As part of the regular corporate interaction at TWKsIBF, a premier institution offering undergraduate and post graduate courses, the students had the opportunity to learn and interact with Mr. Harsimran Sandhu from Standard Chartered Bank. Mr. Sandhu has been part of the banking sector for over 15 years and is currently the Director Investments. His work experience covers handling investment advisory services, and he has had stints in the leading private banks in the country.
The topic for the session on 8th April was Handling HNI [High Networth Individuals] client relationships. HNI clients bring a unique opportunity to banks as they help the bank to grow the business at the branch level significantly, invest in products and services provided by the banks, present an opportunity for the bank to cross-sell their products and help introduce banks to similar clients. While having an HNI client is ideal for a bank, maintaining an HNI account presents its challenges. The HNI relationship manager needs to address the needs of the HNI clients resourcefully keeping the requirements of the customer in mind. There is a great loss in losing an HNI client!
Mr. Sandhu conducted the session around asset allocation for HNI clients and the discussion centered on methods of asset allocation for HNIs. He used visual tools such as charts and graphs to great effect. While the students were paying close attention to understand the work that goes into determining the investments to be made in each asset class for HNIs they are keen to have Mr. Sandhu address some of their questions. Here are excerpts of the discussion:
1. How to balance the investment portfolio?
There are broadly three steps that will help to understand the requirements of the clients:
a. Assess the risk tolerance: The risk tolerance ranges from Conservative to Aggressive. Before finalizing on any investment, the HNI relationship manager needs to determine the risk tolerance by drawing up an investor profile. A conservative investment strategy implies investment in low-risk investments. These investments earn lower returns; however, provide greater security of the amount invested. An aggressive approach, on the other hand, provides the highest returns with the least protection for the investment.
b. Investor Allocation: Based on the risk tolerance each investor profile has a corresponding asset allocation.
|Conservative||Moderately Conservative||Moderate||Moderately Aggressive||Aggressive|
|About 20% in equity, 55% in bonds and 25% held in cash||About 40% in equity, 50% in bonds and 10% held in cash||About 60% in equity, 35% in bonds and 5% in held in cash||70% in equity, 25% in bonds and 5% held in cash||80% in equity, 15% in bonds and 5% held in cash|
c. The right investment choice: On determining the profile and the allocation, the most important part of the relationship manager is to finalize on the selection of investments. Determining the ideal choice between equity, stocks, mutual funds, etc. requires the relationship manager to have complete knowledge of each of these financial investments and to develop a strategy with the investor’s’ preferences in mind.
2. What is the right time to invest in the market?
It does not matter when you invest in the stock market. What matters in whether the script that you want to invest in is overvalued. The investor needs to choose the industry and each stock with careful research and with a good understanding of the company and the industry it is part of. Time is not the determining factor when you are looking at equity as a long term investment.
3. What are the basic qualities to enter the HNI business in a bank like Stan Chart?
Well, first of all, a HNI relationship manager will need to have excellent knowledge on the subject and be able to build trust with the client. It helps if you are quick with numbers, but you need to have the ability to be likable and patient. Sometimes HNI clients can be very set in their financial dealings, and you will need to summon all the patience within you to make them listen to you even when you are offering better financial advice to them they were then following.
Having satisfied the students’ curiosity on HNI banking and having given them a real-life glimpse into what goes into making an HNI relationship manager, Mr. Sandhu stressed on the importance of communication in HNI banking. He advised the students to develop good English reading and writing skills as multi-national banks give a lot of importance to this aspect in the interview. Knowledge of the various investment options and aptitude are also important and will help the students to progress in the HNI banking field.
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