“All men are created equal but some men are more equal than others”.
All clients require First class service but some require special focus. They have more, invest more and believe they require more guidance. That is the reason why, while small clients are often neglected and suggested to seek mutual funds, HNI clients who form part of PCG by most brokerages are promised personalized superior service. At the time of sign up it is often promised that the experts of the brokerages sitting in headquarters will take a look at portfolios personally and come up with right decisions. Product expertise, delivering the best service in terms of Pro active status updates, reference materials, suggesting alternative viable options, dropping names and claims about extra ordinary past performance by the so called experts becomes part and parcel of relationship manager’s job. Building, managing and maintaining wealth for HNI on a long term basis hence becomes a challenge and responsibility of PCGS.
However no Master Key exists to open all locks! No expert can handle all portfolios with same effectiveness! Even if it does, the following problem issues will not allow for a smooth sail in troubled waters like the one’s listed below:
Everything about business comes down to people and unfortunately this business is a business of attrition. Attrition is very high among individuals touted to be brilliant performers in market. What happens to clients who entrusted the job of managing their portfolios to them is anyone’s guess when they shift loyalties between companies.
Limitations of personal supervision:
Unless the process adopted by the expert is defined, documented and be capable of being delegated, absence of expert leads to gaps in the process. Decisions revolve around the availability of experts and their absence could mean lost opportunities for investors.
Even if we have brilliant person grounded with the same organization, he will have serious limitation on number of accounts he can handle. If one takes about 4 hours to study a company and its financial results closely, he cannot study more than 50 – 70 companies in a quarter, after which review is required with next quarter results. If a client’s portfolio contains shares outside the covered stocks, analyst will not be able to contribute anything. The more an expert becomes successful the more will be the demand for him resulting in lesser attention to individual accounts who backed him from the beginning.
Flawed approach of personal supervision:
Accepting the immutable truth that no business exists without problems. Fund managers take a view on individual stocks, irrespective of its significance in each portfolio and decide to hold or sell. Cost price in the hands of investors is not reckoned too. Vivekam’s business model strives to overcome the above limitations.
Vivekam’s approach to resolve this messy problem:
“You don’t drown by falling in the water: You drown by staying there”
Personal decisions Vs Process driven decisions:
To resolve the above short comings, an organization ought to develop process driven decisions to scale up and still be effective in their operations. If a process is well defined it will remain effective irrespective of number of accounts being handled or number of stocks being tracked.
On almost all occasions, claims from relationship managers about the efficiency of experts is not backed by any window that allows back testing on different situations. On the contrary, if the organization has well built processes to aid decision making, back testing window could be provided to eager investors.
Pricing for performance:
In case of personal supervision, if someone excels in performance, there will be hordes of people rushing to handover their portfolio with a hope to earn more. Pent up demand will necessarily lead to increased pricing for services that could offset the advantage. In process driven organizations, prices for services could be easily maintained irrespective of surge in accounts or stocks to be tracked.
Most of reality is negotiable. Not all problems have a technology answer but when they do that is a more lasting solution. Vivekam’s business model runs on process driven strategies that use the computing capability of advanced computers to the fullest. Back testing window provided for each product or for portfolio processes help you gauge the likely effectiveness beforehand. With minimal to no personal discretion in day-to-day handling of accounts, result displayed by back testing routines is very likely to emerge.
Be it identification of stocks fit for investment, diversification at client level, exit levels for each client based on their individual cost price, role played by each stock in one’s portfolio or deciding on desirability of any stock, processes play the role defined and documented by experts. Leaving no room for any slip due to absence of one employee for whatever reason, proven processes are deployed with precision.
Increased business to Vivekam does not lead to dilution in service since computer systems work with precision and our support staff ensure that the processes are in place every single day. The pricing of Vivekam will not change with increased demand for our services. In fact, it could drop after a while, if the economies of scale are achieved.