Karvy Private Wealth: Looking beyond the Pandemic to India’s Vast Wealth Market Potential
Abhijit Bhave is CEO of Karvy Private Wealth, the wealth management arm of India’s Karvy Group. In his current role, he is responsible for the Karvy Private Wealth business in India and the Middle East. He is someone who works incredibly hard and diligently at the business, with a clear vision of positivity and strategy. At home, he likes to spend quiet time with the family and meditate. In his spare time, he likes to help those around him via motivational public lectures. Hubbis had the pleasure of talking to him by video call to Mumbai recently, and we found a CEO who is keeping his eyes on the big picture, and continuing to help shape Karvy to cater to the needs of the clients and the growth that he is confident lies ahead beyond the pandemic.
The recent years have been very positive for Karvy. “We have been taking giant strides towards our Vision 2020, with AUM up 44.50% since 2017 and revenues up 46.09%,” Bhave reports. “For our investors, we have been in line with our corporate mission to help our clients achieve their dreams and goals by investing and growing their wealth, by giving them the right advice of investing their wealth across asset classes. India’s private wealth has been growing at a rapid pace for many years and barring a prolonged pandemic hitting India extremely hard; we expect growth to resume in the foreseeable future.”
There are many more wealth creation opportunities and thus more opportunities for firms like Karvy to manage wealth.
“We have witnessed the Indian wealth management market getting wealthier, younger and more digitally savvy,” he says. “That is where the challenge is, to match up to our clients’ expectations in terms of technology, skills and experience.”
Fingers in every pie
Karvy, which has been working in the retail segment for the last 35 years, now caters to the mass affluent segment, the HNWIs and also the UHNW market through the family office business. “We are trying to increase our share of slice of all three business pies.”
For Karvy, says Bhave, wealth management is not a complicated exercise. The goals are simple, namely to help clients reach their financial goals with better risk management. “The basic need is to optimise their return on investments,” he says. “As we go up the wealth curve, the needs evolve into bespoke services, estate planning and global investments. And as 70% of Karvy’s clients are business people, we can also diversify by helping them raise capital through our investment banking arm, manage debt and borrow.”
Na Bhuto Na Bhavishyati
Today, Bhave is looking ahead to a time of less volatility. “Everybody talks of this pandemic being a Black Swan event,” he comments. “India has an ancient language called Sanskrit and in that, we talk of something called ‘Na Bhuto Na Bhavishyati’, which means never happened in the past, and may not happen in the future, Covid-19 is that kind of an event.”
He reports that, understandably, many clients have lost money, some with huge losses both in debt and equity at the same time. “People are talking of survival,” he says, “many are no longer talking about return on capital, but the future return of capital. Risk appetite has reduced, so have the return expectations.”
Digital has become a need, not a luxury, he adds. “We were well prepared, thankfully” he reports. “Earlier we were only transacting for mutual funds and bonds, but now we have the capability of doing every investment solution online, whether it is portfolio management, a private equity fund or even physical real estate.”
Risk management and protection
Protection is also more in the sights of the wealth community. “We used to believe that insurance is not a wealth management kind of product because people have a lot of wealth already, and they don’t need protection,” he notes, “but today, a lot of clients are talking of health insurance and critical illness insurance and life insurance. And estate planning is more central, as people are worried about their lives, and their families, so estate planning is the other trend that people are talking more about.”
As far as Karvy Private Wealth is concerned, Bhave reports that it continues to focus on its four core values – Integrity, Positivity, Ownership, and Dependability (IPOD). “Starting with being positive,” he explains, “we are not talking just about a bounce back, but our internal theme is to #BeBold and look at where exponential growth will be.”
He also explains that Karvy has defined five ‘Rs’ for its strategy for the next 9 to 12 months – Resolve, Resilience, Return, Reimagination, and Reform. “We believe absolutely that India’s growth will resume,” he reports, “Some might say this is a minor hiccup along a multi-decade path.”
In tune with market trends
He steps back somewhat from the Karvy focus to look more broadly at the Indian wealth management market.
“We have seen global private banks such as BNP and HSBC leaving this market,” he reports, “but domestic private sector banks and NBFCs are now competing more actively, and other competitors are building and growing, including some from overseas. We are comfortable with the competitive environment and well-positioned to help clients in their asset allocation, risk management, and return optimisation.”
“We see a lot of money flowing into fixed deposits and sovereign bonds, as a flight to risk aversion from the equity markets but we are helping clients shift towards both short-term paper and high credit debt as well.”
He reports Karvy launched its own debt portfolio, rated AA and above, while for equity Karvy continues to retain its overweight view for the Indian market on account of liquidity measures taken by central banks across the globe and in anticipation of whatever recovery lies ahead, whether V-, U- or even an L-shaped recovery. “And we are shifting more and more to the advisory model, to stay ahead of trends in this market,” he adds.
The Four ‘Es’
To adapt to the market trends, Karvy has also honed its value proposition through its four ‘Es’, the most important of which Bhave reports is E for ‘Exposure’, which focuses attention on 3 vectors, namely safety, liquidity, and returns. “Then comes ‘Ease’,” he reports, “in terms of how fast and how easily we can achieve these goals and whether the clients and we can do it without meeting face to face. Then, we also have two more Es – ‘Earning’ and ‘Education’”.
Focusing on technology, Bhave observes that Karvy’s investment is directed to two key aims. First is to improve the customer experience, and the second is to boost automation. “To help achieve both goals,” he reports, “we are restructuring, with fresh capital coming in which will help us grow at a much faster pace over the next five-year period.”
Reimagining the future
Bhave returns to an earlier comment about reimagination. “We are determined to reimagine the entire proposition from the clients’ perspective,” he reports.
“Firstly,” he reports, “as an advisor or as a wealth management company for the last five years we have always had equity-led investments where we were trying to get a higher return and we were equity overweight but we have scaled that back to only the large cap and quality stock space, with also separate focus on private equity. But today, with the current situation and also gauging changing risk appetites, we have significantly increased our coverage on debt, whether pure India sovereign debt, or corporate debt, AAA paper, perpetual bonds, a lot of investments are going into high-quality paper directed to the secondary market and whenever a primary issue comes in.”
Secondly, gold has become more of an investment priority, whereas before it was more of a hedge for the portfolio. “Accordingly,” he reports, “we have enhanced our drive more towards gold as an investment class, through Sovereign Gold Bonds and Gold ETF’s.”
Thirdly, there is the increased emphasis on protection, with Karvy directing clients towards hedging their portfolios via derivatives in a portfolio management structure, and also reviewing insurance needs and solutions.
Rising to the challenges
He explains that India will face up to the challenge of the virus but that India is what he terms a ‘touchy-feely’ culture, with many social embraces and hugs of friends and acquaintances, even business associates and clients. “We of course have adapted to this, so too have our clients and key client-facing staff, such as the RMs,” he reports. “And we continue to adapt, with digital enablement and enhancements, with additional training, with deeper advisory expertise and better delivery, with more emphasis on balancing risks and returns, more structured approaches to presentations and client meetings as well as delivery.”
But he also comments that patience is a virtue, as clients have lost a lot of money, so Karvy needs to help them stabilise portfolios and then look ahead to their ultimate longer-term financial goals, to help restore some realism to their goals and to adopt a realistic, balanced path ahead.
Dreams and goals
Bhave draws the call towards a close by reiterating the ethos of helping clients achieve their dreams and goals. “In chess, for example, everybody works for the King to safeguard the King and to then take the King on the path to victory,” he says. “Well, if I say that the client is the King, my job is to ensure that the King is ringfenced, his capital preserved, and then slowly we help take him towards the path of victory, that is how we look at the business conceptually.”
Bhave closes the discussion with a comment on his own positive approach to the crisis and the opportunities ahead. “This is, of course, an immensely serious and tragic phase in our history here, and for the World,” he says, “but we must look through the negatives to a brighter, healthier and more prosperous time ahead. I first met Hubbis when I joined Karvy some five years ago, and I remain as positive and hopeful today as I was then. I believe we are in the right economy, the right industry, and this is the right company for the times ahead.”
Bhave’s Key Priorities
Bhave reports his first priority is to expedite the corporate restructuring to help the core drive towards building more and higher-quality assets under advisory. “Geographical expansion is central to that mission,” he says, “expanding from our 31 locations today including Dubai and Abu Dhabi, into 20 new locations, including within the MENA region and into more Tier 2 cities in India.”
Secondly, Bhave wants to see Karvy shifting the appraisal of an employee’s performance from revenues and assets more to client returns vis-à-vis the market index. “That is the matrix we are trying to put in place,” he reports, “because that is finally the proof of the success in the partnership between the wealth manager and the client.”
The third mission is to build a consistently and profitable, growing organisation. “We have very ambitious plans,” he reports, “and while some others are worried about survival, we are honestly talking of exponential growth and being bold in terms of our aspirations. We are raising capital and putting that in technology, in products and towards expansion in terms of geographies.”
Getting Personal with Abhijit Bhave
Abhijit Bhave is CEO of Karvy Private Wealth, the wealth management arm of India’s Karvy
Group. In his current role, he is responsible for the Karvy Private Wealth business in India and the Middle East. With an overall experience of over 24 plus years across the wealth management and financial services industry in India and overseas, Bhave is well suited to facing the challenges of building a successful wealth business.
Prior to joining Karvy Private Wealth, he worked for organisations such as Deutsche Bank, HSBC, ICICI Bank and Unit Trust of India (UTI) in various stints across roles and functions such as Business Head, Sales Management, Products and Channel Management. He has also worked in areas such as asset management, cash management, corporate banking and retail banking.
He originally earned his MBA from the Indian Institute of Management, Lucknow and holds a Bachelor’s degree in Mechanical Engineering from VJTI, Mumbai University. He has also completed his CAIIB, AMFI and IRDA certifications.
Looking back on his career, Bhave notes that he has enjoyed a diverse and exciting journey, working with a number of global brands and more local financial institutions. He has especially fond memories of his posting to Hanoi with Habubank, then becoming head of wealth management there with Deutsche Bank, which had a stake in Habubank. “That was a pioneering and exciting time,” he recalls, “and then I moved back to Deutsche Bank India before taking the reins at Karvy. In a few words, I have been lucky in my career to date.”
Bhave and his wife have one son who will soon turn 12 and the couple will also soon celebrate their 20th wedding anniversary.
His hobbies include reading, traveling, public speaking, motivational lectures, and he volunteers for Art of Living, an institute which does a lot of things including yoga and seva, which he says means service.
He also meditates every day, and during lockdown has even found time for family games such as scrabble, chess and UNO. “I try to beat my son without cheating,” he jests, “and sometimes have to play judiciously to let him win without appearing to do so.”
He expands on the meditation, noting that India is a highly populous and ever younger country, creating a stressful environment. “You see so many older, experienced people getting replaced by younger, energetic people,” he reports. “It is natural but also has its pressures on everyone. I started with transcendental meditation some 20 years back, but now I do a lot of app-based meditation including Yoga Nidra, which is ideal for stress management, and takes anywhere between six to 30 minutes. It helps greatly with positivity.”
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