Anand Rathi Wealth has set the IPO price band at Rs 530-550 and the issue is to open on Thursday. How has the journey been so far?
Amit Rathi: The journey sometimes seems great in hindsight but when we started the journey, we did not realise how big an opportunity we were tapping into. When one starts any business, one thinks this is one more business around mutual fund distribution that one can go after. But when we tried to navigate the new business, we realised that at the end of the day, the focus has to be on the customers and the more we listened to customers, the more we understood we wanted to do this business a little differently than how we imagined.
I thought a lot about what the industry was doing and that journey has been exciting. We have been joined by a huge set of professionals who really helped us grow over this period. Client goodwill is one of the biggest factors for growth in this business. It is references from existing clients that help it grow and they are the biggest brand ambassadors and that is the barrier to entry for us in terms of growth and also for new players in this industry.
But we have discovered along the way and it has helped us that the focus is on client polls and not to think of ourselves as merely a distributor of financial products but rather how we are trying to help solve customer needs and customer problems. So working with customers, helping them identify their needs, spending that time and effort and it makes it a little longer sale cycle but helping the clients think through their goals much more clearly then trading, creating a financial plan or strategy that helps them navigate markets and, of course, spending a lot of time on product research and to ensure that we on top of what we are delivering.
Going through all these processes and building the right set of complementary skills within the team that allow us to go to the marketplace, It has been an exciting journey. The client segmentation has also evolved and we do not consciously go after the ultra high net worth space. We do not go after the retail space in the private wealth business. Fintechs are attacking that but I think it has been a culmination where strategic discussions have evolved over a point of time.
How do you feel now that you have built the organisation and will be a listed company soon not.
Feroze Azeez: I feel very good because this business is built on passion on two levels. One is passion to educate clients — not just our clients. If we can spread education so that we as a country and investors in turn take more mathematical decisions in the path of investing that has been one passion.
The second is to tangibly influence those whom we can directly influence, those 6,000, 7,000 clients which we currently manage. So it feels very good. But this is the first step and there are miles to go before we sleep. In this journey we have accumulated several professionals over the last 10-15 years who have shared the same objective not just the self-monitoring objective but also shared the same passion and that is why coming to work every Monday morning has been so exciting. In the future, it will be even more so.
You guys have built this organisation painstakingly over the years and are among the top three now. Other than technology, what are the other levers that the top management is working on?
Amit Rathi: In the last five years, the growth in terms of the number of dollar millionaires is basically 14%, 15%, 16%. We are doubling every five years and so the macro opportunity itself is great. Within that, financial savings are growing in a great manner and as a business, we want to ensure two-three things. One is we are able to move correctly, to ensure that what we are executing currently we will do that the legit way — our research, our advisory all are very important.
The second is what can we do to train our RMs to ensure that their productivity levels across the entire value chain is actually improving week on week, month on month. We spend a lot of time on house play and some it is almost 20-25 man days a year. Everyone in that system goes through training to increase productivity.
The third is technology. We started investing aggressively in technology five years back because our core wealth management business is also fairly standardised. One of the big challenges in this business has been how to get talented RMs to deliver advisory to HNIs. The pool of RMs was not so large and we have been able to standardise the process with which we deliver the solution.
A lot of the workload of the RM can be assisted by technology. So, we had two businesses that we built. One business is a digital wealth management business where we attempted to deliver pretty much end to end wealth management solutions through our digital channel. This is targeting the mass affluent today. We have 3,500 customers with an average of Rs 20 lakh. A lot of the technology is now flowing into our private wealth business.
The other factor that has changed and has actually been a blessing in disguise is the Covid situation where client adoption of technology has changed. We always wanted technology to be on the forefront but client adoption has also changed and that has allowed us to increase productivity where RMs can meet more customers rather than having to physically travel. Transactions have gone online and a lot of stuff happening around technology has really helped build scalability in the business.
The environment is pretty competitive and the margin structures are coming under increased scrutiny. Does a reasonably large size and scale help tide over that challenge?
Feroze Azeez: If you become the best in a segment then you are able to address all the customer or client problems in that segment. So for those clients in the Rs 5-50 crore bracket, a lot of transactional advice goes to them. There is not too much holistic advice or holistic distribution or some planning being done. So one has to get a clear market segment which is least competitive. Point two is to carve out a value proposition for this segment which is tough.
