9th April 2012

Good quality advisors have a golden opportunity today to significantly increase market share as competition dwindles and household savings rise. The big issue for these quality advisors is this : how do you scale up your delivery platform to harness this opportunity? How do you increase your team and retain them when big brands are out to get good talent? How do you optimise efficiencies by segregating advice delivery from service delivery, to help boost productivity of your advisory team? These were some of the key issues that were discussed in a panel discussion at the recently concluded Wealth Forum Platinum Circle Advisors Conference, held on March 23rd, 2012

Panellists (from left to right) : Ashish Chadha, Chadha Investments, Delhi; Puneet Chaddha, CEO, HSBC AMC; Hemant Rustagi, WiseInvest Advisors, Mumbai; Bharat Phatak, Wealth Managers, Pune; Lovaii Navlakhi, International Money Matters, Bangalore; Vijay Venkatram, Wealth Forum

Opening the panel discussion, Puneet Chaddha made a thought-provoking presentation on opportunities and challenges for the IFA fraternity, where he asked advisors to take a long, hard and honest look at themselves (Are you truly independent and truly an advisor)

Large wealth managers scale up their delivery platforms and reach out to customers across the country and the globe by creating repeatable processes and replicating them across offices. Many IFAs however believe that this scaling up often happens at the cost of your personal touch and at the cost of quality - which are the two trump cards of a good quality IFA in comparison to a large firm. IFAs who do attempt scaling up by hiring teams and opening branches, often find that the RMs who they have painstakingly sourced and trained, move on to take up jobs in larger banks and distribution houses - which offer them a bigger brand, more money and the promise of an exciting career path. And that brings the IFA back to square one. Building and retaining a team is one of the biggest challenges today for IFAs who are in growth mode. How then, should an IFA build his team? Advisors on this panel have all successfully dealt with this issue, have built sizeable teams and continue to scale up rapidly. Vijay asked them to share with the advisors participating in the conference their strategies to build, motivate and retain good quality teams.

Lovaii Navlakhi mentioned that the key is to understand what is the most important factor that motivates employees at each stage in their career and find ways of offering that, in a manner that is superior to the large brands you compete with for this talent.

In the initial stages of a young RM's career, the quest for knowledge and learning is more than the quest for money. You and your firm should provide a learning environment that caters to this aspiration - and you are much better positioned to do that versus a large bank, because you have rich experience and insights that you can directly impart to the youngster, which will be difficult for this RM to get in a large outfit with its hierarchies.

As this RM matures, you must shift gears from a learning environment to one that gives him greater responsibilities. Good quality RMs will be hungry for more independence, for larger roles. You are again better positioned to offer them larger responsibilities than they can get in large firms - again due to hierarchy constraints - which you don't have. Money will always be important - but, its important to understand which RMs are motivated solely by money and which RMs are hungry for more experience and larger responsibilities, with money as a hygiene factor. This has worked quite well for Lovaii - of course not always, but often enough to help him build a good quality team.

Bharat Phatak added that what really underpins this strategy - which he too has very effectively employed over the years - is a matching of wavelengths between him and his new recruits. RMs who embrace your firm's philosophy and approach are the ones to be nurtured. Those that don't are misfits in your team anyway. You must be very careful in whom you hire - quality control at entry point saves a lot of hassles going forward.

After the first two stages - the learning phase and the experience phase - comes the third phase in an employee's career - that of ownership. Both Bharat and Lovaii have given equity stakes to key senior members. Both are open to the idea of diluting personal stake in favour of key team members, as a means to recognise, reward and motivate them and build a genuine feeling of ownership in the firm. This again, is something that most large firms may not be able to match.

Bharat however sounded a note of caution on giving a stake in the firm. Unlike listed firms which offer stock options, your senior team member has no window of opportunity to "cash in" on the stake at an appropriate time. He should be motivated by his share of higher cash flows in the coming years, for him to really value the stake that you are willing to give him. That calls for a genuinely long term approach - again here, meeting of the minds is very important for such a strategy to be a win-win for both.

Ashish Chaddha added that one more factor where you can score over a large firm, is the emotional bond that you develop with your team members. Personal loyalty gets built from emotional bonds that you develop. When you are there for him when he needs help the most, when you offer a caring environment that is sensitive to each team member's individual needs and challenges, you develop an emotional bond that often goes beyond just money. Ashish mentioned that he has seen RMs leave him for bigger brands and more money, but come back to him because they were unhappy there. When we talk of a personal touch being our trump card with clients vis-A-vis large firms, it equally applies with team members as well, said Ashish.

In order to promote a fair and equitable environment, one thing that Ashish insists on is that whenever a new RM joins, he ensures that the senior RMs divest some of their smaller accounts to the newcomer. The new RM gets a book to start working on rather than face an uphill struggle to win his first set of accounts. At the same time, the more experienced RMs shed some of their smaller accounts and give themselves room to acquire bigger customers. Everybody is looking for business, everybody has an opportunity to enhance their own productivity and therefore income and the firm benefits.

Moving on from building teams, Vijay shifted focus to another critical aspect - which is the loss of productivity of advisory teams / RMs due to time spent on operational issues. Vijay drew reference to the banking model, where HNIs often have a tag team - an RM and a service officer. RMs rarely get involved in service issues - which is left to the relatively lower cost service officers. This allows RMs to focus on sales and advice. Is this replicable in the IFA world?

Hemant Rustagi believes it is not only replicable, but is the only solution for IFAs who want to scale up. He has done this very successfully in his firm, and his clients are very comfortable with this arrangement. The key is to share the model with your client right at the outset - so that expectations are clearly set. Whether you have one service officer per RM or one for many RMs depends on your service workloads - but it is absolutely vital to clearly demarcate responsibilities between your advisory team and your service team, if you want to boost the productivity of your RMs - who are always the scarce resource.

What if clients insist on calling only the RM or only you for everything? It's a function of how you set expectations at the outset, said Hemant. Puneet cautioned that while this is an effective model, care must be taken that the RM remains in the loop on all matters pertaining to the client. Many a client is lost for service issues and not for poor returns. Your RM must take responsibility for all activities in the client's portfolio and must not be completely disassociated from service aspects. He may lean on service staff for execution - but he must remain in the loop and ensure that the client is serviced appropriately.

What do you think?

What are your strategies to build and retain good quality teams? Do the insights shared by these advisors help you deal with your HR challenges? What do you think of separating advice from service delivery in order to boost productivity? Is that feasible? What are your ideas to scale up your delivery platform, reach out to more clients and grow more rapidly? Share your thoughts with fellow advisors across the country by posting your comments in the box below - its YOUR forum !