Atul Singh on how Validus Wealth is Evolving into a Top Tier Indian Wealth Management Firm
Atul Singh is the Founder & Chief Executive Officer at Validus Wealth, India. He is building the next generation wealth management firm that holistically addresses the financial needs of wealthy Indian investors, spanning from the UHNW segment to the emerging HNW market. He is a veteran in the wealth management industry, having founded Validus Wealth in 2017 after a long career running private banking businesses for Merrill Lynch and Julius Baer. In bringing his venture to fruition in the past 2-1/2 years, he has capitalised on his great experience, crystallising his vision of turning Validus Wealth into a recognised centre of excellence in India’s wealth management market, which despite the pandemic continues to expand. With client centricity at the core, Singh has been successfully building a team that now totals more than 175 people, of whom over 75 are today client-facing bankers, and AUM of more than USD600 million amongst some 1500 wealthy Indian families. But he is certainly not stopping there; he has a vision of building granular coverage and scale across the UHNW, HNW and emerging HNW markets. Hubbis was fortunate to ‘meet’ with him recently to discuss all things wealth management in India and to hear why Validus Wealth is, in his view, so well-positioned from a platform and from a cultural perspective to benefit from the resumption of the rapid expansion and democratisation of the world of investments and wealth planning in India. As India’s economy is set to resume its growth trajectory once the pandemic is under control – hopefully – India’s growing ranks of wealthy private clients will be seeking more investment products and more advice, either traditionally through advisors or digitally as digital transformation rolls out across the nation. Validus Wealth is remarkably well placed to tap into both these seams of AUM, as Singh and colleagues have adopted the hybrid approach from the outset.
Validus Wealth, Singh explains on opening the conversation, is a homegrown private client platform that started less than three years ago but has already built a sizable business comprising 175 people now, of whom 75 are client-facing bankers. The client base is already some 1500 Indian families across the nation, divided mainly between UHNW and HNW segments, but also a growing number of emerging HNI families.
Delivering a better proposition
“The business model from the outset was to deliver a better proposition to the UHNW and HNW client. While the starting point was to service larger clients, but even in the smaller wallet size, clients do look for the right proposition and will often grow into considerably wealthy individuals, so we also have a more experimental focus on the emerging HNW segment. And we built the platform front to back, with a strong focus on digital. However, it is not “D-I-Y”, but hybrid in approach, combining the power of technology along with the RM. It enables the RM to significantly improve in his or her delivery of the right ideas and the right client experience.”
He explains that Validus Wealth opted to work with Infosys to build its core platform. “This has been imagined and built as an open platform, and we have stitched several front-end FinTechs on top of the stable core platform from Infosys. This approach gives us best of both worlds, providing the stability and safety of a large technology player, with nimbleness and client experience of a FinTech. This was critical because, there aren't that many core platforms available for the wealth management industry anywhere which brings the stability with customizable client experience together.”
Agile from the core outwards
Singh has plenty of experience to help guide him and Validus Wealth to the right decisions. He was previously running Julius Baer in India, and before that, Merrill Lynch’s private banking in the country.
“We learned a lot in both banks about the core platforms, so it was ideal to go into this with Infosys, which has a great core platform and that is highly receptive to attach a more sophisticated front-end in order to boost the user experience and engagement. So, we have worked with them to say we will use the core, but then we will be using APIs and will actually stitch the whole host of front-end FinTech players together, combining the robustness of the core Infosys platform with a variety of elements to deliver great client experience. The result is something that is really agile, but also incredibly solid.”
Singh explains that starting a new firm and building it from scratch has been a huge advantage as there is no legacy system to hamper the speed and accuracy of its platform development.
No legacy systems to hold the firm back
“This has been a key from the start, as we realised that we could build precisely to our design, selecting every component very carefully because once you select the first component, you do have a legacy, and you are bound by it,” he reports. “That is why we thought through this front to back right from day one. Infosys was the right first step, and by accommodating various FinTechs with their fully built out API layers, we believe, we are truly developing a new world wealth management platform.”
Singh explains that in his view, legacy systems are troublesome for two key reasons. One is that a large 10-year-old, 15- or 20-year-old wealth management firm will have created a lot of legacy software, all doing different things. “This means they are all kind of bolted together to really deliver the client experience, hence it ends up as a digital experience that is fragmented internally. It might seem ok to the client, but internally it is held together by a huge number of processes and labour, resulting in large service teams and a lot of ongoing costs.”
Chaos behind closed doors
“In fact,” Singh adds, “we had a saying at one of my previous banks that what is not visible is all the ships that actually cross each other in the night. That's the activity nobody sees, but there is a massive effort that goes on through every night uploading and downloading of data and merging the data and cleaning up the data, without any value addition to client. And in reality, no large bank is different.”
Moreover, he explains that it is far from easy to throw all of it out and migrate to a new shiny system. “You are dealing with clients, trading positions, accounts and settlements, so any major change to transition all that to a new system is a gigantic headache and massive obstacle.”
Leveraging technology and WM
This is precisely why a key element of Singh’s thesis in starting Validus Wealth was that technology was highly under-leveraged in the wealth business in India, but also globally.
“I believe that for the upper ends of wealth management, the RMs are key, and will not be replaced by digital. It is for the mass affluent or retail markets, where digital is essential to replace most of the human interface, and that is where most of technology application has been. However, for the HNW and UHNW segments, there is tremendous opportunity in strengthening and enabling the RMs with technology. Combining the RM with digital for serving HNW/UHNW clients, not only enhances client experience, improves advice delivery but also improves RM productivity. This is key in scaling up a business where the key constraint to scale has been availability of good quality RMs and their bandwidth.”
Elevating the RM capabilities
He elaborates on this, noting that the right digital platform can elevate the minimum capabilities of the RMs to a level that produces a high-quality experience. “And then on top of that, the better RMs can then outperform, leveraging the digital tools at their disposal, analytics, AI, machine learning and so forth, and freeing themselves up from daily more mundane tasks. In short, we believed and still do, that we have a major advantage in not being held back by legacy systems.”
He adds that another reason why international banks would struggle in India is because, for example, while they run larger platforms globally, the India business cannot simply be plugged into the global business platforms. And to make matters worse, most of their IT teams in India are not empowered to build a standalone, sophisticated system for India, with a different standard than their global systems. The zeal to run a globally co-ordinated and connected platform creates a major challenge for global firms in innovating on technology in India.
Free to run, and at speed
Singh comments that the ability to design and execute new world wealth management architecture is allowing the firm to build rapidly and develop scale. “Our ambition is to be a top tier private client firm, so we have designed and built our platform for scale and not simply for a boutique. We rapidly built to 175 people because we are not going for a boutique approach. No, our ambition is to be one of the really big players here.”
He elaborates further on the need for scale, explaining that he was very clear from the outset that to capture the India opportunity, one needs to build scale. Hence Validus Wealth was conceptualized as a homegrown, and of top quality, very process-oriented private client business, and bringing in all the positive ideas from global firms, but countering the legacy systems, bureaucracy and lack of agility, away.
“By the time you have put all this in place, as we have now, and if you don’t have enough RMs to take that to market, you will have a drag on profitability. That is why, after building the capabilities, we have focused on building a large client-facing talent pool to take our offering to the market, which is enabled with technology, but still delivered by the individual. In short, if we just build real capabilities and quality at the back end and do not have enough front office resources, you will never make money.”
The firm’s AUM is roughly USD600 million equivalents, or 4,500 Crores in the local currency, with roughly 1500 families onboarded to date, of which roughly one-third have come during the pandemic. “And we are still acquiring 50 to 100 new clients a month, and amongst even the existing 1500 clients, the AUM could comfortably build to USD 2 billion or more, as clients will always tend to add assets once their comfort levels rise, especially with a new firm such as ours.”
Process innovation, not product creation
Singh makes one key observation about Validus Wealth, namely that he never intended for the firm to be the product innovators, but instead to focus on process innovation, which he sees as a much more sustainable proposition.
“Excessive and artificial product innovation can presage financial crises,” he remarks. “But process innovation is all about bringing a very fresh approach to the client experience. And thinking global is vital, as the wealthier Indian families are increasingly global in outlook, lifestyle and investments.”
He explains that the firm aims to bring market-neutral strategies to clients’ portfolios, so this is not just about equities and fixed income, but strategies that are low volatility, uncorrelated to equities and bonds market, mined through Validus Wealth’s own due diligence. “And we then tie these ideas into the financial life of the client, their protection needs and succession planning needs. In short, we try to approach this holistically from the perspective of these clients and their needs and hopes. Finally, we work hard on our digital delivery to ensure the clients are fully aware of their investments on a real-time basis, as the world of investing and indeed our lives are dynamic.”
A gradual but notable shift
Singh notes that historically, India’s wealth market was almost 100% product-centric, with little room for or demand for discretionary or advisory. “And it remains the case today,” he reports, “that the market is product-oriented, but its striving towards a better balance of DPM and advisory. We see a transition taking place gradually towards what I would call a fee-based pricing model, where you get paid for the advice you deliver, and not just for provisioning a product. However, this transition will have to go hand in hand with clients’ willingness to pay for advice as well.
Singh’s number one priority remains the continuous refining of the client experience, which centres on the hybrid model of RM plus technology. “There is a long way still to go in this regard, we have a strong ambition to refine that, and if we do so, the client acquisition and growth will follow naturally and so too profitability. This really means making my 75 RMs as productive as possible. Once you do that, then as you know, there is significant ROE in our business, as you don't need continued capital investment. The key is to get to that first stage of getting to all the RMs running a healthy book of business and being profitable on their own. That is essentially the first big milestone that we're all focussed on.”
The second mission will then also be to expand the talent pool at the same time. “We can go a certain distance with our existing pool of talent, build greater AUM from the existing clients, but we need more to really become a top tier player. We, therefore, need to build the existing pool’s capabilities and skills and enhance their capabilities via technology. But we also need to continue to scale the business, and by that, I mean 200-300 RMs, but it will be incremental, cautious building and step by step of course, but that is the mission.”
Singh explains that his experience in the business has helped him build the RM pool without using any head-hunters. “Collectively, our senior team has a great network, and the talents we hire have their networks, so everybody that comes together is through personal network are comfortable in working with each other. So, you control the quality at hiring, focus on improving their success rate, and keep repeating the cycle to gradually build scale.
Singh closes the conversation by reiterating the vision to build a top tier firm unshackled by legacy infrastructure and legacy thinking. “We have the experience and the team to build something that is fit for purposes for the future of India’s exciting wealth management market which offers an immense potential, even if that great opportunity has been somewhat obscured by the Covid-19 pandemic. India will rebuild and re-gather its economic momentum, and as it does so, the private wealth market will evolve apace. Validus Wealth will be leading the evolution into the coming new decade and beyond.”
Getting Personal with Atul Singh
Atul Singh is the Founder & Chief Executive Officer of Validus Wealth in India. Singh grew up in a tier 2 town in India in the largest state, Uttar Pradesh. He says he enjoyed a typically middle-class upbringing, and was a good student, earning a degree in Electrical Engineering from the Birla Institute of Technology, Ranchi, with a Presidential Gold Medal, and then an MBA from IIM Bangalore with a Director’s Medal.
He finished his MBA in 1999 and took his first job in New York with Booz Allen Hamilton, covering financial services. “Clients included some private banking divisions in firms such as UBS, Goldman, Wachovia, so I learned fast from the best for seven years. But I had the ambition to run a real business, so I joined Merrill and came back to Asia, from Singapore; they were then and still are the largest wealth manager in the world, by virtue of their business in the US.”
Prior to Validus Wealth, Singh was the Managing Director and CEO of Julius Baer India, one of the largest private banking business in India. He led the acquisition of this business from Merrill Lynch, along with 150 employees and USD6.5 billion of AUM. Before that carve-out, he was the MD of Merrill’s private banking business first in Singapore for the region and then moved onshore in 2010 to build a strong India platform.
Married to his classmate he met at IIM Bengaluru during the MBA years, he reports that his wife is an ex-banker turned author who now writes professionally. They have a 10-year-old son.
His favourite pastime when time permits is to travel to his favourite wine regions for tasting and buying fine wines. “Burgundy probably tops my list, but we also are very big Italian wine fans, so Tuscany comes very close, especially the Barolo and Brunello wines. I love reds for their complexity.”
He has always had a love of cricket, but so too does pretty much everyone in India. “A different interest I have really developed in recent years is spirituality, the Indian scriptures, especially the Bhagavad Gita, a 5000-year-old scripture that is entirely relevant to how to live your life today, in the more detached and stable manner. In fact, I think it is tailor-made for human life today, which kind of goes through from crisis to crisis anyway, whether a personal crisis or professional or a global crisis like the pandemic.”
More from Atul Singh, Validus Wealth