Mr. Dependable : Advisor Insights 27th November 2014
What makes WiseInvest a "Dependable" firm to its 8500 clients?
Hemant Rustagi, WiseInvest Advisors, Mumbai

imgbd What makes an investor choose an advisor or a money manager and stick with him through the rollercoaster ride that markets take him on? What begets trust in the eyes of an investor? A simple one word answer : dependability. Mr.Dependable - a joint initiative between Religare Invesco and Wealth Forum - aims to help you explore all the dimensions of what it takes to be seen by investors as Mr.Dependable, and thus build your financial advisory practice on a robust foundation of trust. After all, dependability is finally what money management is all about.

In the Advisor Insights series of Mr.Dependable, we profile advisors who embody the spirit of Mr.Dependable. Advisors who are sharply focused on the 4 pillars of dependability - consistency, integrity, responsiveness and diligence - and who have built their practices based on trust earned through being dependable.

Hemant Rustagi's WiseInvest Advisors is one of Mumbai's most successful advisory firms, with 3 branches across the city serving 8500 clients through a team of over 40 members, managing over Rs. 600 crores of client assets. How does Hemant ensure that all WiseInvest clients who interact with any of his 40 team members, get the same high quality advice and service that he would personally give? What makes WiseInvest Advisors a "Dependable" firm to its 8500 clients? What does it take for an advisor to instill these 4 pillars of dependability across his firm? Read on as Hemant shares with us what it takes to build a firm that embodies the spirit of "Mr.Dependable".

Let me begin by saying that the four pillars that are being highlighted here - consistency, integrity, responsiveness and diligence - are indeed the four aspects that are absolutely vital for the kind of profession we are in. We are dealing with people's hard earned money, we are dealing with money that they are saving up to realize their dreams - so the level of responsibility on us is huge - and unless we embrace all these 4 qualities, we will not be able to do justice to the task we have taken up.

Consistency : Need to be consistent on all three aspects of client servicing

We strongly believe that we need to be consistent - across the firm - in everything we do for our clients - from the recommendations we make, to the portfolio reviews we conduct to the client servicing that we offer. When we tell our clients that they need to be consistent in their approach towards investments, and not to get swayed by news and events and such like, we need to first set an example and be consistent ourselves in everything we do for them. In order to ensure consistency across the firm on all three aspects - recommendations, reviews and service - we have created processes for each aspect, we have created and documented work flows and we have invested in infrastructure to help us execute these processes.

We have a group of seniors who conduct research, short-list funds for our recommendation list and work with RMs to prepare all client recommendations. RMs need to discuss this with this core group before communicating to clients. Our endeavour is that any client who walks into any of our 3 offices, will get the same kind of recommendations for his needs and circumstances - irrespective of which office he goes to. Our RMs are not permitted to recommend schemes that are outside of our recommendation list. The only exceptions are when a client himself wants to take an independent decision on buying a scheme outside our recommendation list - in which case we carry out his instructions on an execution basis.

We have consistently adopted asset allocation as the key portfolio strategy. We have refrained from the practice of seeing short term trends - like a likely cut in interest rates or a possible midcap rally - and rush to clients saying why don't you put some money into duration funds or midcap funds. Our philosophy has always been that investment decisions should be based on needs and requirements and not short term direction of markets. At the same time, clients do like to occasionally take advantage of certain market moves or developments. The way we practically balance these two, is to first ensure that monthly contributions towards plans being executed do not get compromised in any way. Over and above this, many clients have some lumpsum amounts that are available from time to time. These lumpsums are what can get directed towards tactical calls, if required, to create some alpha.

Workflows really help streamline client servicing. Markets can go up and down, and portfolio values can move in tandem - but client service cannot go up and down. We have an operations manual prepared for the firm. This covers every process in the firm - right from what to do when a mail or call comes in from a client. Any new joinee is given the manual and is attached to an experienced person for a month, before he or she is given any independent responsibilities. We have appointed an independent internal auditor to confirm compliance with processes and controls in back office, advisory and marketing.

All RMs have to document all client interactions in a central database. This really helps maintain not just a trail of all interactions, but also provides seamless transfer from one RM to another, should such a need arise due to a transfer or employee turnover or other reasons. For clients, nothing is more irritating than having to go through a familiarization process all over again with a new advisor. Maintaining a record of all interactions helps avoid much of this hassle for clients. For the new RM, by going through the records for the last year or two, he gets a fairly good idea of client expectations, which he can then gear up to deliver seamlessly.

All this requires appropriate infrastructure. We have invested in appropriate software and in teams that ensure that we maintain the required level of consistency in all aspects of serving our clients.

Integrity : instilling similar values and ethics in the entire team is the challenge

Lets understand this very clearly. In our profession, many of us believe that investors come to us because they see us as knowledgeable advisors who can guide them through the complexities of markets and products and help them earn healthy returns on their savings. That may well be true, but a client stays with you only on account of your integrity. Even if some clients may not fully understand the nitty gritties of products and markets, they can sense who is working for them and who is working for themselves.

Being personally high on integrity is one thing, getting all team members to embrace the same values is quite another challenge. We have today a team of 15 RMs, 15 people in our back office and then we have office assistants. Each one of them, and in particular client facing members like our RMs, must embrace the same ethics and values that I did when we set up the firm. That's really what is important.

What we try and do is take away the environmental factors that can induce an RM to not do what is right for the client at all times. So, the first thing is the product selection aspect. Since RMs cannot recommend any product outside our recommended list, any external influences that may tempt him to recommend specific products outside our recommended list, cannot play a part. When we make our central recommendation list, since I come from the industry and am quite familiar with the lacunae as well as benefits of various products, we have a clear set of dos and don'ts. We for example do not see value in closed ended funds, since open ended variants are more investor friendly. I think, for example, that open ended funds can do a much better job than capital protection funds. We, as a rule, avoid NFOs unless there is a new theme that we believe makes sense for our clients. Take for example the new category of Equity Income funds. If you believe the category makes sense, you recommend an NFO of a good fund house. NFOs that are me too's are avoided by us. You must appreciate media's influence on clients' minds. Clients read about high commissions on closed ended funds, on NFOs etc. When they see that here is a firm that does not recommend such products to them, it only enhances the perception of our firm in their eyes.

Second aspect that influences an RM to think about himself rather than his client is target pressure. We don't give any targets to any of our RMs. I firmly believe that I cannot say that we will always do the right thing for the client at all times and then turn to my RM and say, "I don't care how you do it, but I want so much of sales from you this month." At the same time, we do want our RMs to be accountable for performance, and we do have a business to run. What my RMs are accountable for is that every one of their clients must be happy with us. If an RM is handling 100 clients, the only thing we track is how well he is serving his 100 clients and how many of them are happy with us. If an RM ensures that he is serving his clients well, he will get referrals from them, and as we know, in this business, a referral from an existing client means 80% of your sales effort is done. I consider every WiseInvest client as my brand ambassador in the market - if we keep them happy, they will give us enough referrals to keep our business running and growing smoothly. So, the way I try to drive performance of my RMs is not how much business they get, but from how many clients they get referrals. If an RM is serving 100 clients and gets referrals from 70, he is doing his job well. That's the way I look at it.

Responsiveness : its about being there for your client when they need you most

If you are a quality advisory firm, there are some things which are given. Responding to queries within a particular turn around time, monitoring client portfolios at an agreed frequency - these are all given. To me, responsiveness is about being there for your client when he needs you most. Few years ago, we did not have an online portfolio tracking service, but used to send portfolio statements on a monthly basis. Right through the 2008-2009 crash, when portfolio were looking terrible, we continued sending statements every month without fail and continued meeting clients regularly, to address their concerns, to give them the confidence to go through those turbulent times. In times of market panic, investors who redeem are more often those who did not have an advisor sitting by their side, giving them the courage and confidence to ride through volatility.

Diligence : are you on the same side of the table as your client or opposite?

There are two angles to diligence, in my view. One is regulatory - which is to do with disclosures, ensuring product suitability, providing information and so on. The other aspect is what the client expects in terms of diligence. The client simply expects you to be on his side of the table and not the opposite side. He does not see you as a seller of products but somebody who will help him select the right ones for him. If we have to be on his side of the table, we must first put aside our own biases and look only at what is right for him. I cannot superimpose my likes and dislikes - I need to be able to see what is in his best interests. I need to be able to look at all available options in the market and make an informed choice of what is right for him - not necessarily what I like the most. That, according to me, is diligence.

All content in Mr.Dependable is created by Wealth Forum and should not be construed as views of Religare Invesco MF.

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