PALLAV SINHA

Head-International Wealth Management for Turkey, Middle East and Africa (CITIBANK, Dubai)

Tell me more about this new portfolio.
In Citibank, there are two types of banking- Consumer Banking and Corporate Banking or Investment Banking. The Consumer Banking for which I currently work is basically split into the Credit Card business and the Retail Banking business. So the retail banking business encompasses things like branch distribution, investments, transactional banking, deposits, personal loans, auto loans, etc. So that's the kind of business that comes under the purview of retail banking. 

As businesses have thrived there have been a whole lot of people who have accumulated wealth and they want to invest it wisely for their future generations and for themselves. So that's what Wealth Management is. Many are focusing on Wealth Management today-on helping people to manage their wealth by managing their asset allocation and tracking their portfolio. It also includes selection of insurance products, offshore investments where regulations permit and so on and so forth.

Mutual Funds is fast expanding in India and many have made money, many have lost money. So how can one be safe whilst investing in mutual funds. Mutual Funds is a vast category. When you talk about mutual funds, it is not just one kind of investment. There are mutual funds that invest into equity, there are mutual funds that invest into equity and debt, there are mutual funds that invest into money market. I think there are two ways that you can be sure that your investments are well managed-one is to understand it yourself. You have to read and figure out as to what is the sort of risk you are willing to take. I think the underlining strategy in managing investments in mutual funds or any other asset class is to understand what is your risk appetite and what is the return that you can reasonably expect. In equity for the last 15 to 20 years that could have given an average annual return of around 18% but there have been years that they have given returns of -15% or -40%. So it's a highly volatile asset class. One option is to understand the mutual funds yourself. There is a lot of information available on websites, you can look at agencies such as CRISIL which gives ratings to the mutual funds and the other option for people who do not have the time to get into the depth of understanding mutual funds and the right investment category is to find a good investment advisor. It could either be a Relationship Manager in a bank or any other person who works for a distribution company.

How do you keep yourself and your team updated who interact with the end customer?
I work for one of the largest financial services organizations in the world. So apart from the people in the organization or the Relationship Manager we have parts of the organization which focuses on research. We have Research Analysts whose job is 24x7 to look at different asset classes, see their performance, juxtapose it against the macro economic scenario. For instance on coming Monday, which is 10th May, the ECB in Europe is going to come up with a statement for the next quarter and how they are going to decide whether they need to raise interest rates. Similarly the US FED meets every quarter and decides whether they need to change the interest rates. So this is what is done by the research analysts. We are given this research We have constant conference calls and discussions amongst ourselves. We also have a product team within our group which then analyzes these research documents to really identify what investment options make sense. The bottom line is that there is nobody who can say with absolute certainty that one investment will succeed and other won't. The only success in investment is to follow a focused strategy of diversification. If you put all your eggs in one basket you are bound to fail because what goes up comes down eventually. So if you see the Bombay Stock Market exploding and you put all your wealth in it, it is the wrong thing to do. You have to diversify and look at investing a little bit in real estate, a little bit in global equities, little bit of Indian equities, little bit of debt, maybe a little bit of investment in hedge funds- all this within the context of the regulations of a given country. Regulations in India for instance may not permit you to invest overseas but regulations in the UAE allow you to invest anywhere in the world. So within the parameters of the regulation, you have to decide how do you achieve this diversification and how do you go about managing your portfolio. 

People who have worked in software companies in India have already experienced this, even people who work in BPOs in India interact with off shore companies and that I think is the other significant change. You've got to learn to work in a team where the motivation, the thinking, the approach of people of different ethnic backgrounds may be quite different and all this makes it a very exciting and dynamic environment to work in. 

You are an Indian working with an American company in the UAE a real cross of countries and cultures - So what style of work pattern do you follow?
I think this is determined by the kind of organization you work in. There are a number of Indians who have worked with Citibank across the globe and I think as far as diversity is concerned, globally Citibank is a company that embraces diversity. There are various nationalities and ethnic groups who are in senior positions with Citibank across the globe. My approach especially in the business that I am in is heavily dependent on people. I think more and more businesses depend on the skills that people are able to imbibe, the expertise that people are able to imbibe especially in case of investments. It is dependent on how the Relationship Manager interacts with the customer. I focus a great deal on motivation, managing the morale of the people, ensuring that they have adequate support, the right kind of training-these are important factors. The other thing that I believe in strongly is conviction. Once you've decided to go after a certain goal, you should be able to rally your team around to do it. The important thing is also be able to execute quickly. If you just spend time strategizing without being able to execute, a lot of company suffer from that malaise- that doesn't help. The world today is a place where every minute a new competition is born somewhere. The important thing is to move nimbly, to move fast. Sometimes as a consequence you may make incorrect decisions but its better to have attempted something. You may have repercussions but you can always fix them. Inaction is inexcusable. 

How does IT play a role in investments today?
I think during 1999-2001 era, during the Internet boom, people thought everything will move to the on-line mode. Obviously equities were doing well and internet broking was a big thing. My belief is that these are channels. People surf the internet to complement their decision making. There are transactions that happen on-line and I think it is great tool for somebody to go and see his or her statement on-line rather than call up or walk into the branch. So those are places where technology has been of immense value. Despite that however, I think 90% of the important investment decisions continue to be made with Relationship Managers. The Internet has helped the Investor to be more knowledgeable. The Investors today read up a lot before meeting the Relationship Manager and as a result the Relationship Manager has to be better equipped. To give an analogy especially in case of auto dealers - 99% of the customers who walk into the show room to buy a car have already decided which brand of car they want to buy before walking into the showroom. People have done their shopping on-line, they have done their comparisons on-line to a great degree and then the final decision gets made with the Relationship Manager.

So there is a very standard framework that one needs to use - you look at the risk profile, the return needs for the customer, identify products that are suitable to the risk profile. Quite often the customers believe that they are here as some family or friends have made huge returns in the real estate, their inclination is to go and do exactly the same thing. That may be okay to an extend. Maybe someone has made a huge profit in the equity market, but for a guy who has no time to track the company, it is the wrong thing to do. Quite often therefore a successful Relationship Manager should be able to convince the client in the right way and the right manner what is suitable for him.

What are the areas one can invest in India rather than solely focusing on the share market?
The other main asset categories would be several investment options offered by the Government with fixed returns - the Employee Provident Fund, PPF, RBI bonds, etc. People tend to invest in these categories to the extent that they are allowed. But over and above that I think that every investor should have an allocation in debt which could be thru' Mutual funds, corporate debt, government debt; certain allocation in equities which could be thru' a Mutual Fund route, through a vehicle which uses Pool Investments which does not merely invest in two or three companies but multiple companies. In the mutual funds, you could choose a balanced fund which has a combination of debt and equity. You could in the interest of liquidity invest in bank deposits. Most banks offer deposits which gives you reasonably good interest rates and you could also withdraw that money using your ATM card. Apart from that every individual who is earning and has a family and commitment towards the family should have a certain level of insurance. So broadly speaking these are the asset classes that a person needs to look at.

The sooner you start, the better and you can do regular investments. It need not be lumpy investments in blocks of 5 or 10 lakhs. This also helps to achieve rupee cost averaging as the market tends to fluctuate. If you are investing regularly you'll get the highs and the lows and probably you are investing at an average but if you invest in lumps, sometimes you are lucky and catch the low but more often you are unlucky and you get the highs. 

 At that time Consumer Banking was still at its nascent state and today it's a big buzz word. Today, people see Finance or rather Consumer Finance as a career option when they graduate from a Financial School. At that time it was one of the options but not necessarily the only option that one would have. 

What are the qualities to be a successful in the field of Consumer Banking?
In Consumer Banking it's important to learn to empathize with the customer, understand consumer behaviour. It's important to execute swiftly. Consumer banking is about scale, about target and market share. You should be able to execute well, execute fast. You should be able to understand processes and regulations. It needs the approach of a generalist far more than a specialist unless you are joining as say - a Research Analyst. It takes the same skills as anyone needs in order to run a business. It's about understanding how you make your revenues and how you still ensure your customer has loyalty towards your organization. It's about brand building and training It's a range of different skills. 

What are the other avenues that one can pursue in the field of Finance?
Today investment banks are big recruiters. Investment Banking include capital markets, mergers & acquisitions. Apart from that there is private equity, venture capital. You can also join consultancy firms like Accenture, KPMG, etc. Besides Consumer Banking you have financial institutions like HDFC in Home Finance. The options are many now. 

On your personal side, what are your hobbies and interests.
I like to do some outdoor stuff which would include golf, I play squash once in a while. Fitness, movies and leisure travel are other areas.

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