In this Question and Answer (Q&A) interview with Rajesh Saluja, CEO & MD, of ASK Wealth Advisors in India, the 53 year-old head of the firm discusses his personal and professional ambitions, background, the challenges of Covid-19 and of tighter wealth management regulations and fee transparency in India – not to mention talent shortages and tighter margins. However, the huge Indian market still presents great opportunities.
Question: Q1. Please briefly describe your career trajectory and company?
Answer: A1. I joined ASK Group as chief executive officer (CEO) & Managing Partner in Dec 2006 in order to set up their Wealth Management business. They had a financial services (FS) heritage dating back to 1983 and were on the verge of exiting a joint venture (JV) with an American firm called Raymond James. They were looking for someone to set up their standalone wealth management business to complement their pre-existing flagship Discretionary Equity Portfolio Management Service (PMS). This has grown at more than 18% compound annual growth rate (CAGR) for over 20 years providing a strong foundation for the diversification.
I could see the huge opportunity in the growing Indian wealth management sector and wanted to get in at an early stage as a shareholder and become more entrepreneurial after previously working with Standard Chartered Bank: India for 11 years in various roles in their wealth management division.
Personally, the biggest difference between heading a wealth management business for an established multinational corporation (MNC) and being a founder & CEO of a local Indian firm is this entrepreneurial mindset. This was the biggest change in mindset during my current journey with ASK.
I started my working career with Modi Xerox in 1989 and grew to become the Regional Head before moving to SCB in 1995. Capital Markets, specially investing in equities, was always an area of interest and passion during my college days.
ASK Wealth Advisors is today amongst the most respected wealth management & family office service providers for the Ultra high net-worth individuals (HNI) segment in India, becoming one of the top three firms. We serve some of the richest Ultra HNI marquee families in India with 1000+ on our books, and have time for customisation, relationship building and hence trust because of our ultra HNI focus. We believe in wisdom rather than knowledge, and client centricity informs everything we do.
We’ve one of the highest revenues and assets under management (AUM) per client figures in the industry as well. The group cumulatively manages more than USD$6.5bn of assets with annual revenue of close to USD$75m, as of 31 March 2020. Importantly, we know ‘what not to do’ as well as ‘what to do’ in market stressed situations.
Our expertise in Listed Equities & Real Estate is valued, alongside the continuity of relationship that an owner manager driven firm brings, with key employees as stakeholders providing excellent service. We’re headquartered in Mumbai with a branch presence in 11 Indian cities and clients spread throughout the country and Europe, Africa, Middle East & South East Asia.
Growth areas for the business are multifaceted, including expanding distribution in Tier 2 cities in India and also the non-resident Indian (NRI) segment living abroad. On the investment side opportunities exist in:
- Alternate investments,
- Loans against Capital Markets
- & International investments.
Q2. Please briefly describe your company’s plans for the future?
A2. The next phase of growth for ASK Wealth Advisors will be a combination of an enhanced product platform, growth in distribution footprint and investment in technology.
We plan to increase our presence in India specially in Tier 2 cities over the next three years to at least 18 cities and also increase our advisor headcount from 50 to 75. While we have offices in Dubai and Singapore targeting institutional clients, we are keen to build a distribution platform to target NRI clients across various markets - organically or inorganically.
On the Product platform side, we have recently launched our Non-Banking Financial Company (NBFC) to cater to the lending requirements of our clients. This NBFC will offer loans against capital market securities and also allow us to offer special opportunities in fixed income and unlisted equities to our clients. Additionally, we’re in the process of launching our Discretionary Model portfolios across asset classes and fund managers.
We run a highly successful US Global Opportunities fund that feeds into some of the best Discretionary Equity portfolio managers in the US. Our objective is to allocate up to 10% of the financial assets of our clients to International investments outside India.
We’re investing in upgrading our existing technology platform with an objective of on-boarding & servicing our clients digitally in the future.
Q3. How has technology impacted your sector & company?
A3. Technology has and will continue to impact our business in many ways – right from cybersecurity through to the aforementioned digitizing of client on-boarding, transactions and servicing. This will improve the productivity of processes and efficiency of employees, while providing convenience and speed to clients.
Technology will continue to play a larger role in automating processes across all functions of the business. The challenge will be to upskill our employees and educate clients in order for them to adapt these technologies to their advantage.
Trends in artificial intelligence (AI) are particularly exciting. While human intervention remains a critical aspect when building Ultra HNI client relationships, the ability to support a client-facing advisor using AI in research and analysis – especially past and predictive metrics – and in offering personalized advice could be a game changer.
Alongside this, the rise of fintech platforms that can aggregate investment information for a client across all investment products will be a big step-up for the wealth management industry.
Technology is going to have a big impact on the way wealth business is managed and delivered in future. It should be a high focus area.
Q4. What non-Covid challenges does your company face?
A4. Aside from the challenges of Covid-19, which I’ll address later, I think the biggest challenge for us is the fact that wealth management in India is going through a transition phase on the back of tighter regulations and more transparency in fees. The new investment advisory regulations introduced by the Securities and Exchange Board of India (SEBI), the relevant regulatory body, require every organisation to classify their clients as advisory or distribution clients and deal with them through separate teams.
Each firm has to choose whether a client is under advisory or distribution status, and one can either earn fees from clients or commissions from products. This has been done to avoid any conflict of interest on advice. It poses a big challenge for many wealth managers as they will need to redefine their business models and enhance their internal compliance processes to adhere to this requirement.
The other two challenges are:
- A reduction in margins: As the Ultra HNI segment for vanilla product offerings like mutual funds, Discretionary PMS, and so on tightens. More client touchpoints or products and services need to be introduced in order to improve revenue per client, and hence overall profitability.
- A shortage of talent: specifically for financial advisors and relationship managers (RMs). One has to continuously skill a bunch of fresh hires from reputed institutions with a background in finance and seek out those with Chartered Financial Analyst (CFA) qualifications in order to get them to take on the role of a financial advisor. It’s not easy and a lack of skills is something we’re always aware of and seeking to address. We’re a people business.
Q5. How has Covid-19 impacted: (i) Your company, liquidity & staff (ii) Your business & its prospects? (iii) How have you responded?
A5. Well, first and foremost let me say that the dramatic impact of Covid-19 on individuals and organisations is unfortunately still unfolding. No financial institution (FI) will be immune to its effects. We have to future-proof our business for a ‘post-crisis’ world.
While the pandemic has had a serious short-term impact on the economy and business all around the world, I am quite amazed at the client maturity levels and patience with regards their financial investments in this situation unlike the 2008 crisis. There have been no knee jerk reactions or panic to pull out money or anything of that sort. Clearly Ultra HNIs have come of age with regards to building a long-term financial portfolio and staying the course despite the volatility. That augers well for the wealth management industry and reinforces my belief that the size of the opportunity remains intact. The pandemic has not fundamentally altered the industry’s long-term potential.
In the short term, however, the pandemic has forced us to focus on:
- Pace of digitization: Covid-19 has dramatically accelerated the pace of digitization, advancing it by maybe 3-5 years, especially in regard to client on-boarding & engagement. I believe our business will continue to remain a people and relationship driven industry at its core for some time to come, especially in the HNI/UHNI client segment as unlike Western markets like the US & Europe, Indians still like to socialize and build relationships. However, we will need to build platforms and push digital channels to engage with clients, now more than ever. In summary, it will be a hybrid approach in future, combining Human + Digital processes and abilities.
- Business continuity planning (BCP): The pandemic has got most wealth firms to get a fix on where they stand in terms of their BCP and to work on areas that ensure their business is much better prepared in future to handle similar situations. The focus is on client on-boarding, servicing, engagement or acquisition while working from home. Home working has been a facet of Covid-19 for most firms.
- Annuity income: Firms that have built their business models on annuity income will fare much better in the post-Covid world and may not resort to drastic cost-cutting measures or laying off people. Building a strong annuity book needs to remain a focus area. In the short term, tight control on costs across line items and re-deferring unproductive costs will need to be undertaken. We need to plan our costs based on the worst case Covid-19 scenario, while planning our revenue numbers based on the best scenario.
- Virtual engagement: A high level of virtual engagement for teams, especially in regard to client-facing advisors and clients themselves, is essential to maintain relationships.
To summarise, in 2020 I believe many wealth management firms will cross boundaries in search of profitable growth – organic or inorganic. Crossing boundaries often means leaving the comfort zone of traditional ways of working, and performing new activities or doing standard activities in dramatically new ways.
Q6. What are your hopes and fears for the future?
A6. My biggest fear is a delay in finding a cure for the Covid-19 pandemic and more losses of lives and livelihoods in the future. The longer the partial lockdown of the global economy goes on, the more will be the collateral damage and the time needed for recovery. I hope the world comes back to normalcy by the end of 2021.
Against this I am still hopeful about the long-term opportunity for the Indian economy and the wealth management sector, within it. I remain bullish about both in the long-term. It is clear to me that more business will be done virtually in the future but also that it won’t be fully digital in the Ultra HNI sector where relationships matter. It’s easy enough to maintain your business, community and culture, but very hard to build it so protecting that is crucial. There will also be less travel in the future and hence more time will be freed up to do many other things, including enhancing productivity levels.
Q7. What are the key leadership skills required of a CEO & your tip for newcomers?
A7. The key leadership skills required as a CEO of a wealth management business are setting and aligning the entire organization to a clear vision. There must be a high focus on execution; strong people management skills; and domain knowledge; plus proven expertise.
There is a big difference between being a manager and a leader, which many don’t understand. One of them clearly is people managements skills, or rather I would say the softer skillsets needed by leaders – namely:
- Motivation skills,
- Influencing, empathy and persuasive abilities,
- Collaboration skills,
- & Mentoring capabilities.
These play a big role in attracting, developing and retaining talent, while also helping manage employees and clients through various market cycles.
Secondly, a leader must be able to see things others cannot. The bigger picture and joining the dots matter. This comes from experience, knowledge or many times intuition. That is where the vision for the business and alignment of the organisation with it, comes from.
Finally, a key leadership trait I admire is to have the humility to hire people that are smarter than yourself. This is crucial to the successful execution of the business model.
Specifically in regard to being CEO of a wealth business, the other key focus area is the need to create a highly process driven business model, covering: Relationship Management; Sales Management; Investment Advisory; Products; Client Service; HR; Risk Management; Compliance. It is a business of trust, after all, and reputations are built on the backbone of strong processes, experience and knowledge.
My key tips for any newcomer CEO is that what gets measured and reviewed frequently, gets done.
Q8. Personal Background: Briefly share your cultural & educational background, and interests?
A8. I was born to a middle-class family in Jamshedpur, which is in the Eastern part of India, on 14 July 1967. My father was an engineer that went through the Indian Institutes of Technology (IIT) and worked with the Tata Steel Group. I studied at Lawrence School Sanawar, a boarding school in North India. I graduated from Elphinstone College, Mumbai, in Maths & Economics, and I did my Post-graduation in Marketing from Mumbai University. In 1985, I moved to Mumbai, a sought-after city by youngsters at that time because of its cosmopolitan status, and the fact that it is the financial capital of the country.
I am married and have a 14-year-old son. I am also an Honorary Chartered Wealth Manager (CWM) from the American Academy of Financial Management (AAFM).
I have a passion for cricket and golf that I pursue in my free time. I love travelling and my favorite places in the world include London, New York, and Thailand. My other passions include watching movies, playing poker, and eating out.