INTERVIEW: Ambit's Banerjee On Challenges Facing India's Wealth Industry

Tara Loader Wilkinson

15 August 2012

The former private banking head of ABN AMRO India, Sutapa Banerjee, launched the wealth business at Indian brokerage Ambit Capital two years ago. As chief executive of wealth at the firm, the start-up came at a challenging time. Here she discusses the ups and downs of the last 24 months, particularly in the wake of the volatile Indian markets.

Q. Ambit Private Wealth has completed two years in business, how has the journey been so far?

The journey has been challenging, but satisfying. We have grown to more than 180 clients and INR 700 crore in just about two years since launch of business.

We have successfully built in unique differentiated strategies in our Discretionary Portfolio Management Services, that have outperformed the market.

Client portfolios are periodically reviewed to ensure that performance is in line with expectations, which has helped in deepening the relationships and increasing share of wallet.

Our focus has been to build a team of relationship managers with at least 10-12 years of experience in the private banking industry. Hence our recruitment has been selective and team size small compared to industry standards. However, we have one of the highest assets per advisor in the industry, especially in view of the relatively short period we have been in business. We are today a team of 20 professionals.

Q. How has the challenging situation both globally and domestically affected the business sentiment? What kind of advice are you giving your clients in these difficult times?

The global situation has made clients risk averse while on the domestic front a slowing economy has made market conditions non conducive for long term investments in to assets like equities and private equity.

Our advice is based on asset allocation as per the risk profile of the individual client. While there might be tactical shifts in investment products depending on market conditions, it tends to be driven by suitability to clients rather than market conditions.

We have innovated and evolved strategies which use market volatilities for the clients benefit, and these have performed extremely well relative to market.

Q. Has clients behavior and investing patterns changed in the last two years? how?

Clients have become risk averse due to adverse market conditions in the last two years. They have shown preference to either high safety assets like bank deposits and fixed maturity plans or traditional assets like real estate and gold.

Risk capital has been diverted to products like debentures issued by real estate companies which promise secured high coupon.

Q. What are the current challenges faced by the private wealth industry in India? Where do you see the industry headed?

Increasing cost/income ratios is one of the biggest challenges in the private wealth industry. This along with paucity of quality talent and worsening economic conditions has put a strain on the industry. Also regulatory activism has led to a considerable fall in quantum and channels of revenue.

The industry needs to rationalise cost in the current low income environment. Regulators need to realise the role advisors and distributors play and make sure that their interests are take care of.

Only institutions who work with the client’s interest in mind while offering a well diversified product platform will be able to survive. This along with the ability to survive the trough will be enable firms to position themselves correctly when market conditions improve.