Hubbis met recently in Mumbai with Shiv Gupta, Founder & Chief Executive Officer of Sanctum Wealth, to learn more about the domestic Indian wealth management market and the key trends, opportunities and challenges. In this portion of the discussion, he focused on talent and business development. Looking at the big picture, he highlighted the numerous opportunities ahead in India, including the market’s stellar growth, while at the same time pointing to increasing compliance complexities, intensifying competition driving costs higher and fees lower, the need for ongoing investment in digital solutions, and the serious challenges in locating and hiring experienced talent. He then zoomed in on the business models and the value of scale to capture the full potential ahead. As usual, Shiv’s insights were sharp and concise, befitting a 25-year veteran of the Indian wealth management scene and someone who is both articulate and not shy of expressing himself.
Shiv first remarks on the truly remarkable pace of expansion in India’s wealth market. “The sheer size and the pace of growth have already resulted in shortages in terms of the talent available,” he reports. “And it will get a lot worse a lot faster to the point where there is a massive structural mismatch.”
Mind the gap
He says the result is already being manifested in the manner in which people are poaching frontline talent from each other and, in the process, changing the economics of the industry.
“We are clearly going to need some serious interventions from firms, from the industry, maybe from academia as well, to help develop more talent that can feed this huge and growing mismatch,” he comments. “This must be high up on people’s agenda, as they think out a few years from where we are right now.”
Trouble ahead?
However, he fears that there is a blinkered approach to what he sees rather as an impending crisis. “There is the short-term view of managing for the next year or two, but there is a lack of medium- to longer-term thinking and planning,” he says. “As I see things, it is an absolute imperative for the industry as a whole. I do actually think we will get there at some point, but what remains to be seen is at what pace we can all address these issues by creating some sort of agenda for developing new relationship management resources.”
He explains that for this discussion, he was restricting his comments to RMs, but he acknowledges that these shortfalls will also affect other product and service areas, such as investment management, estate planning, wealth planning and structuring, in short, everything that forms part of a comprehensive wealth management suite.
He says that Sanctum Wealth has been working hard to strategise on these challenges, including developing internal training journeys for wealth managers to develop their own talent in-house.
Greater digital adoption needed
He expands his comments to a wider-angle perspective, pointing to the need to scale the business models to capture the dramatic growth potential ahead. He explains that a key impediment to achieving scale is the need for digital solutions that are adopted by teams internally and delivered to clients.
“Technology is an opportunity and a threat,” he explains.
“Wealth managers have a long way to go in deploying technology to its full extent to improve both the quality of advice and the quality of service, and therefore significant investment is needed, and much greater acceptance and adoption internally. At the same time, without the right investment and a smart approach to digitisation, some players could find themselves left behind.”
He continues: “I think this is a widespread issue, with the pace of tech adoption by firms and individuals within firms generally far from what is required to achieve the efficiencies and other advances. There are clear advantages to be seized, in terms of internal productivity and efficiency, and of course, also improving the client experience, enhancing the service proposition and so forth.
A two-way street
But he says it is not only the teams internally that often drag their feet. Clients can also be reluctant and often need to be more receptive to change. “It is a two-way street, as they also need to be encouraged by the banks and the wealth firms to see the value of these solutions,” Shiv notes.
He says he still finds it truly astounding that technology adoption is so slow in the wealth industry despite the catalyst of the pandemic, which opened up new digital connectivity and was a major portal to that first wave of adoption. “Hardly anyone knew how to make a digital presentation at the time, but adoption then was incredibly swift, driven by necessity,” Shiv remarks. “We need to recapture that eager adoption and make the most of the digital solutions available today.”
The value of the hybrid model
He also observes that the pandemic did, at the same time, reinforce the value of human advice and connectivity. Starved of that contact due to lockdowns, people took a long look at what they value in their lives, he explains, and says that is why there is a keen embrace today of the office again in India, as people want human engagement.
“In the wealth industry, we have settled on the hybrid model as the optimal approach for private clients,” he observes, “and rightly so.”
“We now need to leverage technology further to promote both digital and technology-supported human productivity and capabilities. I believe we could all do a lot more with technology, and wealth management is not doing it to the degree that it should, and this is especially true around scale and scalability.”
Time will tell…
Shiv is wary of predicting exactly how the wealth industry will evolve amidst the hurtle-neck growth. “In a country like India, all these changes are taking place at remarkable speed, and in a transformational phase that is so compressed, where the market grows 10 or more times in as many years the implications are quite dramatic, and the changes somewhat amplified.”
What he does say is that aside from urgent investment in technology and the dearth of talent, there is rapidly growing sophistication and greater expectations among the client base, rising compliance complexities, and intensifying competition, all of these conspiring to drive costs higher and fees lower.
“Will this all lead to consolidation?” he ponders. “Possibly later on, yes, but not right now as there are more new entrants than people exiting the industry. Moreover, wealth management is not an industry with winner-takes-all characteristics even though there are benefits from scale; there is room for plenty of players to operate profitably, and it will remain fragmented for the foreseeable future, I think.”
Strategic positioning and smart models
Differentiation, he says, is needed, and different competitors adopt differing strategies around how they assemble their products and services, the broader client segments or perhaps niches they target, and the way they approach clients, whether more digital or more personal, or the hybrid approach. “There is not necessarily any one configuration that is naturally superior to the other, as long as you are relevant to your target clients and attuned to their needs.”
He says perhaps the only true point of distinction might be what he calls ‘breadth’. He says if you look at the full-service platforms, they seem to have a natural advantage because they are relevant to more of the clients’ needs and should be able to win more of the client wallet. “If you focus narrowly, there are inevitably gaps that others can fill,” he states.
A Short Note on Shiv Gupta
Shiv Gupta is the Founder and CEO of Sanctum Wealth, which was created through the acquisition of the Royal Bank of Scotland’s Private Banking business in 2016. Over a career spanning almost 25 years, Shiv has held several leadership positions in wealth management across Asia and the Middle East.
Prior to 2016, he was a member of the RBS India Executive Committee and the India business representative on the Coutts International Asia Management Committee. Based in Mumbai, Shiv oversaw all aspects of RBS’ Private Banking business in India, which had close to 100 staff including 29 private bankers located in 4 offices across the country.
Shiv had been a part of the RBS Group for 14 years and was one of the founding members of the Coutts International South Asian business. Prior to that, he was based in Singapore managing the NRI business in Asia Pacific, as well as the Thailand market.
Born in India, Shiv holds a Bachelor’s degree in Economics (Hons) from the Hindu College, Delhi University. He is also a graduate of the Harvard Business School’s General Management Program (GMP).
