commandments
There are other client delight mantras they believe strongly in. Karan, for one, swears by what he calls his Ten Commandments for Successful Client Pitches. Every batch of new recruits, especially relationship managers, is taken through this during its induction process.
His commandments are really a simple list of do’s and don’ts, including tricks and tips that have been most critical in his evolution to becoming a relationship manager with an impressive strike rate.
He says: ‘First, write down what you’re going to say and practice that in front of the mirror before meeting a client. In the first few years when I started out, I did that all the time. Second, brush up on your commercial math. Memorise tables up to thirty rigorously, essentially grade five math but practice this so well that you calculate faster than most clients.’
This isn’t easy when pitching to the sort of clients they have, many of whom are pretty good at commercial calculations and are used to going through large amounts of data daily. ‘So, if you can calculate 35X19 faster than them, they’re pretty impressed,’ Karan adds.
A lot more goes into acquiring clients than mere mental math though; it goes well beyond the products on offer and the platform created. A repertoire of softer skills, mainly the ability to instill trust and demonstrate a client-first orientation in every communication and follow-up action is critical, he says.
For comfort to develop, it is also useful to recognise that in an inherently people’s business, personality type, communication styles and other affiliations (such as alumni networks, social communities and professional associations) can play a crucial role in catalysing a client relationship. People want to broadly work with people who mirror who they are and the values they hold dear.
For example, a client in his 50s who is conservative both in his lifestyle and appetite for risk might not prefer working with a brash, aggressive 28-year-old outfitted in clothes that scream expensive designer later, even if they bring sophisticated domain expertise to the table.
In fact, this is not only true for junior or mid-level sales and relationship managers. Perceptions of risk appetite and communication styles can influence client preferences even at the level of managing partners.
External manifestations — the pitch itself and the frequency of communication — do lead people to guess how somebody would manage their money.
General Atlantic’s Naik tells me that in conversations during their due diligence process with people who did not eventually sign up with IIFL Wealth, a reason for worry was that the firm was as aggressive in managing its portfolio as it had been in its initial pitch. What one person might consider admirable perseverance, another could perceive as zealous aggression.
Why wine won’t take you far
Sandeep Jethwani, one of IIFL Wealth’s top relationship managers, who handles a team of twenty people and roughly 5,000 crore ($750 million) in assets, tells me that this kind of imaging can be very important.
People in their 60s and 70s, Jethwani adds, are usually not big lifestyle spenders themselves and often look down upon those who are, especially if they are first-generation entrepreneurs. ‘I would dress differently, or go for meetings in a different car in that case. Sometimes, I would ask told my driver to drop me outside the gate so I could walk in without having the client see my car.’
Younger clients are more laid back about these things. At best, they would come up with a good-natured jibe if they spot their wealth advisor with an indulgent purchase like a fancy car or an expensive watch. In some cases, these attitudes can become predictors of which way the relationship will go: Whether the first sales pitch would move to an eventual conversion. They also pre-determine any future work rapport between the client and the advisor.
Interestingly, in contrast to the perceived importance of region and language, personality type is probably a more important filter and influencer of the relationship dynamic than whether you’re a Gujarati or Kannadiga.
‘People used to believe that, let’s say, if you want to do well in Chennai, the team should be led by a Tamil-speaking person. Our Chennai office is headed by a Sindhi, the person heading my team in Ahmedabad is a Mangalorean, and in Goa, where people might believe work happens over beer and wine, we have a teetotaler leading all client engagements,’ Jethwani reveals to me.
Wealth management is, first and foremost, about listening to the client, even before you begin speaking. Bright students from top-notch management colleges, hunting grounds for new talent for the firm, are bred on academic competitiveness with a large chunk of the syllabus focused on how people should project and present themselves to audiences. Few people are trained, or interested, in the act of listening. Potential recruits need to be asked: Can you keep your ego in check, listen, absorb and answer only when certain?
Often, while hiring people, especially if they are new to wealth management and have come with a pedigreed educational background, familiarising them with the essence of what a good wealth manager must have — sound listening skills — is difficult. This could also be due to a big misconception about relationship businesses, especially in segments of financial services such as private banking. Enough people believe that these relationships are built on a heady, glamorous mix of dining and wining, a frenzy of socialising where deals are made over fancy meals and expensive alcohol.
Amit told me that when Kotak Mahindra sent him to New York in 2002 to expand their offshore business, several people believed a vegetarian and teetotaler like him had but a slim chance of making inroads into the social networks of wealthy Indian-origin entrepreneurs and professionals, or of those people who managed institutional wealth and endowment funds. ‘I don’t party late into the night and have never taken clients to places where I would not have gone myself. See, a good proposition will work even if the packaging is not great. You need over-the-top packaging when there is an issue with your product,’ Amit believes.
IIFL Wealth has a full calendar of events and conferences aimed at their clients: Marquee Indian and international speakers are invited to these. At their flagship client event in Mumbai last year, attended by over 1,500 of their clients, there was a cigar tasting station, a specialty-tea sampling kiosk, and an agenda featuring stylised dance performances and choreographed fashion shows. Yet, the leadership team says that such events are neither a tool to gauge nor foster client satisfaction. Portfolio performance drives 95 per cent of customer delight, Yatin says. Everything else is 5 per cent— great branding, exclusive gifts, big events and media attention.
The intrepid travellers
In the fifteen months that I researched and wrote this book, getting meeting slots with the IIFL Wealth team — across all levels — was a challenge so extreme that there were times I felt the book would be impossible to finish.
The company seems to be travelling on steroids. At its core, IIFL Wealth functions as a sales force on fire, an intense, customer-facing organisation where everybody seems to be in an endless stream of client meetings. After all, the relationship manager isn’t the only one with access to a client. From managing partners, to the head of equities research, the leader of the propositions or investments teams, and even their head for human resources and marketing, are touch points for clients.
The travelling has been aggravated by the fact that unlike in several other wealth firms, geographical jurisdictions haven’t existed here for most of the past eight years. While there is now a centralised acquisition and lead generation team — something that has come up in the last eighteen months. A relationship manager in Mumbai can try and pitch to a technology entrepreneur in Bengaluru; just as a Delhi relationship manager can chase to convert a client in Hyderabad.
While this does help keep territo
rial issues at bay and has infused the organisation with a competitive spirit, it annoys potential clients who are often unhappy about being pitched to by multiple people from the same company. A new enterprise software to monitor lead generation and sales calls, as well as instituting a do-not-disturb filter while a client is in touch with another sales manager have now been put in place. The company says that, in balance, their zeal has got them more clients than they have lost due to aggression.
Having so many people across levels being exposed to clients isn’t an easy call to take but it has been critical in establishing a speedy flow of information. The response times they offer their clients makes them stand out. Technology platforms such as Charles Schwab and Vanguard in the US might have shown that there is a huge market opportunity in moving the advisory function online but there is no substitute for face time when it comes to fostering deep engagements, especially with HNIs and UHNIs — and, more so in India where large number of the rich are new.
‘A key reason clients select us when they are looking for an advisor is the level of engagement we offer. Our turnaround time for the information a client seeks is very fast. We are also comfortable giving them access across the organisation — from our research team right up to the managing partners. This approach really breeds trust,’ Amit feels. In fact, their ratio of senior-management-time-to-client is possibly the highest in the industry, he adds.
When they started out in 2008, doing this was critical for survival. Showcasing their young, talented team was a way of inspiring confidence and getting clients to realise that the company had built managerial depth. Several of their active clients — and I spoke to more than two dozen — did say that all things remaining the same, the quality of the people they have on board is a clear differentiator, when compared with their peers in the industry.
The Wealth Wallahs Page 21
