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WF : You have successfully built scale in your financial planning and advisory practice, without compromising quality of advice. In what aspects of advice have you instituted processes that enable you to offer consistent advice? What are aspects of advice that are more difficult to build processes around?
Shyam : There are two broad types of advisory processes that one needs, the moment you wish to build a firm that uses multiple advisors. The first type pertains to processes relevant to each customer. The second type pertains to processes relevant across customers.
Processes for each customer - One of our founding, guiding principles was that our customer should have a consistent experience no matter whom he spoke to in the company. To deliver to this, it was essential that we have clear processes for every step of the advisory experience. The major steps here are 1) Understanding the customer and his needs 2) Articulating actionable recommendations and 3) Instrument selection. Each of these processes is completely standardized. This is extremely important and useful not only in achieving the consistency I referred to earlier but also in enabling a relatively seamless transition from one advisor to another for any reason.
The details behind each step are too much to cover in this article, but at a high level this is how we approach each step. We use our proprietary financial planning application, PEAKPLANNER, to understand the customer. We use our report generator template to identify and articulate actionable recommendations. Each month, I create PEAKFILTER, which is our mutual fund ranking system. The system is completely objective and numbers driven. Funds are recommended strictly based on PEAKFILTER rankings. Each scheme's PEAKFILTER ranking is also available to customers in their portfolio, so discussing performance using PEAKFILTER also becomes a process that customers quickly get comfortable with.
Processes across customers - There are four main processes, scheduling customer interactions, the interactions themselves, report writing, and execution. We have a central team that oversees these processes very tightly to ensure that we perform to high standards in each area. We have metrics for each of these that we track and review during our sales meets each month. Every customer report is uploaded to his portal, so that he can easily access all of his reports and track progress from one to another. Apart from these, we also collect feedback from our customers regularly, which we find to be extremely useful.
WF : To what extent has technology played a role in institutionalizing advisory processes in your firm? How did you go about the buy vs build decision and what influenced you to build your own IT solutions?
Shyam : Technology has played a critical role in helping us to put these processes in place. When Priya and I started PeakAlpha, I had a good understanding of financial services technology. We used technology extensively in most aspects of our business, advisory or otherwise. Our industry, and a few others, like telecom, have a huge advantage. Our product is virtual, and therefore lends itself very well to technology adoption.
Our use of technology has enabled us to maintain consistency in service delivery. When it comes to customer interactions, it has enabled us to take what could be a very loose set of discussions and bring a level of quality and predictability around them. We frequently tell our customers, "Give us four hours a year, and you don't have to worry about your finances after that." This is only possible on a consistent basis through a robust service delivery platform.
We feel completely vindicated in our decision to build rather than buy. Anyone who has been in our industry for the last ten years can clearly attest to the fact that change has been massive. We have needed to change our processes to accommodate these changes several times. Since we have built this application from the ground up, our knowledge of the system is very solid, and enables us to make changes as needed. Further, as our own thinking evolves, we can have as system that reflects this thinking.
WF : In this profession, do you regard your IT enabled advisory platform as a key differentiator or does it get quickly commoditized? Is there lasting value to the firm in going with a build approach?
Shyam: Our company was born in Bangalore and caters to a set of customers who are quite savvy in their technology adoption. Therefore, our being able to offer a strong service enabled by current technology has definitely been appreciated. At this point we don't see a product we could buy off the shelf which can do what we offer our customers through our platform. Our ability to maintain the platform as a key differentiator depends on our ability to keep innovating and improving our platform. As of now, we don't see this getting commoditized very soon.
WF : Is there an opportunity for you to consider a robot-advisory model where you will have a purely online advisory model?
Shyam: It is very tempting to consider a model where the solution is completely technology based. However, we strongly feel that any service is worth paying for only if lasting value is delivered. In our experience, advice alone is not likely to create this value. Wealth is created only when recommendations are consistently executed and monitored. Our customers really value the discipline that we help them to inculcate in their finances. This discipline is created over time, and with frequent hand-holding through rough and smooth times. We have seen often that people start many things with enthusiasm, but are not able to maintain the same enthusiasm over time. A gym membership with a personal trainer is much more likely to yield results than without a trainer, for the same reason. Life tries very hard to distract you, and often succeeds. Therefore, we are not convinced that a robot-advisory model will yield long-term results in financial planning and wealth management. We would like to share life's journey with our clients and celebrate their joys and successes, it is one of the high points of what we do.
WF : How has your experience been with instituting processes for service delivery? Where does IT play a role in your firm in delivering seamless service and where do you see gaps that you are keen to fill?
Shyam: We have a great story to tell in terms of processes for advice. We have a lesser story in terms of processes for service delivery. We would love to be in a paperless world, where many other industries have already evolved to, including banking. I can't remember the last time I walked into a bank branch. Yet, in our business, we are still pushing pieces of paper around. This is quite frustrating.
There are a few processes that we have institutionalized at PeakAlpha. We scan every application before it leaves the office to be processed. We find this to be very useful in case of issues in processing transactions. We capture each transaction in our system before the application leaves the office and reconcile against registrar feeds, so that we know quickly when transactions have failed. Automated alerts are sent to customers for various events, such as processed transactions, SIP alerts, redemptions, etc. But I suspect this is par for the course among most of our peers in the industry.
WF : We now have MF Utility and the NSE platform as two key transaction platforms for IFAs to choose from, apart from many others that have been in business for some time. What are the key factors you will look for in a transaction platform that you wish to embrace?
Shyam: This is not rocket science. A good transaction platform should make it easier to do business. It should enable advisors to spend more time with customers and less time filling forms. It should be reliable and easy to use. The platform should make information related to transactions, customers and the overall business easy to access. The MF Utility and the NSE platform are eagerly awaited and will certainly help.
Think BIG salutes Peak Alpha
For their excellence in adopting smart technology within a well defined process framework to deliver high quality advice and service to their clients, the 2014 Think BIG award for technology adoption was given to Shyam and Priya Sundar of Peakalpha Investment Services, Bangalore.
Shyam Sundar (4th from left) and Priya Sundar (6th from left) receive their Think BIG award from Himanshu Vyapak, Reliance MF and Vijay Venkatram, Wealth Forum.
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