For our second CareerPreview, we explore the world of wealth management and private banking. Let’s take a look at the life of a Private Banker/Wealth Manager, through the eyes of Soumya Rajan!
Failure is a good thing
Shilpa Jain: As our primary aim is to make young women financially independent, why is being financially independent important to you?
Soumya Rajan: Being financially independent is the safety net and another source of income when a family is confronted with adverse personal circumstances. It is extra income in good and bad times. It is an important attribute for the personal self-esteem and confidence of women. It is important for young women to be both financially literate and financial independent.
SJ: How did your professional journey begin? What was your ambition then?
SR: My professional journey began as a Management Trainee (MT) with ANZ Grindlays Bank in the summer of 1994. At that time, the Bank was the largest foreign bank in India and had a training programme for MTs which was extremely sought after. I remember earning INR 6000/- a month as a stipend and feeling extremely rich! I didn’t join the Bank with a lot of ambition, that came later when the seeds of competitiveness got sown and you soon realised it was about climbing the corporate ladder in an organisation. For me, in the early days just learning something new every day, working with some very bright people and being financially independent were the hallmarks of the first 12 months.
SJ: From being a hardcore banker to an entrepreneurship role as a successful Founder & CEO of a Multi-Family Office and Advisory firm, how did the transition happen?
On the transition to entrepreneurship, when I was heading the Private Bank, I realised that there were flaws to the wealth management business model. Revenues came from product manufacturers to distribute products. This meant a conflict of interest between the “advice” being given by Private Banks and their Clients. Clients were often completely unaware of this misalignment and blindly trusted their advisors. A second flaw to the business model was that the solutions that a Private Bank could provide to their clients was only what their Bank offered. Sometimes the best solution for a client did not sit with the organisation that you represented but was available with a competitor.
These two fundamental flaws led me to think about an advisory business model, where the interests between the clients and the firm are aligned. Could we be neutral service providers and help our clients find the best solutions because we were not aligned to any one provider? Could our services be more holistic as we looked at the larger financial well-being of our clients as the over-arching theme as compared to just investments or just succession or just family governance? The advisory approach also had pricing merits for clients – the cost of investment would be lower and have greater transparency. I also noticed that there was no large firm with a national presence that offered wealth advisory services. Waterfield Advisors was founded in 2011 to fill this white space in the financial services landscape.
SJ: Can you demystify “Private Banking” and what it entails for the benefit of our young women?
SR: Private Banking is a set of specialised services to High Net Worth (defined as clients having financial assets > US$1m) and Ultra High Net Worth clients (defined as clients having financial assets > US$30m). The service proposition crafted by financial services companies for these segments specifically addresses the needs of these clients, which were often different from other retail client segments. Since the services were often perceived to be more exclusive in nature, the name Private Banking emerged.
SJ: For the women wanting to make a career in private banking, can you give us a few guidelines on how should they go about it?
SR: Private Banking can be a great career choice for women. You need to have fairly strong IQ and EQ to be a successful Private Banker. Gone are the days when it was good enough just to have very strong relationship management skills. It is important to have a fundamental grasp on financial markets, how they work and their inter-connectedness. This means having a good grounding in macro-economics. Women are also natural collaborators and collaboration is an important skill to develop in helping clients find holistic solutions in non-financial areas where they need advice like succession planning, estate planning and philanthropy.
SJ: What are the various roles in private banking which one can consider?
SR: Roles in Private Banking can be in different areas – all of which are important in client delivery. The role that most people hear about is the role of the Relationship Manager or Private Banker, individuals who directly interact and engage with a Client. These are sales oriented roles and carry business and revenue targets. This is the one-point contact person for Clients with the organisation. They are also the individuals that have a full understanding of the client’s needs both from an investment perspective and other softer aspects. More recently, I have often seen many young women shying away from the RM role as they think it may be too high pressure or that they have to keep achieving revenue and business targets. I am disappointed when I hear such arguments, because I believe fundamentally women make great relationship managers – they connect well with clients and can empathise with them, in whatever situation the client finds themselves in. I think the fear often emerges because women are more scared to fail. That needs to change. Failure is a good thing and teaches you many life lessons. It builds strength of character, so young women shouldn’t be afraid to fail. I can tell you from experience, that no one who has ever been successful has not confronted failure.
Other important roles in Private Banking are in the areas of Investments. There are two roles in the Investment function – one on the Product side and the other is on the Advisory side. In Product roles, the interaction will be Asset Management Companies, Fund Managers and looking at the macro-economic environment to craft suitable investment products for Clients. The Advisory role is the Client interface role within the Investment function. In the Advisory role, the Investment professional works with the Relationship Manager to determine the risk appetite, liquidity requirements, cash flows of the Client and then craft an investment plan for the Client. The Investment Professional then chooses the right products to create the financial plan. Both roles are important in Private Banking.
The third important role in Private Banking is the role of service managers, to ensure the seamless coordination of planned investment executions. This role involves coordinating between the Clients, their Bankers, Asset Management Companies and other Product Manufacturers.
SJ: Would you require any specific qualification to make an entry into private banking?
SR: No specific educational qualifications are required to have a successful Private Banking career. I would recommend a good understanding of Economics and a comfort with working with numbers, as a pre-requisite. The regulator has also specified specific certifications that a banker needs to acquire if they want to be in the Wealth Management industry.
SJ: One hears that some of the well-established private bankers make a lot of money by way of bonuses, etc. Is that correct? And how does one become a successful private banker?
SR: Private Banking is a lucrative career monetarily. However, in my view, in Wealth Distribution firms, the Relationship Managers incentives are not aligned to a Client as the revenue in a Wealth Distribution firm is from the product manufacturer; so you may be a “great” Private Banker, be considered to be so by your firm and earn large bonuses and incentives, but did you do the right thing by your Clients every step of the way? This is a dilemma I am sure every successful Private Banker has faced.
My benchmark for a successful Private Banker is therefore not how much you have earned monetarily, but are you someone who does the right thing by your Clients, when no one else is looking and sleeps well at night? I am therefore more encouraged by the emergence of Wealth Advisory firms than by Wealth Distribution firms.
SJ: Wealth management in India is largely bucketed into two categories- Mass affluent and HNI/UHNI. What is the differentiation?
SR: The difference between Mass Affluent, HNI and UHNI is how we segment a Client in the Wealth Management industry. This is a function of the amount of investible financial assets a client has. Mass Affluent Clients have investible financial assets between US$100K and US$1m, HNI between US$1m and US$30m, UHNI are those clients where the investible financial assets are > US$30m.
SJ: You have a wonderful diversity balance at Waterfield Advisors – wherein 60% of your workforce are women and 50% are in leadership positions. Keeping this in mind, what message would you like to convey to the young women out there?
SR: I think having a good gender balance in any firm builds organisational strength. It makes for a more diverse workforce with differing perspectives. I have a great leadership team comprising of very talented men and women. Our senior management team thrives on well debated discussions, being collaborative and constructive. I am a big believer that the future success of many businesses will be predicated on their ability to collaborate and not compete.
Wealth management, in particular, is a career where women can take a career break and come back to a mainstream job. The basic skills they would have learned before they took a career break will still hold true when they return. What they would need to brush up on is specific subject matter expertise and technical aspects of their jobs. With the right workplace environment and supportive colleagues, this transition can be quickly made. The challenge for many women returning from career breaks is where they see themselves in terms of their male peers in the organisation. There are no easy answers for this. My advice to them is to remember that merit in the long term will shine through, so don’t get disheartened by the short-term. Think about the long-term goals of your career, 10 or 15 years out.
SJ: Any specific problems you would want women to keep in mind while pursuing an entrepreneurial journey? How to overcome those issues?
SR: It’s tough to be an entrepreneur. Don’t have any illusions that it will be easier than being a salaried individual. Before embarking on an entrepreneurial journey, have a good sense of how much capital you can commit to the enterprise, think of the downside risks – in terms of time, money and effort to create a successful company. Do you have a supportive family who understands your ambitions? It is important to have frank and open discussions with them, as the success or failure of your journey will impact them deeply, both financially and emotionally.
Overcoming difficulties is the cross that every entrepreneur must bear. These will come in different shapes and forms – capital, people, business models, competition, family commitments, black swan events. It is how we respond to these situations that ultimately differentiates the winners from those that get left behind.
Private Banker| Wealth Manager
Soumya Rajan is the Founder & CEO of Waterfield Advisors, India’s largest independent Multi-Family Office and Wealth Advisory firm that presently advises on assets of ~US$3.5bn. She previously worked at Standard Chartered Bank India for 16 years, where she headed their Private Banking Division from 2008 to 2010.
Soumya is the great granddaughter of India’s second President Dr S Radhakrishnan and the sister-in-law of Dr Raghuram Rajan, ex-Governor of Reserve Bank of India.