General Manager – Wealth Management, Standard Chartered Bank says his bank has moved away from incentive structure to align with client interests.
With
such extensive experience in wealth management, how have you seen the
aspirations and goals of HNIs and wealthy clients evolving over the years?
There are a couple of changes that are notable. Demographically, most HNIs tended to be businessmen, promoters and industrialists a few years back. Over the last 15-18 years, wealth has got more widely distributed with many more salaried individuals and first generation entrepreneurs accumulating wealth. To some extent, this is due to employee stock option schemes and the way corporate compensations have developed and capital access and valuation gains for entrepreneurs.
With demographic change, lifestyle and expectations from money has been changing. For instance, the expectation of an industrialist or a promoter is different from that of a salaried individual. Another outcome that we note is that income generated is not just for deployment into business or for family, which was generally the case in the past. Many wealthy individuals today have a well-articulated philanthropic objective. We are increasingly helping individuals generate a cash flow for a trust or philanthropic commitment they have made.
How does one wealth management firm differentiate itself from others? What is your differentiating factor?
Even though the products or benefits may be similar, the quality of expertise and service that clients experience from a firm may provide one of the largest areas of differentiation. Product differentiation in the financial services industry tends to be narrow, and a majority of products offered by wealth management firms tend to be similar. Differentiation is often built around how a firm combines these products to offer a solution. Quality of service and advice can add to the difference. We must also recognize that advice is not generic; it is relative and very individualistic. How much do you know and understand your customer is at the heart of advice, the starting point. One should then have an ability to deliver an appropriate solution. This includes ensuring that there is a smooth execution process, post sales services, quality of performance reports, reviews, etc. For instance, some of our clients tell us that they have had a differentiated experience through our advisors from their portfolio review meetings
What kind of services do you offer to your clients?
As a bank we offer a wide range of products across a range of customer segments. Our customers range from the salaried individuals to professionals to businessmen who may have a full relationship across our commercial as well as private bank. We understand that each customer set may have a unique need. We therefore customize our solutions accordingly. In terms of products, we are able to not just provide investment solutions or execute mutual fund transaction, but also offer a full range of banking services including savings deposits, cards, loans, mortgages, foreign currency services etc.
Banks have come under regulatory scanner for mis-selling. Does the negative news of mis-selling affect the relationship with your clients?
It may be inappropriate to generalize, since has to do with a customer’s specific experience with his service provider. A poor experience may happen across categories; for instance - if one has a bad experience with a telecom service provider, or one reads about a car manufacturer recalling its product due to a defective part, it may not imply that the entire category itself is challenged. At the end of the day, consumers are concerned if they are impacted. So while adverse news about the industry does cause all stakeholders some concern, we keenly track if our customers have had a good experience with us, and if not, what we can do to continually improve
What safeguards has Standard Chartered Bank deployed to curb mis-selling?
We have a host of in-built process checks to help ensure that practices are fair and transparent; We are also continually learning from what may have gone wrong in the industry and with other institutions. We then proactively build controls to help prevent similar occurrences. For instance, one of the reasons touted in the industry is aggressive sales targets and incentives linked to those targets. We don’t have product sales targets or sales incentive for our advisors Performance can be measured on various other metrics including new customers and folios added, portfolio performance, customer satisfaction scores etc. We survey our customers quite frequently. There are other checks in place to help ensure that no bias creeps in that may lead towards a product-push. This is corroborated by sales behavior we continually track.
How many advisors do you have? Are majority of your clients from top cities?
We have a presence in over 30 cities, and have close to 100 specialists across these cities. They cater to our existing clients and also reach out to new clients.
RBI had come out with its own set of proposals recently on selling third party products by banks. What are your views on it?
The RBI draft guideline had been issued and we have requested for certain clarifications from the RBI. We expect to have more clarity once final guidelines are announced.
How have direct plans impacted your business?
Some
of our corporate clients shifted to direct plans, which has led to an impact from
an AUM standpoint... However, since corporate business tends to be at very fine
margins, revenues are not impacted as much.
This is the first part of the interview.
