Here’s how companies are retaining relationship managers
The wealth management industry in India has grown exponentially in the past two decades and is all set to sustain this growth trajectory. This exponential growth has largely been perpetuated by a host of factors including India’s long-term economic prospects, positive demographics, rising income levels, and current low penetration. However, not all wealth management firms operating in India have been able to harness the value of these macro positives. Atleast four marquee global banking brands forayed into the wealth management business in India to eventually sell-out or wind down their wealth management interests in the country between 2013 and 2015. Today, the top wealth management companies in India are home-grown.
Considering that the macro environment would largely favor all players, what could be the reason behind the fact that the companies with the biggest share in the wealth management industry around the world have found it difficult to succeed in the Indian markets?
We need to understand that for an individual to entrust someone with his money, he needs to have complete faith in the wealth manager’s ability to manage his money and trust that the wealth manager’s decisions are governed by the client’s best interest. The role of a relationship manager (RM) in fostering this trust is integral. A good RM really is a friend, a financial advisor, legal adviser, shrink, banker and life-coach all bundled into one shiny package. To become a one-stop solution for the client, an RM should have the ability to understand the clients’ requirements, spending habits, investment biases and other proclivities and provide solutions in an effective and simple manner. As communication is the key to any sales job, the knowledge of local language is equally important. This is why we see local RMs outperforming foreigners. As financial education in our country is still quite low, people need the help of RMs to better understand investment products and make optimal investment decisions.
Along with a good RM, continuity in relationship is equally important. In the wealth management industry, clients place a premium on trust and stability. Clients are often fed up with RMs changing jobs every two years which leads to a gap in their relationships. As it takes time for a client to develop trust in an RM, s(he)would prefer to deal with a known person, with whom s(he) has a history of transactions than to move to a new RM. The key to building a long-term relationship with clients is to provide them with RM continuity. This continuity can only be achieved if the organization has a team of committed RMs who can genuinely participate in the clients’ wealth building journey.
But, how does a firm ensure that RMs stay committed?
- Attracting RMs: The easy answer to ensuring RM commitment is equity and ownership. At the time when the wealth management industry was at a relatively nascent stage, there were numerous companies that offered to share valuation or part ownership with their RMs. However, in many cases, the initiatives were often either not substantial or primarily on paper. It is important that the RMs are fully vested in the business. And for that, it is imperative that the offers made to them are substantial and fully transparent. It is important that bonuses are linked to their performances and mechanisms to measure the performance is simple and easily understood.
Relationship management, like sales, is not something that can be learned or read. It is more organic in nature and gets better with experience and client interaction. For a company to have a winning army of RMs, it should have strong leadership and a robust learning ecosystem. The best practices should be shared along with the mistakes which need to be avoided. These are the two important anchors around which a formidable team of RMs can be built.
- Retaining RMs: Now for the next challenge, retention. Companies where the employee gets recognition and is made to feel important to the success of the organization often see lower attrition. The inverse is also true. For example: big process driven companies in the IT and consulting space have high attrition rates as it is difficult for an employee’s work to get recognized amongst the sea of people and processes within the organization. Thus, it is important for organizations to create systems and processes where the employee can see a direct relationship between his work and the company’s progress. An ecosystem gets self-created which attracts friends/professionals from outside, people willing to work together to create a conducive work environment where everyone is tethered to the common goals of growth and value creation. Just imagine supplementing this environment with a dose of intense practical learning and development! It is also very important to understand the pulse of the people working in the organization and then offering solutions that they would find most attractive. Unlike the previous generation, the millennials don’t glean their knowledge and technical skills from behind a classroom desk. They are digital natives who have all the information at their fingertips. They want practical handholding, networking opportunities, and flexible work culture.
- Growing RMs: The third factor in this troika is growth. Good and committed employees should be given the opportunity to grow and achieve scale in their roles and positions. The key is to motivate employees to reach new heights and recognize them for their achievements. Once again, making employees stakeholders in the success of the business can go a long way in ensuring their commitment.
In the wealth management industry, relationships are built on a bedrock of trust. A client’s belief that the wealth manager understands his requirements. Trust that the wealth manager will act only in the best interest of the client. RMs act like a conduit between the client and the wealth management firm. They are both, agents of the firm as well as agents of the client. RMs have played and will continue to play, an integral role in contributing to the growth of the wealth management industry in India.