Saturday, June 27, 2009

A discussion on the 'Indian Perspective of Wealth Management'

During a recent visit at the Indian School of Business (ISB), Pallav Sinha, Managing Director and Chief Executive Officer, Fullerton Securities and Wealth Advisors Limited, India, interacted with the students and discussed with them the ‘Indian Perspective of Wealth Management.’ Calling it a privilege to be at the ISB and to address the students, some of the topics Sinha discussed during the session were - the different segments in business, importance of customer relationship, the formula for success etc.


Talking about the philosophy of Fullerton’s business and what kind of space it has in the Indian market, Sinha said, “Most of us have heard of fortune being made at the top of the pyramid and at the bottom of the pyramid. But there is a huge business opportunity in the middle segment, which often tends to be ignored. This is not a prime target market for a majority of the people.” According to Sinha, it is possible to make huge business propositions in this segment for a variety of reasons - there are very few people here like the micro-finance companies, small personal loan companies etc., that target the lower income. Sinha calls this the ‘underserved segment’ and calls the one right on top the ‘spoilt for choice segment,’ as every financial services company and bank targets this. “It is important to understand what each segment requires, and quite obviously at the bottom it is more basic needs and as you go on top it gets sophisticated,” added Sinha.


Retail financial service players find it extremely difficult to enter at the sophisticated level and create product structures and a business proposition there. Entering at the middle segment is the best option for a new entrant because it allows one to acquire new relationships and deepen them over a period of time. “It is a great strategy for acquiring entry and new customers, because in consumer business the number of customers define your success factor,” mentioned Sinha.


The other important factor Sinha discussed was customer relationship. He said, “One should be able to measure customer profitability, and in my experience it is extremely difficult to measure it because all financial services and banks are sometimes unable to identify how many products a customer has. “As it is not possible for one entity to deliver multiple products, according to Sinha, the recipe for success is to identify customers across products and deliver. Customers should be able to get all the information they require from one person at one point.


Sinha ended the session by sharing the four most important factors in business execution and implementation, which are customer experience, product programmes, sales and pricing. “It is important to have an implementation plan. Here, there is no scope to do different things but it is about doing things differently like reducing cost of acquisition, looking at credit margin and not credit losses etc. At the same time it is very important to define your unique value proposition to tell people what you stand for in the market. But it can never be static. You need to constantly revaluate it and fine tune it,” concluded Sinha. 

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