How do you go about acquiring new clients?
In my experience, referrals and word of mouth work well in the HNI space.
We approach new clients in a differentiated and targeted manner.If you look at the HNI space, there are pockets of wealthy people depending on where they live, where they work or what they do. We create our brand presence in these pockets. For instance, many HNIs in South Mumbai are associated with premium clubs. We do a lot of branding activities in such clubs.
HNIs are open to new concepts and also want to remain updated. We conduct events such as panel discussions where we invite experts to give insights into issues that are of concern to HNIs. These insights are topical macro issues say for eg GST or market related events.These events help in building a thought leadership as well as a networking opportunity for us.
We also try to create our brand presence in lifestyle and sporting events like golf, as many HNIs like to be associated with them.
Such activities help spread the word about our offerings and get us referrals.
How do you segment your market? What is your approach?
We have segmented our clients into four broad categories – CXOs, professionals, inheritors and entrepreneurs. Each of them have different needs, goals and lifestyle.
While CXOs invest in a systematic way given defined & predictable cash-flows; Professionals like lawyers, doctors, film-stars or sportspeople need more focused liquidity management so that they can save for emergencies, create a long term corpus and grow wealth simultaneously, given the lumpy nature of their earnings.
First generation entrepreneurs are inherent risk-takers, which are reflected in their investment patterns as well, while Inheritors, on the other hand, prioritize preservation of existing wealth.
What are the challenges in catering to HNIs?
The biggest challenge is to understand the diverse needs and goals of clients. Each client is different and hence needs to be approached and offered solutions in a customised manner. On a broad segmented approach, one cannot approach CXOs and professionals in a similar manner. The approach has to be different depending on the background of the client you meet. We have created different value propositions for CXOs, professionals, inheritors and entrepreneurs.
Which is why we have segregated our pitching style and value proposition to engage with them. We have a different pitch book for CXOs, professionals, inheritors and entrepreneurs.
For instance, most CXOs have ESOPs. Our private bankers when approaching CXOs will thus definitely talk about the myriad opportunities pertaining to that piece of shareholding. On the other hand, doctors generally would not be having ESOPs and have a very different income trajectory compared to CXO. The pitch, accordingly, would be dealing with planning on those lines.
The other big challenge is lack of talent of Private Bankers in the Industry. Hence as a firm, we spend considerable time in nurturing and mentoring Private Bankers and coaching them to meet the growing and diverse needs of the HNI segment. Hence creating processes and adopting digital strategy helps in this regard.
What are the needs and aspirations of ultra HNIs?
Ultra HNIs have broadly three concerns.
First is to tread the fine balance between risk and reward. They have a wealth preservation focus, are cognizant of risk-return matrices and yet given the inherent entrepreneurial risk-taking instinct, set high benchmarks for portfolio performance. Advisors, in this case, need to formalize the investment statement clearly right from the beginning.
Most ultra HNIs do not put in place their succession planning. Here is where advisors can prove useful. Advisors should consider providing estate-planning services to increase the engagement with clients.
The most essential part of the aspirations of Ultra HNIs, though, is helping them out in their businesses or space of work. If your client say for example is a promoter of a chemical company, you need to understand the challenges in his business and whether and how you can help him overcome those challenges. Depending on the stage of life or maturity of business, on one hand, we will have Ultra HNIs wanting to raise funds for business expansion or a strategic acquisition and on the other hand, there will be UHNIs looking to monetize their businesses. Needless to say, advisors should be able to identify and address the needs accordingly.
Why is it that a lot of this wealth is not coming in financial services sector? What needs to be done?
We believe that the money has started moving from physical assets to financial assets due to structural shift in the economy. Both demonetisation and GST have changed the dynamics of investments and savings. In addition, government’s push for digital payments, removing intermediaries and creating transparency has been helping to make structural shift in the economy. In fact, we have been witnessing people investing in financial assets.
The lack of returns and limited visibility on future prospects for traditional physical assets like real estate & gold, have rendered them unattractive while simultaneously increasing the relative attractiveness of financial assets like equity.
There is an increase in the number of wealthy people in the country. But it doesn’t seem to be getting captured in the assets under advisory of wealth managers. Why is that so?
The wealth management industry is growing at a significant pace. The growth in AUM of Mutual Funds is a reflection of this trend. Over 40 per cent of wealth is in emerging metros and towns. So far, these markets are underserved. Most Wealth managers have focussed on top 5-6 leading metros in India
Secondly, a typical boutique wealth management firm has only 30-40 RMs who handle large accounts they usually service the top of the pyramid.
However, we can bring this wealth to the financial world leveraging technology. Geographical presence does not matter in this new digital world. As a firm, we are tapping this segment through a combination of our physical presence and a strong digital platform. We have today presence in more than 25 locations and over 200 RMs.
HNIs like to work with multiple wealth managers. What are you doing to increase the wallet share with HNIs?
Working with HNIs is like connecting dots. You have to put in place one-stop solution in the true sense. Here the one-stop solution is not products, but about services. Since ICICI Group is one of the largest financial conglomerates, we offer a basket of services that HNIs look out for, i.e., from corporate finance to estate planning. We help our clients in all aspect of their finances, be it investments, banking solutions, real estate or investment banking.
We have one of the largest teams of experienced relationship managers that is constantly reaching out to serve our clients.
We engage with our clients through our relationship managers. We have one of the largest team of relationship managers in the country. In fact, many of our managers have over 18-20 years of experience.
We are also very strong on the digital platform. Our platform provides a variety of services such as news and research report to our clients, execution in multiple products like mutual funds, Fixed Income, bonds and soon we will introduce AIFs and PMS and give them a consolidated view.
We think the combination of offline (RMs) and online (platform) services helps us increase our engagement with HNIs.
Apart from this, we have a corporate office team that gives family office services to ultra HNIs.
The combination of a large financial institution, where we provide multiple solutions, and yet offering the flexibility like a small boutique player, to provide customised solutions to clients, is our strong proposition, which has helped us increase the wallet share with HNIs over the years.
