How you make money impacts your client relationship

By Morningstar |  14-12-18 | 

Rahul Vohra, Chief Executive Officer of Millerhill Advisors, shared his views at the Morningstar Investment Conference held in Mumbai on October 23 & 24, 2018. Below is an excerpt from that discussion moderated by Dhaval Kapadia, Director - Portfolio Specialist at Morningstar Investment Advisers India.

Does earning commission from fund houses vis-à-vis charging fee to clients directly make a difference in your client relationship?

I think how an adviser makes money does impact the relationship. The fee model is slowly gaining traction. The value-add which advisers are doing is coming under question. Advisers who are able to figure it out quickly will have a competitive edge. I am confident that over a period of time, we will see the emergence of a model which will enable the industry to become stronger.

How is the family office space evolving in India?

The family office space is in its infancy. It has emerged in other parts of the world. It will go through its testing times, both at an adviser level as well as at a client level.

The involvement of the younger generation is also increasing within family offices. Their investment preferences are different. They have higher expectations from their advisers, in terms of knowledge and skills.

Given the growing involvement of younger generation, do you see a change in the way investment decisions are being made in family offices or ultra HNI kind of client setups?

The requirements and thought process of younger clients are very different. While their parents were very happy being in control and making all the investment decisions on an advisory basis, the younger generation is much more open to the idea of discretionary management. They are far more comfortable with technology. They are also very open to exploring new investment ideas. They are keen to diversify outside India. Thus, I think it's important for the industry to start thinking how they want to prepare themselves to be able to deal with this.

Are robo advisers a threat to your business?

Robo advisers will also have a space in a market like India. Over time, robos could become better in their capability to deal with client needs. But there are challenges in terms of getting the right talent, retaining them, investing in the business to build scale and finally monetizing the robo model. It's not easy. It takes tremendous amount of effort, energy, time and money to develop a platform. Thus, I'm a cautious observer to see how does the robo model pans out.

How should an adviser define success?

Building trust is crucial. I think that is success.

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