The Wealth Wallahs by Shreyasi Singh

Author:Shreyasi Singh
Language: eng
Format: azw3, epub
ISBN: 9789386141972
Publisher: Bloomsbury Publishing
Published: 2016-10-28T04:00:00+00:00

Chapter 12

The relationship roulette

In all my interviews, trust and relationship were often used to describe the dynamics between clients and their wealth managers. Most people seem to view wealth management as a relationship game. It is built on a loyalty that comes from expecting the advisor to provide inputs and service that benefit the client’s long-term interests, and also stem from the intimacy established by a client sharing his financial health, wealth objectives and family’s future needs.

On their part, wealth managers say, building relationships is critical because when they acquire a client, it is with the view that they will manage them for several years or, hopefully, even a generation, if not more. The economics of the business also means that the wealth manager only starts making profit out of a client relationship after the first few years. For these reasons, cementing a relationship is crucial to the business.

Yet, as the landscape of the industry has shifted as sharply as discussed so far, what does the relationship really amount to? If expectations have been reset, powers chipped away at and a healthy dose of scepticism pumped into the client-advisor engagement, both the cost of the relationship and the premium that it guarantees, must necessarily have undergone substantial tweaks.

The death of intimacy?

A senior wealth manager in Mumbai, who has been in the industry for more than two decades, tells me that the value of a long-term relationship has certainly diminished where the first-generation wealthy in India are concerned.

It has made longevity in the context of a relationship seem irrelevant, at least, for now. ‘Clients are not evaluating relationships or making new ones with the view that these advisors will be with them for the next fifteen to twenty years. The conversations are more about pricing, fees and being shown smart products,’ says this wealth manager.

Because this is usually a client’s first relationship with a wealth manager, there are greater concerns about the effectiveness of the new partnership. This effectiveness is likely to be measured in monetary terms. The value of the relationship is possibly the next stage of evolution.

There are others who say, in confidentiality, that the concept of a relationship is overstated because the foundation of the engagement is in demonstrating sustained, continuous performance. The bond strengthens from the services offered and a sense of shared purpose; the relationship acts as a binding tool.

If the fabric of performance goes through too many tears, the relationship is unlikely to survive. The personal relationship works only as long as the firm and the client are in a mutually beneficial engagement. It’s a tough balance to strike sometimes, especially while maintaining the distinction between being a client’s wealth manager and not becoming their munim (accountant).

‘Loyalty earns you coffee at best. And, a weaker blend of coffee if the portfolio isn’t doing well. Three cups of coffee can go down to one quite quickly,’ a young wealth manager with a global firm once told me.

More than on any other aspect, wealth managers I interviewed requested not to be quoted in this issue.

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