Incremental innovation is a continuous effort towards enhancing your products or your processes. There is nothing big bang about it - but the impact of incremental innovation is just as profound over time. A great example of incremental innovation is how Sapient Wealth has been innovating with its HR practices. Amit takes us through some of the smart ideas that Sapient has implemented in the way it organizes and manages its growing team, to ensure high levels of motivation, enviable levels of retention and most importantly, a very sharp focus on serving clients excellently.

The Innovators - a joint initiative by L&T MF and Wealth Forum - aims to provide you an idea sharing platform to inspire incremental innovation in every one of us, to enable us to not only strengthen our businesses, but also serve our investors better.

Amit Bivalkar, Sapient Wealth, Pune

Managing a growing team is one of the biggest challenges for an IFA firm. We need to be innovative in how we measure and incentivize performance across the firm - not just the front end people. We also need to devise innovative retention strategies in a competitive market for talent. And above all, we need to create an organization structure and a system that serves our clients excellently. In this context, there are a few things we have done, which have worked very well for us, our clients and our team.

Service RMs: We serve over 3800 clients and are growing quite well. But when we did our A-B-C analysis of clients, we saw that the top 15% of clients contributed 92% of revenues. Its more skewed than the 80-20 rule. 450 HNI families account for most of our revenues, while the rest are primarily SIP oriented retail clients. The advisory engagement with these 450 families rests with the three partners at Sapient. But, rather than have a common back office serving these clients, we created a middle structure called "Service RMs". We have 4 service RMs who are mapped to a set of 100-120 HNI families. Every single service aspect for these families is taken care by their respective service RMs. Whether it is form filling for transaction execution, FATCA compliance, processes for change of status to major for a family member, PAN card for such majors, IINs, change in bank mandate etc - all services are handled by the designated service RM. The service RM in turn liaises with our back office team to ensure completion of tasks for the client. Clients know who their service RM is and call him directly for any service issues. What this has done is that it has freed up our time (the partners' time) considerably to devote to more business development aspects and at the same time, ensures ownership of client service at a single point for each client - thus ensuring better client servicing.

Incentive structures: A shadow credit and incentive structure has been created for these service RMs to ensure that their variable pay is linked not only to growth of AuM that they serve, but also to the level of service errors during the year for clients they are responsible for. Our back office team likewise has an incentive structure that is linked to number of transaction processing errors and number of transaction rejections. For back office staff, another level at which we provide incentives is zero absence during the month.

We had a peculiar problem from an unexpected source. We have 3 pick up boys who have been given bikes to go around and pick up/deliver forms etc from clients homes/offices. Some client locations are close to our office, some are far. In a day, one of the boys could spend all day covering only 5 pick-ups while another could complete 20, because of proximate locations. Someone would grumble that he was being given only far out locations while the other would grumble that he was being given too many pick-ups to do. We therefore created an incentive plan for them that focused on total kilometres travelled. Our estimate was that each could cover 25-30 kms per day and therefore 700 kms per month. We rolled out an incentive plan where payouts are based on how many kilometres beyond 700 are actually covered by each of these pick up boys in a month. Daily log sheets are filled in for this purpose. Now, our pick up boys never grumble about volume of pick-ups - they are eager to travel more during the day, execute more pick-ups, log in more kms and beat the 700 km threshold!

Compensation across the team in our firm is thus directly linked to how well we serve our clients. Our job is to break down each member's jobs into client deliverables and devise incentive structures that are aligned to how well we serve our clients.

Matching grant: We encourage retail investors to save regularly through SIPs - we thought we should do this with our own team as well. Once a team member completes 3 years with Sapient, he/she automatically becomes entitled to our matching grant program. We encourage team members to start SIPs in funds of their choice. When they begin their SIP, we immediately match it with a similar contribution in the same scheme for a similar amount (upto a max of Rs.5000 per month). The condition is that these SIPs need to be for a 5 year period. Over this 5 year period, if they save Rs.60,000 per annum - which is Rs. 3 lakhs, our contribution will add up to another Rs.300,000. Over this 5 year period, depending on markets, staff members can look forward to receiving an amount in excess of Rs. 10 lakhs - which is a very substantial amount for most staff members. We started Sapient in 2009. The first set of matching grant contributions began in 2012 and the first set of maturities will come next year, in 2017. It is a matter of tremendous satisfaction for us that we have not had no attrition among team members who are more than 3 years vintage and who therefore qualified for the matching grant program. This program not only encourages staff members to save, but is also serving as a very useful retention strategy.

Share this article