The Hindu Business Line : `With growing incomes, wealth management is for everybody'

"We work along with customers to offer a range of investment advisory services — in debt, equity, mutual funds, derivatives, besides tax advisory, succession planning, insurance advisory, etc." -- MR V. MAHADEVAN, CEO, WEALTH ADVISORS (INDIA) PVT. LTD.

Wealth management services have been getting more attention over the last two years.

A booming economy, rising stock prices and an increase in salaries and spending power have turned the spotlight on this sector. The wealth management space was earlier the preserve of some foreign banks which offered these "exclusive services" to a select few. This was not a service you could apply for. The unsaid tagline was "Don't call us. We'll call you (if you are that wealthy!)."

Today, a number of private banks offer this service. Also entering this arena and carving a niche for themselves are standalone entities that offer the full range of services — investment advice, portfolio management, taxation advice et al.

Wealth Advisors (India) Pvt. Ltd is one such entity that began operations just two years ago. It is part of the J. V. Gokal group, a leading commodity export house. Spearheading the group's foray into this area is its 46-year-old Chief Executive Officer, Mr V. Mahadevan.

A chartered accountant and a company secretary by qualification, Mr Mahadevan has handled a range of financial services, from insurance and mutual funds to banks and wealth management. Beginning in 1986 with New India Assurance Company Ltd as an Officer in the Claims Committee, he moved to GIC Mutual Fund as Branch Manager and got elevated as Head of Sales for South India. He has also worked as Secretary to the Trustee Board at GIC Mutual Fund.

In 1994, he joined Birla Global Finance Ltd as Head of Distribution. A year later, he joined DSP Merrill Lynch Ltd as Head of Sales for South India and was promoted as Head of Corporate and Retail Sales. Mr Mahadevan then moved to ICICI Bank as Deputy General Manager responsible for managing eight product lines, including life insurance, general insurance, mutual funds, GOI bonds, online trading, retail gold, and travellers cheque. For the last two years, Mr Mahadevan has been busy setting up wealth advisors across the country.

As we wind up the interview, Mr Mahadevan regales us with his anecdotes about a recent China trip. "I have learnt the power of silence," he says. And the power of one word — OK. None of his interlocutors in China could speak English! But he managed for two days using a combination of menu cards, OK and silence. He says the experience has been refreshing enough for him to want to observe a vow of silence on at least one day a month!

Read on for his take on the wealth management scene in the country.

What is the state of the wealth management industry?

Wealth management is just emerging in India. The growth of the economy has already been widely showcased.

Wealth and disposable income are growing substantially. We are also noticing that for the first time the ability to earn and save are slightly different. Earlier you just put away your money in some guaranteed products. Today, when even the government is withdrawing from those products ( it recently stopped the maturity bonus on post-office savings), investors, whether they be doctors, architects or anyone else, need professional help.

Is wealth management only for the wealthy?

It is for everybody. The person who is earning Rs 30,000 per month also needs this advice. For instance, if there is a 25-year-old guy who earns this sum, his first priority is to buy a house for, say, around Rs 20 lakh. He has to now protect this property from, say, flood, cyclone or other natural disasters. Here is where we can help. You have building insurance that doesn't cost more than Rs 800-1,000. That's what it costs for a dinner in a good hotel in any city. Why not protect the asset, which you are going to live in for the next few decades? Similarly, there are other issues, such as protecting your family from medical emergencies. All these come within the scope of wealth management services.

Which is your main market?

The opportunity in this space is mainly because of two developments. First, there are more people in employment who are getting stock options. I know of institutions where more than 100 people have stock options worth Rs 2- 5 crore. And they encash it.

And, second, the expansion of business and entrepreneurial capacity. We see first-time entrepreneurs cashing out partially over a period of four-five years. That cashing out can be from Rs 5 crore to Rs 100 crore. These people need wealth management services.

We service some film personalities too. They want to maintain the status earned during their peak to continue. Nobody wants to slip. There is a genuine feeling that they have a five-year "peak" during which every rupee earned must be saved carefully. Without giving names, I can tell you that they are willing to take good advice. We have other professionals also, such as doctors and architects.

We would look at someone who has the potential to have a surplus of around Rs 2.5 crore.

Isn't the bar rather high?

The relationship starts on a much smaller note. We work with clients over a period — six months to a year — in order for them to understand, assess and gain confidence in us. We wait for the length of the time. We look at the potential.

There is a cost to servicing the client. That is why we look at this kind of potential. When you offer one-to-one service, a relationship manager can handle 20-25 clients. To that extent there is going to be the element of higher costs.

What about competition from foreign and Indian banks?

Basically, the service they offer is transaction oriented. Most of them offer some mutual funds and some equity advice. But someone who has between Rs 2 crore to Rs 25 crore don't want this. He wants somebody who can work with him over a period of time. We need to work continuously, for him to trust us, for us to understand him, his family, his taxation issues, succession issues, etc. There is some value addition when you deal with people over a period. I can suggest more ideas and we can exchange notes on how to go ahead about certain things.

We have a customer-centric model. We work with customers and offer them a range of services — investment advisory — in debt, equity, mutual funds, derivatives, besides tax advisory, succession planning, insurance advisory, etc.

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