Sutapa Banerjee of Ambit Capital explains the skills and knowledge that relationship managers need to be successful in the Indian wealth management market.
Date: Oct 2011
To verify this, she said she normally tends to ask for client references from the RM, and then speak to clients.
In addition to credibility and trust with clients, knowledge of Indian capital markets across the board is also important, she added. While an RM is not expected to be an expert on everything from taxation to estate planning to derivatives, Banerjee said they need to have a fair share of knowledge across all of these products and areas to be able to act in the client’s interest and know when to bring in an expert in any one of the fields, if required.
In terms of industry experience, compared with the early stage of development of the wealth management industry when Banerjee ran the business at ABN AMRO, at this point in the market’s evolution she said she is looking to recruit lateral hires who’ve been in private banking for at least last six to eight years, and with total financial services experience of about 12 to 14 years.
Senior people who’ve acted as financial advisers to clients over the last few years are more likely to be able to command trust and have credibility, she explained. They will also likely have a certain amount of assets under management (AUM) which they’ve built up over a period of time – so they therefore know how to grow and keep that business after acquiring it.
Another thing Banerjee said she looks for when recruiting – which comes from having been in this industry for a long time – is whether the RM has generated excessive revenue or AUM. Rather than rush to hire this person, she said she tends to be skeptical, because it indicates that they have pushed products which are high-commission earners.
Following up on referrals
As a starting point, Banerjee said RMs will most likely first have a conviction in both the organisation they work for, as well as the product advisory capabilities of the firm. Then they would look for gaps in client portfolios which they can fill.
With this conviction in the products, the RM will take that proposition to a client they know, she explained. If it’s a client they don’t know but is a referral, then the RM goes through the normal steps to set up a meeting to determine the client’s requirements.
Being effective over a longer time period
Whether it’s to do with the industry being nascent or to do with the remuneration structures for RMs, the market tends to push an RM to book quick revenues. This is what Banerjee said makes the industry move away from being able to act in the client’s interest and instead just into peddling products.
Instead, an RM needs to command credibility and client trust, which are difficult to actually fulfill, she said.
Resolving the dichotomy between the organisation’s interests of trying to achieve its own milestones in terms of revenue, and acting in the client’s interest by an RM saying, for example, that they would much rather stagger investments over a period of six to eight months rather than put everything into equities today, requires an organisational framework which allows the RM to do just this, said Banerjee.
As a result, in a niche set-up rather than in a mass wealth set-up, the firm needs to be very focused on the kinds of personalities of RMs it is taking on and whether it has that maturity to be able to balance the immediate organisational revenue pressures with acting in the interests of the client.