Whither Wealth Management in India

The following article was published in the Business World (4th April, 2011) as 'A Wealthy Experience'

http://www.businessworld.in/bw/2011_03_25_A_Wealthy_Experience.html



India's booming economy is leading to great changes in its financial markets. One such change is the emergence of numerous players in the booming Indian Wealth Management market place. The economic growth in India has led to significant rise in disposable incomes and the ranks of affluent household have been soaring like never before. This huge business opportunity calls for specialized wealth management companies and various companies with little to do with wealth management have stepped in. But how will these players create their space in this action packed market which is yet to break out of the structural constraints of yester years?

This industry operates in various segments – i) Mass Affluent, customers with invest-able surplus of some Rs30lakhs to upto Rs1crore; ii) Affluent, customers with invest-able surplus of approximately Rs1crore to upto Rs5crore; iii) High Networth Individuals (HNI), customers with invest-able surplus of more than 5crore.

While the Mass Affluent and Affluent customers are being serviced by preferred or priority banking divisions of the retails banks, HNIs by organizations which call their services ‘Private Banking’. The new entrants in the market have the affluent customer as their target segment. These independent Wealth Management (IWM) companies plan to address the more sophisticated requirements of the Affluent customer and also benefit from the sense of disillusionment against their existing Wealth Managers.

Investors across the spectrum suffered during the credit crisis because of the inherent shortcomings of the existing structures in the wealth management practice - product pushing, and absence of advice and portfolio churn. This and recent events such as the Citibank wealth management fraud has catalyzed action towards putting together comprehensive regulations for this business – not an easy task given involvement of multiple regulators.

IWM companies are trying to fill the space between private banking and preferred banking as Affluent customers are currently being served, rather very inadequately, by the preferred banking divisions.

The current regulatory structure doesn’t allow banks to offer a wide range of investment products or offer the advisory services the Affluent investor requires and increasingly expects. Further, changes in the mutual fund industry have reduced the existing margins dramatically – MF being the mainstay of the investment product offerings at preferred banking divisions. The regulations suggest that investors pay directly to advisors hence link revenue to quality of advice and service. This can be best done in an independent wealth management company structure.

The business model of an IWM revolves around the following factors
• Offer a very wide product suite which can help provide customized solutions for the investor.
• Offer advice which is independent, sophisticated and proactive.
• Have an enhanced level of service offering, using superior technology.
• Create a brand to which trust, credibility, integrity can be readily associated.

Affluent customers confront considerable complexity and vast opportunities in the financial markets. To help affluent customers navigate the market ups and downs and to take advantage of opportunities while paying close attention to their needs and factors that may affect individual circumstances, a sophisticated advisory process and a very wide product suite is required.

However the current offering from these IWM companies seems to be a copy of their preferred banking cousins. They are found wanting on all counts except with regards to their ability to offer a wider product suite. An IWM product suite normally comprises, besides the regular MF, PMS, VC Funds and deposits, high involvement products like real estate, trust services, and sophisticated structures. In other aspects too, when pitted against preferred banking business, IWM companies again fall short.

Products push approach, recommendations based on only quantitative variables and historic data characterize the advisory platforms of preferred banking divisions. And as IWM companies have hired most of their client facing team from the preferred banking space, their advisory platform too is hostage to these factors. Most such people are yet to develop an approach of listening to and understanding client needs, and proactively provide an up to date investment advice and designing wealth management solutions.

Further no IWM company has yet been able to create a brand to which trust, credibility, integrity can be readily associated. They are no match to the delightful service banks, especially MNC Banks offer to their preferred customers.

Hence for IWM companies to become significant players in the Indian wealth management industry a hard look at the existing structures is required. They will need to invest, in a big way, in their people. There is a pressing need for training and skill enhancements of the people so that they are well informed and can offer high quality advice to their customers. In the advisory proposition there is a need to include more sophisticated tools for asset allocation and model portfolios. Including concepts of dynamic asset allocation and qualitative factors in the advisory process, along with specialized research on Alternate Investment products will position themselves to offer products and services that affluent investors rightfully demand and expect.

A brand building exercise is also important as most of these IWM have been set up by equity broking companies and the equity broking companies in India have rarely commanded trust and respect. A respected and trustworthy brand will help IWM companies reach out to their rapidly increasing potential customer base, who might be currently being serviced by the private bank across the street.

Independent Wealth Management companies should offer end to end services from wealth creation, to wealth protection and estate planning and in the process form generation long relationships. It is only then that these independent wealth management companies will be able to come into their own.

Recent Publications

Two recent publications.

First in the Money Today, the personal finance magazine of the India Today Group. Guest Column in the September 2010 issue.

http://moneytoday.intoday.in/index.php?option=com_content&task=view&issueid=86&id=6355&Itemid=1&sectionid=106



Second in the Business Standard. 'Opinion' in the Saturday 2nd October, 2010 issue.

http://www.business-standard.com/india/news/manavendra-prasad-mutual-fundsstillbest-bet/409893/

Mumbai only for Mee

Ages ago, while I was working in Mumbai the Indian Express asked me to write some 500 words about being an outsider in Mumbai, for their end of the year special editions. This was in the backdrop of Raj Thackeray and his hooligans then as part of the Shiv Sena beating up students from UP & Bihar who had come to Maharashtra to write the entrance test for jobs in the Railways.

How the Indian Express reached is rather interesting. I had written a small article and with a desire to have it published took it to the newspaper. They didn't it like and rejected my contribution. I wrote another article, this time about Bihar. The local(Bombay) editorial team liked it and they sent it to their central editorial team in Delhi. A couple of days later I heard from them, to be told that they couldn't carry the article.

I asked, why?
They said, ' Who are you that we should publish the article?'
I was stumped, I always had been sure of my identity.

Then a month or say later they called to check if I was keen to write for their end of the year editions.

Pasted below is the said article I had sent to them. Further below is the link to what was actually published.

So that is how my second article was published in a newspaper. Though the editing left me very dissatisfied, I felt like a celebrity with the photographer from the newspaper spending half a day clicking pictures of me all over the city.


My Contribution

A European friend on his first trip to India was briefed by his consulate that Bombay was not India and yet all of India, but for me, fresh out of India’s irrepressible cow belt Bombay was and is what only India could be. Bombay is a microcosm of the whole of India – rich, diverse, tolerant and ‘shining’.

My encounter with the city initially was full of disappointments. Soon after I had arrived the city shut shop because it happened to have rained heavily the night before. The dividers on arterial roads were submerged under water and above all people didn’t think twice before wading across ankle or even knee deep mucky water. The only thing people seemed to eat were ‘pav’ and everything they said seemed to end with a ‘che’. People appeared to be mild to the extent of being sissy, and this was quite disconcerting for someone who had till then lived only in the pushy, and crass north.

Names of most fashionable stores written in Hindi, besides the usual English, albeit in small font was a peculiar sight. The Oval maidan and its cricketers in whites amidst the neo Gothic buildings gave it all an old world charm. The sensex indicator at Churchgate station appeared quite queer. No conversation being complete without discussing and predicting sensex levels felt a trifle too materialistic.

Live in Bombay for a couple of weeks and you see all the original notions of the city crashing one after another, and that sure happened with me too. From the initial fascination of the endless and rumbling sea to the kem cho’s the city simply grew on me. The mildness was better appreciated as the politeness and the civic sense of its citizens. The unusual spectacle of queues at bus stops and trains running by the minute and not by the quarter of the hour soon became routine. The city did not sleep and the freedom to go anywhere and at any hour without any fear or whatsoever gave me a sort of a heady feeling and I realized I was snugly falling in love with this city.

Though the on and off xenophobic violence under the ‘Mee Mumbaikar’ campaign raises some questions about the city’s large heart and its accommodating spirit, here too one needn’t despair for these incidences fall in the realm of politics for was it not the Tamils at the receiving end some years ago. These are for the voters’ consumption which we from Bihar and UP find it easy to appreciate given the disproportionately large public space we give to politics back home. Such incidences are against the spirit of Bombay for Bombay thrives on its cosmopolitan culture and has always accepted in her bosom anyone who has chosen to seek his fortune here.

Hence and not surprisingly, living in Bombay for the past few years has made me realize that living elsewhere now would be a difficult proposition.



The link to the published article


http://cities.expressindia.com/local-news/archivefullstory.php?newsid=71732&creation_date=2003-12-27"

A handy guide to marrying the girl of your choice

In this day and age when you are capable of having your own set of ideas and opinions for most things in life, very often you will manage to find someone of your choice who you think fits the bill of the right life partner.

So when you broach this with your folks you are, often, instantly met with disapproval. Your parents will tell you that, after all the smartness they credit you with, marriage decisions are best taken with the advice of elders. They will bring to fore logic and reasons from their own perspective. They will highlight the differences in family, culture, tradition, language, eating habits or even profession. In some cases they may be disparaging of the girl’s family or even the girl.

The way you respond to this situation is crucial for you to make any head way. You need to stay your ground and explain to your folks how their concerns are all surmountable and in today's metropolitan life, the difference in one's personality caused by one's family’s tradition or profession are largely mitigated if not negated.

In the next stage of this saga you will find your folks completely ignoring the idea of this girl in your life for that matter even the idea of your marriage. They do not mention it and will ignore or stonewall any discussion with regards to your marriage plans. They will be oblivious or pretend as if such an idea doesn’t exist.

Getting to the next stage will depend on your response. Foremost, you must not let your determination fray. Second, indicate to your folks that you are willing to go ahead with the marriage even without their involvement.

In this stage your folks will once again disapprove but will now cite a different set of reasons. They will now use sentimental or emotional pressure. They will talk about how they had been planning for your marriage since you were a kid etc.

If, now you do not budge from your point it could have two possible results.

A) This is the more common result. Congratulations, your folks have at last come around and they are now talking dates, ensuring enough time to be able to organize things properly.

B) They harden their stand and oppose it tooth and nail. Don’t despair, you go ahead and get married. Congratulations.

Remember time is a great healer and a grand child can melt the toughest of hearts. However, should you actually have made a wrong decision; do not be afraid to discuss this with your folks so that a possible resolution can be achieved.



Post Script

For Men
1)If you have doubts in the first stage itself, then may be you should reconsider your decision.
2)Folks, in some part of their head/ heart believe that this girl is only a passing fad and that is why they try to buy time and tend to ignore it.

For Women
1)If you don’t stand by your man, there is little he can do.
2)Trust you have chosen the right guy, for a vast majority of men chicken out in the second and third stage.

For parents
1)Try and show reason – real, logical reasons to your son.
2)Try and explain your point instead of ignoring or stonewalling it.
3)If the son fails to see the logical reasons and is making a bad decision then damn yourself for not giving your child enough common sense.

Philoshpher's Notes III

This too has taken quite some time to come, the third ‘philosopher’s’ notes, just as the second did. Having a diverse set of knowledgeable and intelligent friends has contributed in putting this together.


The language of love

A good childhood friend, now with a mission to spread happiness (www.lovingsilence.org) shared with me key elements of a happy relationship. One of the most important ideas was ones ability to understand your loved ones mode of expressing love and affection.

People express their affection in the following five ways, but each one has one or two of these as the preferred way.

• With words of affection
• By spending quality time
• With affectionate touch
• With gifts and presents
• By acts of service

Interestingly while getting to know each other one tends to express affection in all the five ways and as one settles in the relationship the preferred ways come to fore and in absence of clear understanding of the above one feels reduced affection and love.

So go ahead and figure out what is your loved one’s preferred way of expressing love, and you will know that love has not changed a wee bit.


Why marrying within your caste made sense, but doesn't any more.

In any marriage compatibility of the people involved is paramount and also important is the woman's ability to adjust and adapt to the new set up she moves into (given our current social norms/patriarchal society).

Caste often determined ones social mores, values and ideas about life and things in life - education, money, religion etc given that caste at one point was the basis of profession and social standing. Therefore for a successful union of two people one stuck to choosing within the same caste because it was most compatible, least disruptive for the woman. It basically made sense.

However in the current times when you live a metropolitan life you tend to rise about the original caste norms customs and views. One tends to be more independent and individualistic, forming independent ideas of life. Given that everyone lives in the same environment one has similar factors helping influencing the formation of these ideas. To desire compatibility in marriage only with people of the same caste seems illogical, and just doesn't make sense.


How bullying is often confused with shrewdness

It is extremely easy (if your conscience doesn’t come in the way) to cheat someone who is a) poor and uneducated or is b) a member of the family.

When you cheat someone who is poor and uneducated, you cheat basis your ability to bully him or rather his inability to get back at you. This is extremely easy to achieve. This is often assumed to be your smartness or shrewdness.

When you cheat someone from your family, you are doing it when they least expect it. You have used the emotional comfort to make them naïve or in other words you have emotionally bullied them. The reprimand for this rarely more than a heated exchange of words (which gets forgotten soon enough)

So if you are really intelligent, smart and hence possibly shrewd, go out there and fight your own size and don’t bully the weak.

Back from the States

It has been a year since I was in Patna last, taking advantage of the long weekend around Gandhi jayanti I was once again there.

This visit, I was pleasantly surprised to see smooth and widened roads almost everywhere in the city. They are laying a drainage network for even the smaller roads - Patna was at last trying to get out of its rusticity. Electricity was not an issue and there existed this general buzz of activity and action around everywhere.

However the traffic was a pain, and the constant honking was extremely irritating besides being harsh to the ear. Cycle rickshaws on the thoroughfares don't make a large city. Doubt if these rickshaws are going to go off the arterial roads in the near future, with assembly elections just a year away.

Travel in the city using public transport is relatively costly - Rs 40 for some 8 to 9 km and that too traveling in cycle rickshaws, and shared auto rickshaws. The local administration should introduce auto rickshaw taxis, and retool able cycle rickshaws drivers to drive shared auto rickshaws and get the cycle rickshaws off the important roads.

The irrepressible people of Bihar are known by different names in the rest of the country. Harry to Hariya is often used, depending on ones degree of separation from rusticity. The people of Bihar have always been considered unique in their own way. No wonder Bihar is often called the States that is United States of Bihar – a world apart.

After all the Bihari is a different species - extremely intelligent, hardworking (mainly if you have migrated out of Bihar), rustic, diffident, religious with strong identities about caste, region and trade. A Bihari's penchant to try and relate to another person basis his caste is unbeatable. This visit I was reminded of a dialogue I would often have with co travelers during my train trips to Patna during school and university days. It used to be fun once I got a hang of it - people trying to know my caste, it would go like this….

'Kya naam hai aapka? (What is your name?)'

Manavendra.

My first name doesn't give away my caste, hence the following question would be asked.

'Par naam kya hai aapka? (But what is your name?)'

One is expected to give his complete name, that is, with the family name. Once I got wiser I would once again say ' Manavendra' therefore the next question would follow.

Pitaji ka naam kya hai? (What is your father's name?)'

Shri J S Prasad

So there you are, the surname has been conveyed. In these times of changing/adopted family names the next question was to be surer about ones inference.

Kahan ghar hua aapka? (Where is home for you? This actually meant which part of the state your ancestral home is in?)'

I would say ' Patna' if I wanted to be cheeky else would say Chapra as the answer to the intended question.

Every region of the state has predominance of one or two castes for example Chapra is suppose to have large number of Rajputs, Yadavs and Kayasthas. Patna being a large city, the dominance doesn't truly hold though Kayasthas are the numerically dominant community in the city. The caste along with the region of your ancestral home nearly confirms your caste but yet you will be asked.

To aap log kayastha hain? (So, you are from the Kayastha community)'

Incidentally in Bihar the caste name or the family name is called 'title' and you realise how important that surname is.

Bihar inspite its eccentricities has been central to the idea India for all its history save some 700 – 800 years in the last millennium and it is these people that are once again going to enable India to occupy its rightful place in the comity of nations.

Randomly Speaking II

Childhood values & teachings juxtaposed with real life situations make one, often, realize that…….

Hard work is the surest way to success, but not the only way