The Hindu Business Line : Market is going to open up further as economy becomes stronger...

The client profile is changing. We are getting younger clients. Mindsets are changing. People are willing to borrow and build assets. Aspirations are higher. Younger people are creating wealth. Industry is becoming more sophisticated. MR PRADEEP DOKANIA, MANAGING DIRECTOR AND HEAD (GLOBAL PRIVATE CLIENT), DSP MERRILL LYNCH.

Mr Pradeep Dokania, Managing Director and Head (Global Private Client Group), DSP Merrill Lynch, is hopping cities as DSP Merrill Lynch seeks to expand its presence in Chennai and Bangalore. The opportunity now is big, he says, admitting to being amazed by the scale of changes over the past four years. Although the ownership of the joint venture has changed to Merrill last year, this has not led to any change in strategy. It is more a change of focus, he says.

Merrill has been involved in the private banking space from the beginning, that is, a couple of years ago. It is now investing more, hiring more people and opening more offices in a bid to expand its franchise as the Indian wealth management space grows.

Getting good people is not easy, he says. "This was not an industry, so you don't have readily available people. But this is the situation everywhere. We are going through a golden phase of growth. So there will be resource constraint," he adds a trifle philosophically, while remaining confident that supply will catch up with demand over the next three years.

With a market that has close to about one lakh dollar millionaires (or those having Rs 4 crore in financial assets) currently, and whose numbers are growing at 15-20 per cent, there is enough and more to keep him and his ilk busy.

Mr Dokania, who was in Chennai recently, says that as one adds more products on the platform, the relationship with the clients become closer. "Over time, you build a rapport with the client, understand their needs and then it becomes really personalised, when you become a sort of extended family," he says, summing up in a line, what the business is all about.

Excerpts from an interview:

We have seen a number of banks in the private space in the last three years and offering their services to high net worth individuals. What's driving this?

I think, since the economy started opening up in the early 1990s, wealth generation has started happening in a significant manner and it has been well dispersed; it was concentrated earlier. Starting with IT companies and small businesses and now professionals, all are making money. And thanks to the growth in the economy, our lives are also changing. People have started feeling the need to go to specialists, which is why you are hearing more about it recently.

That's where we can play a role, because we have experience in financial markets with specialisation in capital markets with research support in equity and fixed income. The proposition we present to our clients is advisory services — not broking.

Why should a client come to you rather than go to a bank?

There are different approaches. One, the business is big enough to go to multiple players. A really wealthy person is not satisfied with only one firm. The key question is the approach — we are capital market players.

The client expects us to have an understanding of capital markets and advise accordingly. Based on that he builds a solid long-term portfolio. I am using the word "long-term" specifically. We are not brokers. We are not in the business of day-trading. We don't have terminals around. We don't have multiple branches. We focus on high-net-worth individuals as a matter of strategy. The threshold for our clients is Rs 2.5 crore or half a million dollars.

In a way, aren't you setting the bar too high?

We are not. We believe there is a critical mass of clients in that bracket. We have been growing pretty well in the last four years, almost approaching 100 per cent every year. We are targeting the same growth next year also. We are now becoming an all-India player. We are looking at expanding our footprint. We have Rs 11,000 crore under advise from about 1,300 families. We believe it is still only the beginning. There is an opportunity. We are not aspiring for a leading share. We are looking for a small market share.

What have you found different in the southern market?

For one thing, people look conservative. They are not flashy. Compared to some other regions, people here are solid. You have to deal with that accordingly. Their exposure to the capital market is lower than, say, those in Mumbai, but that is due to historical reasons. Now it is spreading everywhere. People are open. Chennai has been able to attract a lot of industries. The opportunity is there not only in the upper end but also in the mass affluent market.

Do you find clients interested in alternative investment classes?

Yes, the interest is increasing. We have started seeing some real-estate products. There is, for instance, a real-estate venture fund, which has been converted into a capital market product. This has a 7-9-year horizon. This is an alternative asset class, which is not correlated with the stock market. Then you have gold and other commodities. Private equity will start coming. Hedge funds are not yet there, but it will come. We are seeing significant interest.

What about diversifying through overseas investments?

That is also possible. I think the limit of $1,00,000 per person is quite decent. We are looking at that opportunity. The market is going to open up further as the economy becomes stronger and integrates with the rest of the world. Besides equity and debt, we are looking at structured products. We have floated a trust company which looks at succession planning for families. We are trying to build a platform to handle a variety of client needs.

Has your client profile changed? Do you get younger people?

Yes. It has changed. We are getting younger clients. Mindsets are changing. People are willing to borrow and build assets. Aspirations are higher. Younger people are creating wealth. Industry is becoming more sophisticated. Clients are also well informed. More professionals are joining the high-net-worth category. Salaries have changed dramatically. Increments in India are much higher compared to the US, where it is 4 per cent.

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