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COVER STORY
4 INDIAN WEALTH MANAGEMENT - ISSUE 1, 2017
family in India (hailing from the Marwar
region in the northern Indian state of
Rajasthan and known for business
acumen and work ethic), founded a
travel agency that didn’t go so well.
Rather than taking a back seat after in-
vestment by General Atlantic, however,
there was no talk of a sunset stage. “We
are far away from that,” he says. “It is just
the start. The sun is shining on us.”
Fresh blood
As part of this next phase of
the evolution, IIFL Investment
Managers plans to add a large
number of new relationships, with
a particular emphasis on new-to-
bank relationships, to benefit
from the tailwinds of growth in
the country.
The firm is also realistic about
the need to be patient, especially
since customers typically don’t
buy advice on day one. It might
take until the 12th month, or even
longer, before that happens.
“Our effort in launching new
products is to ensure that we get
as many new-to-bank clients as
possible,” explains Bhagat.
“The moment we lose sight of
that, it will become a stagnant
franchise and we will only be
able to add assets from existing
families, which is something that
happened to a lot of [wealth
management] organisations from
2007 to 2012/13.”
“You can’t just get up in the morning and decide
to innovate today; that’s not going to happen.
It’s got to be [part of the] culture.”
Unperturbed by the outcome of his
maiden venture, Bhagat went on to do
a Master’s programme in Business Ad-
ministration, Finance & Strategy at the
renowned Indian Institute of Manage-
ment in Bangalore.
Post-IIM in 2001, he joinedKotakMahin-
dra Bank, becoming the Mumbai head of
the bank’s wealth management division.
ALL OR NOTHING
But being his own boss at 17 was infec-
tious. In December 2007, at 28 years
old, Bhagat resigned from Kotak to join
the office of IIFL (previously India Info-
line), to ask the chairman, Nirmal Jain,
to back the idea for his own wealth
management practice.
Jain bought into the pitch and Bhagat,
along with Yatin Shah and Amit Shah,
founded IIFL Investment Managers
(then known as IIFL Private Wealth
Management). In October 2015, IIFL
InvestmentManagers sold a 21.6% stake
in thewealth unit to General Atlantic for
INR1.2 billion (USD173 million).
“There has never really been a dull day,”
reminisces Bhagat, “and as we [develop]
different things keep coming along.’’
SIFTING CLIENTS
IIFL Investment Managers also has a very
clear viewon the types of clients it feels
it can add most value to; it doesn’t want
to go below the equivalent of USD3
million in financial assets invested with
the firm. Effectively, this means a client
will need to have a total net worth of at
least USD5 million to USD10 million
across their various providers.
Some exceptions exist, says Bhagat,
where, for instance, a client is 40 or
under, since this gives the firm a longer
timeframe and more of the individual’s
lifecycle to participate in their wealth
accumulation and management.
While this approach to segmentation
leaves a large under-penetrated groups
of India’s wealthy – including salaried
individuals – it also offers an opportu-
nity for the group’s asset management
offering to leverage distributors such as
commercial banks, including the likes of
ICICI Bank, Axis Bank, and HDFC Bank.
But Bhagat also sees a large amount of
money moving from non-financial /
unsecured forms of savings to financial
assets. Plus, a greater number of people
are falling within the tax net. In all cases,
there are compelling reasons for them
to look to save and invest money in a
more constructive manner.
Lower fixed income returns might also
force some individuals to look at optimum
methods of investing, he adds. Such strong
tailwinds in thewealthmanagement busi-
ness are likely to continue toplayout over
the next 10 years, he predicts.
This also bodes well for the leadership
transition that he and his fellow man-
agement team have earmarked for a
fewyears down the line, when theywill
look to take on a lighter role and hand
over the reins.