2. The Real Playbook for Building Serious Wealth in India | Srikanth Subramanian | Paisa Vaisa

Paisa Vaisa with Anupam Gupta

Anupam Gupta interviews Srikanth Subramanian, CEO of Ionic Wealth, to discuss the evolving landscape of wealth management in India. The epis

Key takeaways

• The 'triple multiplier' effect—asset growth, new investor influx, and increased SIP amounts—drives a 20-25% CAGR in the Indian wealth market.
• Wealth management should be treated as a horizontal service encompassing various products, rather than just a single-product distribution model.

Main topics

• Wealth management segments in India
• The Triple Multiplier Effect

Notable quotes

Treat it almost like another startup.

Conclusion

The episode serves as a strategic guide for emerging affluent investor

Transcript preview

Speaker 5 (0:00) IVM Speaker 1 (0:03) Life may be anything, the first thing is very important. First memory, first love, first heartbreak, first work. Friends, I am Gopal Dutt and this is my first podcast. First with Gopal Dutt, which will be released on IVM Pop. I will talk to those who are busy with their work, whose name we all know. So come to the YouTube IVM Pop channel or wherever you listen to podcasts. Listen to our podcast. Meet interesting people. Speaker 2 (0:36) First and foremost, with Gopal Dutt. Speaker 4 (1:04) Whenever latest episodes drop and always comment. Whenever you have a point of view, you like the episode, you don't like the episode, leave a comment for us so we can learn from that. Let's start this episode right now. I wanted Ionic Wealth for quite some time because it's a very interesting thing. I, you know, the more I read about it, it seemed interesting that within AngelBang, you could have something like this. But we shall come to that. Tell us about yourself, your background, your journey. And then we'll talk about Ion Egg Lent. Sure. Firstly, Speaker 3 (1:34) thanks a lot, Anupam, for having me. Look, I've been a career financial service guy, if not a career banker, but 23 years with an established firm, 18 or 17 out of those 23 years, cut my teeth in the domestic private wealth practice and went through length and breadth. So one of the few guys in the industry. who moved horizontally within the wealth space. So usually you'll have people who are exceptionally deep rooted in one particular function, be it relationship skills, be it product, be it advisory. I was one of the more fortunate ones that opportunities came knocking and I kept taking them. So started my role on the product side, moved back to business, combined product and business, moved to strategy, ran international business, and finally culminated into running the overall private wealth advisory practice for one of the larger established firms. In addition to that, I also used to run the global wealth practice for that firm with offices across the world. And towards the last two, three years of my stint in the 23 years career, I also was fortunate to see how we can use technology to aid, take the same products and take the craft to a newer set of audience across the length and breadth of India. So started with a simple journey of a sunrise industry called insurance, quickly in six, seven years moved into private wealth. Loved the idea of capital markets, speaking to investors, deconstructing portfolios for investors, minimizing information arbitrage that stuck there for about 18, 19 years, still continue to do so. But I've been fortunate to see how wealth changed in India over the last 18, 19 years. International wealth experience showed me how best practices internationally at a point of time could be brought back to India. And the last in technology was the genesis of what we then started doing in Ionic, which is how do we at some stage integrate the two. So that's been the journey Speaker 4 (3:37) for me so far. Ionic, well, tell us about it. Why Ionic, first of all? I mean, I'm familiar with atoms and electrons. Actually, yes. But Speaker 3 (3:46) instead of just going after a fancy name, we did a more copybook style. We said, look, let's rediscover ourselves. What do we stand for? even if it meant that we go back to cliches in terms of first putting together what our soul is, what our purpose is, and then moving towards what should we stand for in terms of value prop. The name actually came pretty much in the end because we said once we know all of that, then shortlisting the names were fairly easy. So out of all that we sort of brainstorm, one thing that stuck with us is the journey of wealth is very collaborative in nature. And one of the things that sort of stuck with us, and that's where we emphasize a lot in all our taglines and all our campaigns is, can we be in some sense co-founders to our investors' wealth creation journey? It was audacious because co-founders has different connotations, different meaning. But we somehow wanted to call that out and wanted to also pique the interest. And also, we also realized that calling out is one. But it's a highly responsible statement to make because falling from such a tall claim is also equally risky. But we went ahead with it. We said, while many can claim, including us and including many other potential competitors in terms of competence, in terms of longevity, in terms of great partners, great team, great products. But what we really want to do is can we handhold everyone who trusts us in terms of... managing their wealth. And in some sense, also the co-founder award helped us to push the message across that don't treat your wealth lightly. Treat it almost like another startup. And in many cases, the kind of families that we used to deal with, in many cases, their personal wealth was equal or in some cases, even bigger than their operating wealth. So in the operating company, you have so much to take care of their operating wealth in terms of team, structure, company. Private wealth was usually relegated to multiple wealth managers. And you would just meet once a quarter, once a month. And it was very cursory. So idea was also to put some seriousness back to creating the wealth. So once that idea stuck with us, we slept over it. We came back. We started feeling good about it. We wanted to dig deeper. So that came the brand purpose that also allowed us to put up a value proposition. After that, it was easy. There were a few names that stuck out. Sharpa was one. Ionic was one. Ionic also had a bit of an edge to it. It had a little bit more progressive tinge to it in terms of tech. And yes, you're right. Ionic also meant ions and atoms, which sort of stick together. And that's also what gave shape to the logo, which essentially is two circles who can be like two co-founders. Speaker 4 (6:31) AngelOne, tell me about that, right? Because this is a part of AngelOne. Although, you know, when I see the website and when I see the branding and when I see everything, it's like Ionic is... its own brand, its own identity. And your founders also have a very, very, very different background versus something like an angel, which is Dinesh Bhai, founder. He's, you know, he's probably among the very, very few guys on the brokerage side who got the tech wave really right. So just maybe a couple of lines about Angel's presence and how you guys... Look, Speaker 3 (6:59) you know, contrary to what many perceive these kind of partnerships, it was us who actually went to Angel One because we've been... We've been awestruck in terms of how AngelOne kept reinventing itself and kept breaking every notion that was out there. And coincidentally and serendipitously for us, at that point of time, they were looking at setting up their own wealth outfit. We had a certain outlook in terms of how we wanted to set it up. So while this is a wholly on subsidiary at this point of time, but there is enough skin in the game for the three co-founders, which is us and the larger team overall. over a period of time. But in a working style, it works as a strategic partnership where AngelOne comes and backs us not only with capital, but all other technical know-how, be it access to customers within the norms and regulations as prescribed, Speaker 4 (7:53) be Speaker 3 (7:53) it access to technology. So I thought when we looked at it and we said, look, if we can independently build this and we all collaborate where the best practices come together. there was magic left to be seen. And, you know, two years out, I couldn't have been more lucky that not only Dinesh, but also AngelOne seemed to be the right ecosystem for us to sort of build Speaker 4 (8:14) it. Before we get into the details of this entire thing, you know, AI and tech and all that, I want you to give our audience just a very broad and short overview of wealth, right? I mean, I don't know how you guys see it, because this is obviously the hottest possible sector for the last... post-pandemic, let's say, for the last five, six years, teams have been set up. AUAs, assets under advisement, have just exploded. Even though optically, when you look at the Nifty, it's gone nowhere for the last two years. But obviously, this is a field that's really booming. See, we are SIP kind of people. So when we see this kind of wealth being created, it's just out of curiosity on the outside. What is the size? How many people are there? How many families are there? We have income tax data. We've got all sorts of stuff. And the numbers are just... just get staggering and staggering. 100 families of 1000 crores, each that itself becomes like one. So how do you guys map this in terms of the total size? Because the wealth management industry is now got pretty much everybody. And probably a few more lined up to jump in. Right. Speaker 3 (9:17) So if you look at it, and I'll simplify it for a point, we somewhere cut the pyramid into three. So on the top end of the pyramid, which is far more narrow, or what we also call is the ultra high net worth, for lack of a better word. Some say it's about 25 crore net worth, some say it's about 50 crore net worth, but give or take that's the range that let's say in a broader range, 25 to 50 crores and above net worth, usually require much more bespoke services because with... absolute amounts of wealth going up, your requirement complications also go up. You will look at succession as a scope. You will look at asset allocation, diversification, not just within India, but also globally. You may have a slightly broader family where each one of them will bring their own color. So that model continues to be run in a very bespoke way. And for me, for example, in my background, bulk of my time I've spent in that corridor, which is... the ultra high net worth. So that was one piece where there were incumbents doing extremely well, still continue to do well. And that was a piece which your traditional private banks, stroke wealth managers have been catering to. Then at the bottom end is, let's say for again, lack of value, but if I give a range, that's a zero to one crore net worth. So if you stay with me for a minute, the top end is 25, 50 crores and above. Portament is 0 to 1 crore and middle is anywhere between 1 to 25, 1 to 50. Speaker 4 (10:42) Huge. And Speaker 3 (10:42) I'll come to that in a minute. But if you look at 0 to 1 crore, over the last half a decade or so, the technology companies had been crazily successful, whether it is giving first-time investors their new folio, first-time investors their new DMAT, giving them quick access to invest into financial services, the whole concept of financial inclusion. The counterparts of the pure private banks in the top end here is the fintechs, who Speaker 4 (11:08) on Speaker 3 (11:09) the zero one cross through the DIY journey, et cetera, et cetera, Speaker 1 (11:12) with Speaker 3 (11:13) high frequency latencies, with great UI, have made that access across multiple geographies in India very accessible. So I think these two, we thought, were reasonably well, it's never fully exhaustive, but it was reasonably well catered to. That left the whole middle piece jostling somewhere because there's 1 to 25, 1 to 50 is a very interesting piece. Well, it's a large piece, but it exhibits towards the initial part more like a DIY investor towards the end part. It exhibits characters like a bespoke. But if you take all of them, Speaker 2 (11:48) they Speaker 3 (11:49) didn't have a dedicated calling card for them. The private banks were too busy at the top end. Fintechs were too busy capturing the large. which now often repeated what called demographic dividend, which I think everyone uses it. So fintechs were. And the middle investors whose only issue was they didn't have time because mostly these were salaried people getting good salaries, good ESOPs, good bonuses. So they were extremely busy Monday to Friday or in many cases Monday to Saturday. So they didn't know where to go. So most likely the custodians of their bank accounts or their brokers, they would just double up as wealth managers. Now, there are multiple reports. There's a BCG report, there's a Capgemini report, which gives certain data. But suffice to say, almost 80 % of India sits in the bottom end. Speaker 4 (12:37) Correct. Speaker 3 (12:38) Not more than 70,000 to 80,000 families are in the upper end. And the middle portion, which is what we call the middle belly, give or take, and each one of us can have different assessment, but let's say it will be a million to two million households. Now, there are two parts to it. One... we had coined this word called triple multiplier one of the reasons why wealth became such an interesting spotlighted industry and second how do we look at wealth overall and how do we sort of segment what the triple multiplier effect said is that there are three distinctively and uncorrelated growth opportunities because of which the market was growing a wherever investors have already invested in equity debt read commodity etc etc by and large they were growing at a particular rate let's say each year depending on good year bad year but on an average anywhere between eight to ten percent their assets were growing Speaker 4 (13:34) portfolios which Speaker 3 (13:36) itself was adding to the base so 100 rupees was invested in various instruments 100 was becoming 108 109 depending on nifty depending on fixed income blah blah blah so that was one piece because of which the market was growing at eight to nine percent second the number of investors that were coming into first time wealth fold was also increasing by about five or six percent each year there were multiple new investors who were coming into the fold and they were they were not available previous year and on top of that each investor were already invested so let's say if you were doing an sip of x Next year, you get an increment. Next year, you get higher. Speaker 4 (14:16) You will Speaker 3 (14:17) make it X into 1.2. So your capital was also increasing. And all these three are mutually exclusive in their own way. Speaker 4 (14:25) That's a triple multiplier. Speaker 3 (14:27) Add all of that, all the triple multiplier effect, it adds up to almost a 20-25 % CAGR growth. At 25 % CAGR, market is doubling every three years. Speaker 4 (14:38) That explains the boom. Speaker 3 (14:39) And that explains the boom in some sense. And on top of that, You've got the great India tech stack. You've got things like mutual fund aggregation platform like MF Central, Speaker 1 (14:49) like Speaker 3 (14:49) other aggregators. You've got DMAT account aggregators, like account aggregators. You've got frameworks like accredited investors through which people can get access to multiple products at lower thresholds. So on one end, you have technology which has been knocking on the doors to make products available and accessible. On the other end, The regulator wanted more and more people to come into regulated, organized financial inclusion space. And on this side, because of a healthy economic boom, you had market growing at 24, 25%. So when you look at all three, any smart money will look at this trend and say that it is JZN. So when you lift the veil of cynicism, which is right now we are going through because so much money has come, there was a reason for it. Everybody saw this. Where... things may go right or wrong is each one will follow their own strategy some may get it right some may get it wrong but that is true to any industry that is on one side the industry what we understand very well is if i split the pyramid the way i mentioned zero to one crore for example angel one understands extremely well Speaker 2 (15:57) sure on Speaker 3 (15:58) case-by-case basis need-to-need basis we can always power uh products solutions knowledge because as a wealth outfit doing deep research competencies second skin to us. But one crore to 25, 50 crore segment, we are trying to target through an omnichannel presence, which means even if we can't, from an economic model point of view, afford to have boots on the ground to service this large set of growing, emerging H &Is, Speaker 4 (16:29) we Speaker 3 (16:30) are also finding them fairly native to use technology. and I'll come to that in a minute, but a recently launched institutional-grade AI called Ionic Wealth AI is the first such attempt where we are now putting the power in the hands of these investors to say, look, we are known to call what is right for you. And the one thing that we keep in mind is we don't like to preach. We say, we will give you an RM, we'll give you a tech, and we'll give you the power to choose. You want to use 100 % tech? Speaker 2 (16:57) Tech Speaker 3 (16:57) is unable to do that. You want to use 100 % RM? RMs are equipped to do that. You want to take some transactions online, some transactions you need to talk to RM that we do. Speaker 4 (17:07) And Speaker 3 (17:08) that leaves only the last segment, which is the 50 crore plus. That for us was very easy. We've done that for a long period of time. So when a lot of high quality private bankers move, a lot of investors move with us, that business gave us the initial sort of thrust and that continues Speaker 4 (17:22) to grow for us. So let's go into that. The point that you mentioned about... the platform that you're building, right? Because I remember in the early days, for the longest time, when the mutual fund AUMs were being built, that required distribution. You had a lot of distribution coming up. Then in the mid-2000s, once the regulatory side was handled and VC money came in, the mutual fund platform business came in, which is with tech. Tell us what you're doing, right? And look at it from the perspective of how you would tell someone who comes to you, someone who's watching this episode right now, how do I sign up a wealth manager? What are the three things that I should look at? You know, whether it's app, whether it is tech, whether it is the presence of a distributor, let's talk about that. And here I'll talk only about the 1 to 25, or maybe 0 to 25, let's say. I'm sure that there is... But Speaker 3 (18:05) you know, in some of these, Arpam, while quality of the people or resource may change, but the answer is still the same. The two important factors that just doesn't change is your own comfort and competence. And I'll just clear it in a minute. Comfort means in a human parlance, you are going to talk. deeply personal stuff. You want to create wealth over periods of time. You want to be freely able to talk about your compulsions, your ability to live a particular lifestyle. So you need the person on the other side who understands you deeply, doesn't judge, has been there with you for a long period of time, understands your family, understands your temperament. That's where the comfort. In the context of tech, the same job the app has to do. The app has to be subservient to your requirements. where the app, instead of telling you, giving you intuitive nudges or giving you intuitive UX, a truly high-quality wealth app needs to behave like an RM, that you are at the service of the investor. When you push a button, the work has to happen. Speaker 4 (19:05) When Speaker 3 (19:06) you ask a question, the answer has to come. So the comfort part is the same, whether you go through a technology route or through an RM route. The other thing which I find sometimes a little bit of a rarity, because a lot of people don't ask this question, Look, it's still a knowledge business. You don't go and choose a doctor without asking about the doctor's competence. How many surgeries has he done? Who has he referred to? In our industry, that question is slightly more rare. People are more pitching their skills on comfort, their skills on lower cost or some of those things. But as an investor, you must figure out a way to see that... the person you're so choosing or the platform that you're so choosing has to have equal amount of comfort. Unless and until someone has seen enough number of booms and busts, enough number of extreme situations in the market, when a crunch time comes, how will someone who's himself or herself not experienced be able to guide you? So the two common answers that will remain, whether it's for the zero to one or the one to 24, anyone, will be comforting. uh competence now the tools change in a higher end of the market these are purely human uh this thing in the 1 to 25 it could be an omni channel where when you look at choosing an rm or a wealth outfit these two still continue to be the most important parameters if you have to choose an app it is you're not going to choose an app which is very click baitish in nature which is very highly propensity in nature those are vertical businesses See, also one misnomer in this industry is that, which in the offline world still doesn't exist, people in offline world coexist. There are product companies which focus on a particular product or a particular service. Mutual Fund or AMC is a single product company. Portfolio Management Services is a single service. AIF is all about focusing on one product. Broking is about a single service. So when they pitch... their service or a product, they're absolutely right in putting a lot of focus on their product and their service. Correct. But when you choose a wealth manager, wealth management is a horizontal. All these have to sit inside a wealth manager. A wealth manager cannot come and say, you bought this today. They do, but they shouldn't. Speaker 4 (21:25) That Speaker 3 (21:25) you bought this today or that. Wealth manager, the whole equation should change. Anupam, you tell me. What are you feeling like? Speaker 4 (21:32) What Speaker 3 (21:33) is Speaker 4 (21:33) your Speaker 3 (21:33) temperament? Do you have any expenses after a year? Once you tell me all of that, let me go down in my bag and tell you, this is the solution for you. Right or wrong, by and large, offline world still understands the difference between a wealth manager, a stockbroker and a mutual. Online world, there is still some lines that are blurred. We bunch up many people together and call them wealth tech. It's also maybe far. more glamorous what to say, Speaker 4 (21:59) but Speaker 3 (21:59) we call many broking firms WealthTech, we call many mutual fund companies WealthTech, and we call WealthTech WealthTech. But if you understand the difference between the two, that if you go to a product or a service provider, you choose their product or their service. They will