Latest / The Neon Show / How 1% Stay Rich - What India's Richest Families Do With Their Money That 99% Don't | Rohit Sarin, Client Associates

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How 1% Stay Rich - What India's Richest Families Do With Their Money That 99% Don't | Rohit Sarin, Client Associates · The Neon Show

• 0:00
  SPEAKER_02: 6.1 million dollars, the largest multi-family office in India, by 1400 plus right and I think.
• 0:07
  SPEAKER_00: So the clients that we work for would be less than half a percent of India.
• 0:10
  SPEAKER_00: These are businesses which are anywhere between a turnover of say 500 crores to 5000 crores.
• 0:16
  SPEAKER_02: Your clients are roughly 39% family offices, 33% CA crose, 25% content, not 3% trust.
• 0:23
  SPEAKER_02: What are the common mistakes you see people in their early life making when it comes to wealth creation?
• 0:29
  SPEAKER_00: Younger generation, especially post-COVID, largely I think they've gravitated towards the trading factor.
• 0:35
  SPEAKER_00: This isn't a great site.
• 0:36
  SPEAKER_00: I don't even have a demand of it.
• 0:38
  SPEAKER_02: What's the single biggest differentiator you see how these ultra-HNI spend money versus middle class?
• 0:45
  SPEAKER_00: The relationship with wealth is very similar to.
• 0:54
  SPEAKER_02: Welcome to the Nuan Shrovi.
• 0:55
  SPEAKER_02: Very excited to be hosting you today.
• 0:57
  SPEAKER_03: Thank you very much.
• 0:58
  SPEAKER_02: You guys started in 2002.
• 1:00
  SPEAKER_03: That's right.
• 1:01
  SPEAKER_02: And uh the firm client associates now manage over$1.6 billion.
• 1:07
  SPEAKER_00: 6.1 I would say.
• 1:08
  SPEAKER_02: 6.1 billion dollars.
• 1:10
  SPEAKER_02: Wow.
• 1:11
  SPEAKER_02: From uh over 1,400 um family purposes.
• 1:15
  SPEAKER_00: Yeah, yeah.
• 1:16
  SPEAKER_02: So so uh when you meet someone new, how do you explain what you do?
• 1:20
  SPEAKER_00: So I think if I can coin it in one single sentence, it's like that we are family CFOs.
• 1:25
  SPEAKER_00: Uh just like uh CFO at the corporate level with uh help the business manage the corporate balance sheet or the corporate wealth and solve any problems around the balance sheet of the business.
• 1:39
  SPEAKER_00: We would do the same thing around personal wealth or a family wealth, you know, trying to help families solve any problem which they may have around their family's wealth.
• 1:50
  SPEAKER_00: So that is what we do, and uh we work as a multifamily office.
• 1:54
  SPEAKER_00: Uh, in fact, when we started in 2002, we pioneered the concept by launching ourselves as India's first multifamily office.
• 2:03
  SPEAKER_00: Those were really early days because uh Mr.
• 2:06
  SPEAKER_00: Premji and I remember this very distinctly was the first Indian to set up his own family office uh in 2006, which was four years after we started and introduced the concept in India.
• 2:19
  SPEAKER_02: So, what happened in the early years?
• 2:21
  SPEAKER_02: Like uh you set up the shop in 2002.
• 2:24
  SPEAKER_02: How did you identify the next first five customers?
• 2:28
  SPEAKER_02: Your pitch to them, how they, you know, took the idea.
• 2:32
  SPEAKER_00: I think the first year was uh a very interesting year because suddenly I think we, as founders of a new venture, bootstrapped, grown up in middle class homes, you know, deciding to quit our multinational jobs, which were a huge privilege in the society at that point in time.
• 2:50
  SPEAKER_00: And from a full salary to a no salary, you know, coming into that it was a massive shift.
• 2:55
  SPEAKER_00: And I remember when I started, I had a negative net worth at that point in time of 32 lakhs, and which you now you can do inflation adjusted.
• 3:03
  SPEAKER_00: So no salary, negative net worth of 32 lakhs.
• 3:07
  SPEAKER_00: But then we had done a financial planning because if we were getting into wealth management management, then we pretty much should know about our own financial planning.
• 3:15
  SPEAKER_00: So we had done a financial planning uh which can you know keep us afloat for the next 12 months, and we decided we will not take any salary in the first year because rather we focus on building revenue instead of building cost.
• 3:28
  SPEAKER_00: Uh, but I think we got a good response.
• 3:30
  SPEAKER_00: Uh, we had a go-to market because we had had been in the industry.
• 3:35
  SPEAKER_00: Uh, we had our own network to go to, so we started going to them with a proposition of family office.
• 3:40
  SPEAKER_00: It was a new proposition, it was a very client-centric proposition, uh, which made a lot of sense to customers.
• 3:46
  SPEAKER_02: What type of family business these were, and what was the scale?
• 3:50
  SPEAKER_02: If you can just give me some idea.
• 3:53
  SPEAKER_00: Yeah, so see, the economy in the markets were of a different scale at that point in time.
• 3:58
  SPEAKER_00: And I remember that we had kept a client qualification threshold at that time.
• 4:04
  SPEAKER_00: $1 million used to be 2 CR.
• 4:07
  SPEAKER_00: And we had kept that because uh that time Merrill Lynch also used to be there as one of the wealth managers, non-banking, and they used to have that threshold, and we said that we will keep the same bar for ourselves also.
• 4:20
  SPEAKER_00: So one million dollars has always been uh the threshold for our industry globally.
• 4:24
  SPEAKER_00: We started off with that, which used to be two CR.
• 4:27
  SPEAKER_00: At that point in time, the wealth largely used to be embedded with the generational business families, you know, where it was, and then there were some professionals which are senior corporate executives, which has started coming into wealth.
• 4:41
  SPEAKER_00: So uh entrepreneurship had just started developing, so it was largely two buckets, two segments.
• 4:47
  SPEAKER_00: It is the families in business, and secondly, is the uh corporate professionals where the which was a go-to market.
• 4:57
  SPEAKER_02: So I think uh today your clients are roughly 39% family offices, 33% CXOs, 25% entrepreneurs, and 3% test trust.
• 5:08
  SPEAKER_02: How was this split um then?
• 5:11
  SPEAKER_00: So largely I would say that point in time this would be about uh 60% would be family in business because that is where the source of the wealth was actually sitting at that point in time in the society.
• 5:23
  SPEAKER_00: These could be from small businesses like you know, exporters to mid-sized businesses into manufacturing.
• 5:29
  SPEAKER_00: Then the rest about 40 odd percent could be senior corporate executives and professionals.
• 5:34
  SPEAKER_00: But then over a period of time, as uh the entrepreneurship bug you know hit the Indian society, and that is where the third segment emerged, which is the new wealth segment, which is through entrepreneurship, where the first generation you know entrepreneurs they created ventures and they then uh unlocked wealth, you know, monetized wealth through their ventures.
• 5:54
  SPEAKER_00: So over a period of time, there's a second or rather the third bucket which emerged over a period of time.
• 6:00
  SPEAKER_02: There is one stat there that says that India now has some 308 billion years.
• 6:06
  SPEAKER_02: And if you can share the number of millionaires, like what's that number and how you see that number evolving over the last few years?
• 6:15
  SPEAKER_00: Millionaires is typically a dollar millionaire is about, you know, which in today's time will be about nine and a half crores.
• 6:21
  SPEAKER_00: I think there are various sources, but whatever number ballpark which comes around is about a million odd households, you know, there are about a million odd millionaires, dollar millionaires in India.
• 6:31
  SPEAKER_00: And I think that figure is growing.
• 6:33
  SPEAKER_00: When we started, it used to be in thousands.
• 6:36
  SPEAKER_00: That point in time, which is gone to a million million now.
• 6:39
  SPEAKER_00: So so uh so I think the effluence is spreading in the society, but this million households still are just a dot in the ocean of India's market.
• 6:48
  SPEAKER_00: You know, they just constitute about uh 0.3, 0.4% of India's you know, overall number of households.
• 6:56
  SPEAKER_00: So the clients that we work for would be clearly are less than half a percent of India, but then this will continue to grow over a period of time as more and more people you know come into money and they unlock wealth as the affluence, the wealth effect you know, will create more wealth for more and more people in the society.
• 7:15
  SPEAKER_00: So I think I expect that this number will inch upwards from the current very small dot which is there.
• 7:24
  SPEAKER_02: So, how are uh now people making money or you know creating wealth?
• 7:30
  SPEAKER_00: So now I think it is happening across the board.
• 7:33
  SPEAKER_00: This is what happens when an economy grows.
• 7:36
  SPEAKER_00: When an economy grows, then wealth creates wealth, you know, because what is the law of economics is that one person's expense is another person's income.
• 7:44
  SPEAKER_00: Income.
• 7:44
  SPEAKER_00: Right?
• 7:45
  SPEAKER_00: So when person when one person creates wealth, then when a person also spends a part of it.
• 7:52
  SPEAKER_00: And even that part which the person is not spending is a person is investing.
• 7:57
  SPEAKER_00: That also creates economics for, you know, it creates an industry for banking and financial services.
• 8:02
  SPEAKER_00: To answer your question, where wealth is happening is today, I think the wealth in India is being driven by Indian society's increasing ability to consume more and more.
• 8:12
  SPEAKER_00: Like 60% of India's GDP is driven by consumption, and about 40% is by investment.
• 8:17
  SPEAKER_03: Yeah.
• 8:18
  SPEAKER_00: And who are the people in India who created wealth?
• 8:20
  SPEAKER_00: You know, people they're too, they're consumer businesses, number one, whether they are traditional consumer businesses, you know, or their consumer internet businesses, you know, which have scaled because driven by consumption.
• 8:31
  SPEAKER_00: Consumption.
• 8:31
  SPEAKER_00: And the second is investment, which is let us say, which is businesses which are driven into infrastructure and all highways, ports, airports, and so on and so forth, because that's also given scale.
• 8:43
  SPEAKER_00: So I think that is where wealth creation is happening in India.
• 8:46
  SPEAKER_00: Largely consumption of India is driving wealth creation and uh which is benefiting now multiple industries.
• 8:53
  SPEAKER_00: And there is another interesting data point which I can share with you, is that now India's per capita income is roughly about 3,000 plus minus US dollars.
• 9:03
  SPEAKER_00: So typically, see when a country's, and this has been seen in the South Southeast Asia and Asian economies like China and all in the past, that whenever a country's per capita income has crossed$2,000, that economy that's the inflection point for the economy because what happens is still$2,000 per person.
• 9:24
  SPEAKER_00: That society is in a survival mode.
• 9:27
  SPEAKER_00: Whatever you're earning, you are just kind of surviving.
• 9:29
  SPEAKER_00: There is no surplus income left to for other discretionary uh activities.
• 9:36
  SPEAKER_00: You're just spending on non-discretionary, which are essential things to consume, right?
• 9:41
  SPEAKER_00: Uh so India is now crossed that threshold about five, six, seven, eight years back.
• 9:46
  SPEAKER_00: And when that happens, so this additional now today$1,000 per person per year is then propelling India's consumption story because then that$1,000 per person per year is actually creating demand for multiple products and industries, right?
• 10:05
  SPEAKER_00: It could be HI, it could be travel and tourism, and which will lead to wealth creation.
• 10:11
  SPEAKER_00: So basically, wealth is creating wealth, you know.
• 10:14
  SPEAKER_00: So that's a dynamo effect which is coming already, in has started, will only increase with times to come.
• 10:22
  SPEAKER_02: And let's also talk about the traditional family offices, how they have been, you know, managing their wealth uh within your portfolio, outside your portfolio, if you see any trend.
• 10:34
  SPEAKER_02: Um they are just compounding their wealth or venturing into different uh ventures, or maybe fourth, third or fourth generation that is not able to keep up with the uh wealth that first generation or second generation made.
• 10:49
  SPEAKER_00: So, see, in case of family businesses, uh they are not new to managing their wealth because they've been in wealth uh across multiple generations.
• 10:57
  SPEAKER_00: It's just that they their perspective around uh how to manage wealth keeps changing with changing times.
• 11:04
  SPEAKER_00: And more essentially, with two things, which is the with the fresh perspective of the younger generation, which they bring in after they've completed their education, they've seen the world and come back to family, and also uh the readiness of the older generation to let the reins go.
• 11:20
  SPEAKER_00: Right?
• 11:21
  SPEAKER_00: So also openness to accept those new ideas.
• 11:24
  SPEAKER_00: Uh, but by and large, you know, despite this, you know, largely their approach to wealth management management remains glued to uh protecting their core family values, right?
• 11:35
  SPEAKER_00: So while they're happy to uh continue to upgrade their skills, uh you know, freshen their perspective and stuff like that, be in sync with the latest times, but not at the expense of the core family values.
• 11:52
  SPEAKER_00: So that is, you know, every senior generation is very conscious that they would want to pass on as a bait into the next generation.
• 11:59
  SPEAKER_00: So they're happy to give more freedom to the new generation to bring in fresh ideas, but provided the good old core family values uh are protected.
• 12:12
  SPEAKER_00: So I think there for them, since they've been in wealth for a long period of time across generation, one of the core values is to protection of wealth, right?
• 12:20
  SPEAKER_00: Because for them it is not to get rich but to stay rich, right?
• 12:26
  SPEAKER_00: So protection of uh wealth is uh not that they won't want to grow their wealth, but their expectation is not that they have to compound their wealth at 20% per annum.
• 12:34
  SPEAKER_00: Even if they can compound their wealth about 10-12%, they're absolutely fine with it.
• 12:39
  SPEAKER_00: Right?
• 12:39
  SPEAKER_00: So because it really doesn't affect the larger goal, is that the family wealth is like a family legacy, and it is a generational wealth, which means the scale of that wealth is so large that it will last beyond the lifetime of the existing generation, then the primary goal of such a family becomes to really compound this wealth across generations, right?
• 13:02
  SPEAKER_00: So then protection balanced with growth becomes a strategy.
• 13:06
  SPEAKER_00: So that is what the key difference is.
• 13:08
  SPEAKER_02: But can you share some examples where you saw that maybe uh the older generation is a bit hesitant passing down uh the wealth to the newer generation because maybe uh the knowledge that the newer generation has uh accumulated, the older generation is not able to, you know, understand.
• 13:27
  SPEAKER_02: Or let's say uh AI, we see a lot of family offices, the second or third generation, they are very excited about AI, and the older generation is not able to understand, or maybe wants to take some more time to understand what it actually is, and the newer generation maybe they want to write the AI wave now, now only.
• 13:46
  SPEAKER_02: So, any any anecdote, story you want to hear?
• 13:49
  SPEAKER_00: Yeah, so I think you brought in a very interesting uh aspect.
• 13:52
  SPEAKER_00: So I think I see less and less of this conflict between the older and the younger generation now than what I used to see maybe 20 years back.
• 14:00
  SPEAKER_00: Okay, and I guess one reason for that would be that the tech shift, which has happened dramatically, you know, maybe in the last 15-20 years, especially after the smartphone era, uh, which is what I think which has created the gap in the understanding of opportunities between the older generation and the newer generation, because the newer generation is grown up in the internet era, so they are more familiar with the opportunities which are coming.
• 14:27
  SPEAKER_00: First, the internet came, then the smartphone came.
• 14:30
  SPEAKER_00: Now AI has come.
• 14:33
  SPEAKER_00: So, so I think the older generation understands that the arbitrage between their understanding and the next generation understanding is now really widened.
• 14:43
  SPEAKER_00: So that is where they are now a lot more flexible and open-minded to let the younger generation make the lead.
• 14:52
  SPEAKER_00: And this is also getting validated.
• 14:54
  SPEAKER_00: In fact, today, when you see there's one report of PwC which came out in 2024, which said that in India there are about 300 family offices.
• 15:02
  SPEAKER_00: Now, if you pick up you know the bulk of the list of family offices, largely they are being steered by the younger generation.
• 15:09
  SPEAKER_00: You know, I can mention a few names because they are publicly available, they are not private.
• 15:14
  SPEAKER_00: For example, uh the Marico family.
• 15:17
  SPEAKER_00: The next generation is actually leading the family office, while the father really built a very respectable brand over the generation.
• 15:25
  SPEAKER_00: Uh, it is that's a public name which I can quote out.
• 15:28
  SPEAKER_00: And there's several of the names which I get to see, these are businesses which are could be anywhere between a turnover of say 500 crores to 5,000 crores.
• 15:37
  SPEAKER_00: Many of them could be unlisted privately held, but it is the younger generation you know which is taking the charge to kind of uh steer the family wealth, and uh and the senior generation is very, very happy to be guided by them.
• 15:54
  SPEAKER_00: So this is clearly uh happening coming to AIC.
• 15:58
  SPEAKER_00: Yes, AI is a trend, but as of now, I see what the excitement around AI is not very different than what it used to be when it was dot com era, and I've seen it up and close.
• 16:13
  SPEAKER_00: The first opportunity to start a venture with came to to us was to basically create a dot-com around wealth management, and so much of capital which was available to just start your dot-com because uh ideas were getting funded on the basis of only eyeballs, and which was very unrealistic because see what is a what is a business?
• 16:36
  SPEAKER_00: Business at the end of the day is something which creates cash flows, and eyeballs don't convert into cash flows.
• 16:41
  SPEAKER_00: It was some belief that you know so many users are coming and eventually you'll be able to monetize them.
• 16:46
  SPEAKER_00: But how do you monetize them by solving a problem for users?
• 16:50
  SPEAKER_00: By just attracting users to come and see you, you're not solving any problem, right?
• 16:55
  SPEAKER_00: So uh thankfully we did not participate in that opportunity because and then the we all know it's all history.com went through a bust.
• 17:05
  SPEAKER_00: Only a few of them were really survived.
• 17:07
  SPEAKER_00: Amazon is one of them, rest all went down.
• 17:09
  SPEAKER_00: So I think something similar is happening around AI as well.
• 17:12
  SPEAKER_00: You know, and this happens, it has happened in many times.
• 17:15
  SPEAKER_00: If you pick up the human history, it has happened many, many times that uh, whenever a new change comes in the society, it really attracts masses.
• 17:28
  SPEAKER_00: Now the world is really going to change, and I don't want to miss the bus, I want to be part of this change.
• 17:34
  SPEAKER_00: Uh so it will attract a disproportionate amount of attention of the society.
• 17:39
  SPEAKER_00: It could be in terms of eyeballs, it could be actually in terms of capital.
• 17:43
  SPEAKER_00: So disproportionate amount of capital gets allocated towards a new trend.
• 17:49
  SPEAKER_00: But then, you know, when the filtration happens, when things settle down, then uh only the serious long-term players they are the ones who survive.
• 17:57
  SPEAKER_00: And the rest really they get filtered out.
• 17:59
  SPEAKER_00: I think the same thing is going to happen around AI as well.
• 18:02
  SPEAKER_00: Like, as we you must be kind of an observer of the AI pattern as is happening in the US, about more than$750 billion has been invested in that.
• 18:11
  SPEAKER_00: And essentially it has been done by the largest tech firms, and it's been mutual investments happening between them.
• 18:17
  SPEAKER_00: Because somehow they they are driven by their kind of desire to dominate a world which will be driven by AI, right?
• 18:26
  SPEAKER_00: So that they are dominating the ecosystem.
• 18:28
  SPEAKER_00: But eventually the world is yet to see the fruits of it, right?
• 18:34
  SPEAKER_00: So uh so so bubbles get created all the time whenever a new trend or a new uh thing comes up, but then the bubble does burst also, and then the reality and the life carries on based on realistic pattern.
• 18:48
  SPEAKER_02: So you think for now we are in the bubble and dust will settle in some way?
• 18:52
  SPEAKER_00: Yeah, because see, uh where have we seen actual implementation of AI?
• 18:57
  SPEAKER_00: Right?
• 18:58
  SPEAKER_00: So nobody has really seen the validation of the technology till now.
• 19:02
  SPEAKER_00: Technology is surely is going to stay, it is going to be part of our lives.
• 19:06
  SPEAKER_00: Like internet came, smartphones came.
• 19:09
  SPEAKER_00: AI will, it is going to be an enabler.
• 19:12
  SPEAKER_00: But I think overinvestment is happening in that space at this point in time.
• 19:16
  SPEAKER_00: You know, uh, over a period of time when AI has now started getting into the enterprise space.
• 19:22
  SPEAKER_00: You know, for example, OpenAI and Enthropic, they have done collaborations with our own companies, Infosys and TCS.
• 19:30
  SPEAKER_00: Why they have done collaborations?
• 19:32
  SPEAKER_00: Because they have created solutions which need to be implemented at the enterprise level.
• 19:37
  SPEAKER_00: Where they need the help of these companies because they are the service providers to enterprises.
• 19:43
  SPEAKER_00: When that implementation will happen, which my guess is over the next 12 to 18 months, we'll start seeing some of the earliest signs about the validation of the efficacy of that.
• 19:54
  SPEAKER_00: Right?
• 19:54
  SPEAKER_00: That the what ROI one is going to generate.
• 19:57
  SPEAKER_02: But then isn't uh now the right time to invest if the next 12 months are like you said, that Amazon survived.
• 20:06
  SPEAKER_03: Yeah.
• 20:07
  SPEAKER_02: So there will be some companies who would survive and would become as large as Amazon.
• 20:12
  SPEAKER_00: Well, if you have the wisdom or a magic wand uh to know which which who's going to be the Amazon of this pattern, then the answer is yes, but it's it's very hard to do that.
• 20:22
  SPEAKER_00: Because even in 2000, nobody would would have thought that Amazon will be what it is today.
• 20:28
  SPEAKER_00: So I think in times like this, you know, it's just uh the idea is to just sit by the sideline, be a witness rather than being an actor, enjoy the drama, take away your learnings from it, and based on those learnings and the just is settled down, then make your move.
• 20:44
  SPEAKER_00: There is no point, you know, just joining the herd and the noise and then going down with everybody.
• 20:50
  SPEAKER_02: So, what are you advising to um family offices where both where the younger generation uh has also joined the business, but older generation is still participating, and uh this generation wants to participate in AI.
• 21:06
  SPEAKER_02: So, how do you then advise?
• 21:10
  SPEAKER_00: So, see, uh the I so our advice to them is just wait and watch because it's very, very early days, because uh see any technology we have seen is very binary.
• 21:22
  SPEAKER_00: Either it works or it doesn't work.
• 21:24
  SPEAKER_00: So, while the rewards can be disproportionately high if it works, the risk also could be disproportionately high if it doesn't work.
• 21:31
  SPEAKER_00: So it's zero and one.
• 21:32
  SPEAKER_03: Yeah.
• 21:33
  SPEAKER_00: So if you have the risk appetite to be zero and you're prepared to take that risk to be the one, you please participate because it can be a jackpot.
• 21:43
  SPEAKER_00: But if you do not have the risk appetite, then just as I mentioned, be be an observer on the sideline, you know, learn about these things, and AI is going to remain for the next you know decades.
• 21:53
  SPEAKER_00: So you'll have n number of opportunities to participate in that.
• 21:56
  SPEAKER_00: Amazon also didn't become an Amazon overnight after dot com, right?
• 22:00
  SPEAKER_00: Yeah.
• 22:00
  SPEAKER_00: So we will get our chance to pick and choose, you know, more rationally when things have really started becoming more clearer.
• 22:08
  SPEAKER_00: So that is what our advice to family officers are.
• 22:10
  SPEAKER_02: So at client associates, you guys are uh for now not participating in AI?
• 22:16
  SPEAKER_00: Not participating because I think it's uh it's very hazy at this point in time.
• 22:23
  SPEAKER_02: And uh Ruth, you uh work with some 1400 ultra HIs.
• 22:29
  SPEAKER_02: How these guys structure their wealth uh different than the rest of us?
• 22:34
  SPEAKER_02: And which uh asset classes they structure their wealth in most common?
• 22:41
  SPEAKER_00: So in the past, the traditional asset classes have been listed equities and bonds.
• 22:46
  SPEAKER_00: You know, when we started, the most popular instrument at that point in time used to be RBA bonds.
• 22:52
  SPEAKER_00: The RBA used to issue tax-free bonds.
• 22:54
  SPEAKER_00: Yeah, and I've seen times where RBA has been giving 9 to 10 percent post-tax return, you know, tax-free returns, very, very popular.
• 23:02
  SPEAKER_03: Yeah.
• 23:03
  SPEAKER_00: Because our inflation also used to be pretty high at that point in time.
• 23:07
  SPEAKER_00: So but then over a period of time, you know, clients they became familiar with equity as an asset class.
• 23:17
  SPEAKER_00: They understood the power of equities to compound over a long period of time.
• 23:21
  SPEAKER_02: When did you see this trend in India, like the interest for equity?
• 23:26
  SPEAKER_00: I think you've seen this uh strengthen more so in the last 10 years.
• 23:33
  SPEAKER_00: But then it has started creeping in the 2000 onwards.
• 23:36
  SPEAKER_00: You know, before 2000, it was a market which was very opportunistic, very trading oriented, based on everybody used to look for a tip because that thought that's the only way to make uh money from equities.
• 23:49
  SPEAKER_00: Uh but then later on, I think when people started participating in it in a in an organized manner and a long-term approach in the 2000s, and then they experienced that markets going down during the global financial crisis and then coming up and so on.
• 24:04
  SPEAKER_00: So, you know, when investors have gone through different market cycles, they've understood the asset class.
• 24:10
  SPEAKER_00: And that's the reason they've understood that this is the nature of the asset class, and the best way to benefit from the benefit of this asset class is to stay in the game, right?
• 24:20
  SPEAKER_00: So, another asset class traditionally, where a lot of Indians historically and still are getting invested, remain invested in real estate.
• 24:28
  SPEAKER_00: Uh, because the growth in real estate is what they had experienced, because they've seen, and real estate, you know, they have not seen going down because there's no mark-to-market value which comes on a daily basis.
• 24:41
  SPEAKER_00: Plus, equities they're not experienced apart from just in a very opportunistic way.
• 24:46
  SPEAKER_00: Now, over a period of time, uh they've seen that real estate, of course, in the last five, six years, the cycle has come back, but there was a large down cycle between 2012 and 2020, and equities were actually doing well during modern time.
• 24:59
  SPEAKER_00: So they have understood that over a long period of time real estate will compound higher than real estate.
• 25:08
  SPEAKER_00: So they continue to invest in real estate, but then they are also now comfortable to diversify beyond bonds, are not available anymore, real estate into equities also.
• 25:20
  SPEAKER_00: And now Indians are these families also looking to diversify beyond India, yeah, because that maturity has also come that uh, especially in the recent times, we have seen the rupees depreciation against the USD.
• 25:34
  SPEAKER_00: So they've understood the importance of diversifying beyond India.
• 25:38
  SPEAKER_00: So I think the horizon is really really expanding as the Indian investor is getting more and more experienced.
• 25:46
  SPEAKER_02: Can you please explain this point or why Indian family offices are diversifying beyond India and what are the key reasons?
• 25:55
  SPEAKER_02: And how do you see this panning out in the next 10 years?
• 26:00
  SPEAKER_00: See, the reason is that if you are, it's like good old you know, adage of don't keep all your eggs in one basket.
• 26:06
  SPEAKER_00: So if you are invested fully only in India, yes, given that India is the fastest growing large economy and stuff like that, it'll continue to grow.
• 26:16
  SPEAKER_00: But then it is also important to diversify from the point of view of not maximizing your wealth, but also bringing in as a cushion into your portfolio.
• 26:26
  SPEAKER_00: When you invest outside India in a global portfolio which is poorly correlated with the Indian markets, so then you are basically bringing in the benefits of diversification into your portfolio.
• 26:40
  SPEAKER_00: It is not maximizing your wealth, right?
• 26:42
  SPEAKER_00: But it is making your portfolio more stable, right?
• 26:47
  SPEAKER_00: Instead of it going like this, maybe it is going like this one.
• 26:50
  SPEAKER_00: So that sign curve, you know, is becoming more you know stable, you know, instead of more spiky.
• 26:57
  SPEAKER_00: So I think that is the real benefit of investing uh outside India because you are able to participate in the pockets of growth which is there globally.
• 27:07
  SPEAKER_00: Also, you're able to diversify across currency because in India your exposure is only in rupee.
• 27:12
  SPEAKER_02: Yeah.
• 27:13
  SPEAKER_02: And then what's the single single biggest differentiator you see?
• 27:17
  SPEAKER_02: How you know these ultra-HI spend money versus uh middle class, let's say.
• 27:24
  SPEAKER_00: Very interesting question.
• 27:26
  SPEAKER_00: Thank you for asking it.
• 27:26
  SPEAKER_00: And I have seen this and up and flows.
• 27:28
  SPEAKER_00: I've been a student of wealth all my life.
• 27:31
  SPEAKER_00: And uh see, ultra HI families see they have gone through that phase, you know, they're also humans, but they've been through that learning curve.
• 27:41
  SPEAKER_00: So they largely spend their money on their needs and not wants.
• 27:46
  SPEAKER_00: Whereas people who are just getting there, you know, they're getting into affluence, you know, they're the first time they're brush, and they want to really express their aspirations to celebrate the money they have just buy on their wants, right?
• 27:59
  SPEAKER_00: So, because it's the first time for them.
• 28:02
  SPEAKER_00: Uh, and they'll also, you know, get over that and eventually.
• 28:05
  SPEAKER_00: So, I would say the question that you asked is how's their relationship with wealth?
• 28:09
  SPEAKER_03: Yes.
• 28:09
  SPEAKER_00: So I would say that their relationship with wealth is very similar to like that of a mature partner who respects you, right?
• 28:19
  SPEAKER_00: Understands you and takes your help only when needed, right?
• 28:23
  SPEAKER_00: So, pretty much like that.
• 28:25
  SPEAKER_00: That you know, I have wealth and wealth is an enabler.
• 28:28
  SPEAKER_00: Of course, I live a good life and I will leverage my friend, my uh wealth as a friend to live a good life for my needs and not splurge on my wants, which doesn't matter to me much.
• 28:42
  SPEAKER_00: But what matters to me is you know what my needs are.
• 28:44
  SPEAKER_00: So I think that is what the relationship with wealth is, which is which is quite nice.
• 28:48
  SPEAKER_02: We have talked about family offices enough.
• 28:51
  SPEAKER_02: Let's just talk about the founders who have, let's say, just made their money.
• 28:55
  SPEAKER_02: And if a founder is building in India and building for the world, uh US or your European market, how should they structure their wealth?
• 29:05
  SPEAKER_02: What are the learnings you pass down to these first-time first generation entrepreneurs who have just made the money from uh generational uh you know family offices?
• 29:16
  SPEAKER_00: Yeah, so I think have a balanced approach uh between setting your goals for wealth is between growth and protection.
• 29:24
  SPEAKER_00: Uh, while the first generation wealth owners are more skewed towards growth because they are driven by growth, growth, growth, because that's what you know have got them here.
• 29:36
  SPEAKER_02: Yeah.
• 29:37
  SPEAKER_00: You need to be patient with your money, patient with your money, and we have seen a number of examples, and I can name it because it's a public domain.
• 29:45
  SPEAKER_00: Baijus, you know, they created such a nice-scale business and a brand, but what happened?
• 29:52
  SPEAKER_00: Right?
• 29:53
  SPEAKER_00: So I think it has to be a balanced approach where you balance your aspirations for growth with protection.
• 30:00
  SPEAKER_00: Right?
• 30:01
  SPEAKER_00: If you go, if you just make it very skewed only on the growth side or only on the protection side, then your outcomes over a long term may be very, very suboptimal.
• 30:10
  SPEAKER_00: If you're skewed only in favor of protection, then the opportunity cost of compounding at even a balanced growth rate of 10-12% could be very high over a 30-year scenario.
• 30:21
  SPEAKER_00: But if you are compounding only skewed on the favor of growth, then maybe the additional disproportionate risk that you've taken might actually could have eroded your wealth.
• 30:31
  SPEAKER_02: So the risk that you have taken to scale your business, you don't have to do the same thing with wealth creation.
• 30:37
  SPEAKER_02: You need to be more patient.
• 30:39
  SPEAKER_03: Yeah, yeah, that's right.
• 30:40
  SPEAKER_00: Need to be more patient, and uh I think wealth stays with them who are patient.
• 30:48
  SPEAKER_00: You know, it is it's a gift, you know, which is given by people who are impatient to those people who are patient.
• 30:53
  SPEAKER_02: You and Imanchu started this journey in 2002.
• 30:57
  SPEAKER_02: Uh, when you started, you obviously had a goal in mind.
• 31:00
  SPEAKER_02: Now, after all these years, what do you think?
• 31:04
  SPEAKER_02: Um why this uh you know like what this journey means now, looking back, what all happened?
• 31:16
  SPEAKER_02: How do you reflect on this journey?
• 31:19
  SPEAKER_00: So, first coming to your first part of the question is that you know, was that the right time to start?
• 31:23
  SPEAKER_00: Then I said the answer is yes, because see, we we really had a very, very early mover advantage in various ways that you know we were able to bring a concept to the market which we were the pioneers.
• 31:38
  SPEAKER_00: Yeah, people heard that concept from us first, and then we kind of virtually had the freedom to create a market around it.
• 31:45
  SPEAKER_00: So, no competition virtually at that point in time when you start very early.
• 31:48
  SPEAKER_00: Of course, we also took the risk of that concept not being accepted by the market.
• 31:53
  SPEAKER_00: We could have failed also, but then there's no reward without any risk.
• 31:57
  SPEAKER_00: So we had a massive first mover advantage, and then the other advantage which comes is that you've got talent which is available maybe at a fraction of the cost which is available today.
• 32:09
  SPEAKER_00: So your entry barrier was very, very, you know, I would say benign at that point in time that we could actually be in business on our own.
• 32:18
  SPEAKER_00: You know, we just picked up a computer uh which was being auctioned by Deutsche Bank, the older computers, and I still remember that we won one computer for 8,000 rupees.
• 32:27
  SPEAKER_00: It was a desktop that point in time, and that was a machine to be in business.
• 32:31
  SPEAKER_00: So it was as small an entry barrier as that, you know, at that point in time.
• 32:36
  SPEAKER_00: And of course, our own personal lifestyle was cost was still manageable.
• 32:42
  SPEAKER_00: Then the cost of starting this business, which has become now.
• 32:46
  SPEAKER_00: So I think that was the advantage.
• 32:48
  SPEAKER_00: I think that was, I would say, if looking back, that was the right time to start.
• 32:52
  SPEAKER_00: What we could have done differently and what not differently, I would say, first of all, we build this business organically, bootstrapped.
• 32:59
  SPEAKER_00: So I think that is something which we would like to repeat.
• 33:02
  SPEAKER_00: If I would like to start client associates today, and I tell you the reason for that, because see, this is a business which is in the business of perpetual service.
• 33:13
  SPEAKER_00: You know, wealth has to be looked after forever across generations.
• 33:19
  SPEAKER_00: And that's to be able to do that, you need to build credibility, which will lead to trust.
• 33:26
  SPEAKER_00: Then only that stickiness is there, and that compounding will happen.
• 33:30
  SPEAKER_00: If you do this transactionally, then this one customer is coming, then it's going away, then you're replacing this with a new customer.
• 33:35
  SPEAKER_00: That compounding never happens.
• 33:38
  SPEAKER_00: And I think because of the nature of the business, it is very important that you do this business keeping the client at the center, doing the right things for the client.
• 33:50
  SPEAKER_00: And that is possible only if you have the independence to do it.
• 33:53
  SPEAKER_00: Right?
• 33:54
  SPEAKER_00: So let us say if you have an organization which is led by managers, then naturally it's not that they don't do a good job, but then they are also driven by their own career aspirations, and they are in a typical role if somebody is bright, maybe a few years, and then it is going all the way down.
• 34:12
  SPEAKER_00: So everybody, then I say when we ask to working with the bank, is typically everybody's focused on their goals, then the customer goals.
• 34:18
  SPEAKER_00: So you're not able to really pay attention to the customer fully.
• 34:22
  SPEAKER_00: Then there are organization and industry which are investor-led, and then naturally the objective of investors are very different because their objective is that they have to make money for their LPs and they have to multiply the business and then find an exit in a few years.
• 34:35
  SPEAKER_00: It's only in an owner-driven organic setup like ours you have the independence to do the right thing for the business.
• 34:44
  SPEAKER_00: And for the business, when I say it's for two stakeholders, right things for two stakeholders.
• 34:49
  SPEAKER_00: One is the customer, and second is people who take care of the customers.
• 34:53
  SPEAKER_00: So clients and associates.
• 34:55
  SPEAKER_00: That's where our name comes from.
• 34:56
  SPEAKER_00: That our business is nothing else but these two pillars.
• 35:00
  SPEAKER_00: Then other functions, you know, uh research is a very important core of our business.
• 35:05
  SPEAKER_00: So these are basically the engines of our business.
• 35:08
  SPEAKER_02: That is what happens in research part?
• 35:12
  SPEAKER_00: So, research part, Nancy.
• 35:14
  SPEAKER_00: So uh I understood that this very early that this is the core of our business.
• 35:19
  SPEAKER_00: You know, this is uh I can say not only just the mind, but also the heart of our business, because we are in knowledge business.
• 35:27
  SPEAKER_00: And if we have to truly work like a family office, then we really, really need to have our own independent research, which is a buy-side research.
• 35:36
  SPEAKER_00: A buy-side research is a family office produces for taking its own decisions, you know, which helps you to form your own independent view.
• 35:43
  SPEAKER_00: Because a cell side research will always be bullish.
• 35:47
  SPEAKER_00: When times are good, they'll be bullish.
• 35:49
  SPEAKER_00: They have good reasons to say it's why they're bullish, and times are not so good, they'll have good reasons to say why they're bullish.
• 35:56
  SPEAKER_00: Uh, because it is then aligned with the cell side goal.
• 35:59
  SPEAKER_00: So what we as a research, you know, we produce is that we first of all access our own data directly from the sources, you know, whether it's in Bloomberg, Morningstar, Valley Reserves, whatever.
• 36:11
  SPEAKER_00: Then we process that and come out with the output, you know, based upon the models that we have built.
• 36:16
  SPEAKER_00: Because, see, in investing, it is not, you don't should look at the hindsight, but you have to have an advice which is forward-looking.
• 36:23
  SPEAKER_00: Because markets are constantly discounting an emerging future.
• 36:27
  SPEAKER_00: So there is no point going and advising clients based on the narrative which has already played out.
• 36:34
  SPEAKER_02: And wealth management is a uh foreign was a foreign concept.
• 36:39
  SPEAKER_02: So if you have to draw parallels, how Indian family offices are uh doing versus their uh Western counterparts in terms of wealth accumulation, behavior.
• 36:52
  SPEAKER_00: Yeah, yeah.
• 36:53
  SPEAKER_02: No, I'm very forward-looking thinking.
• 36:56
  SPEAKER_00: Very glad that you know, why we might might have pioneered it, but we did it in this case, otherwise somebody else would have done it.
• 37:03
  SPEAKER_00: You know, nobody can stop an idea whose time has come, right?
• 37:08
  SPEAKER_00: But I'm very glad that it's uh as a concept, it has got picked up by the Indian society because see, a family office is what came up, it started with the Rockefeller family, you know.
• 37:20
  SPEAKER_00: They were the one who first introduced the concept to family office in the US, started with their goal to manage their family wealth.
• 37:28
  SPEAKER_00: And when they kind of mastered the art, then they started offering it to other wealthy families.
• 37:35
  SPEAKER_00: And then in the European continent, you know, there are examples of the Rothschild family, which is also a generationally wealthy family, and they've also kind of demonstrated a capability.
• 37:46
  SPEAKER_00: So, all this in the Western developed world, it the concept of family offices flourished.
• 37:51
  SPEAKER_00: And uh, I wouldn't be wrong to say that in the US there'll be thousands of family offices because the scale of wealth is among us and the spread of wealth is also very, very broad.
• 38:00
  SPEAKER_00: And uh so would be the case in continental Europe because their wealth essentially came from the colonial wealth, you know, which is much longer even in the US, American wealth.
• 38:12
  SPEAKER_00: And I think Indian uh families are quickly uh learning about it because they've understood from because their younger generation has gone out for their education, they've got the exposure, and they have learned that this is nothing else but family offices, nothing else but it's an institutionalization of management of family legacy, right?
• 38:34
  SPEAKER_00: And this is what has helped the West to preserve their wealth, and this is what you know they've understood is important for them, for us also to preserve our wealth.
• 38:43
  SPEAKER_00: We used to be the richest country Muslim 300 years back, right?
• 38:46
  SPEAKER_00: That's the reason we invited external invaders to our country who took away our peacock throne and Kovinur.
• 38:52
  SPEAKER_00: Yeah, I think that same wealth will come back to India next 50 years, right?
• 38:57
  SPEAKER_00: So, but only if we as a society learn to take care of it, take care of it.
• 39:04
  SPEAKER_02: So and uh client associates is the largest multi-family office uh in India, managing 1400 plus ultra HIs.
• 39:14
  SPEAKER_02: Uh, but I'm sure we would have a lot of newer uh wealth advisors also coming to the entry, but the number is very low.
• 39:22
  SPEAKER_02: So why the barrier to entry is so um you know, it's just so difficult to get into this industry.
• 39:32
  SPEAKER_00: Uh so if you look at see, there are uh see our industry is also today really, really breadth is a lot, but it's there is there's a confusion of nomenclature in industry.
• 39:47
  SPEAKER_00: So there are you know one set of players which are called mutual fund distributors, they're also you know helping their clients uh to kind of compound their wealth their own way.
• 39:56
  SPEAKER_00: But you know, one section of the industry which is calls themselves advisors because they've taken a civic license like RAV, also incidentally one of them, and uh they believe they are the only ones who are advising, and they are just about less than 500 odd which are active.
• 40:14
  SPEAKER_00: Uh but the reason for that why the number of resisted investment advisors are very, very less is because see the market readiness.
• 40:22
  SPEAKER_00: And this is not only an Indian phenomenon but the global phenomenon as well.
• 40:25
  SPEAKER_00: It's a classic consumer psychology that when it comes to writing a check for paying for services, you know, it the customer is not ready for it.
• 40:34
  SPEAKER_00: So I think that concept, because of that reason, is really not taken off.
• 40:38
  SPEAKER_00: But when you look at the mutual fund distributors, there are lakhs and lacks of them.
• 40:43
  SPEAKER_00: In every nook and corner of the country, it could be not only in tier, forget tier one cities, it will be in tier three cities.
• 40:50
  SPEAKER_00: And which is what actually is that's a force which is actually driving the financialization of savings in in India, which is what uh which is getting manifested in the amount of money which is coming into SIPs.
• 41:03
  SPEAKER_00: You know, last month was some 32,000 crores.
• 41:08
  SPEAKER_00: So I think uh, but you know, if your question is around building uh wealth management platforms, why the entry barriers are high, and reason for that is you know, as an industry we have come a long way, some 25 years old, because I seriously believe that this industry started coming, started coming into its uh you know, start building beginning of 2000.
• 41:31
  SPEAKER_00: So when I got came into ANZ Greenlays, that bank, I was hired by ANZ Greenlay's bank as a team of the 10 people to launch wealth business in India, way back in beginning 1999.
• 41:44
  SPEAKER_00: So I can call myself this first generation of wealth manager in India.
• 41:47
  SPEAKER_00: So about 25 years, industry has really really come a long way.
• 41:51
  SPEAKER_00: So what has happened there is while the industry has really grown in terms of the size of the pie, but the cost structure of the industry is also grown, and that is the real cost structure is centered around the people, it's a people's business, it's a service business.
• 42:04
  SPEAKER_00: Yeah, so naturally, because so many people entering, they've kind of the talent is limited and the cost of talent has gone up.
• 42:14
  SPEAKER_00: So today, actually, the for somebody who's starting this business, the economics are not very favorable.
• 42:21
  SPEAKER_02: Yeah, let's talk about your book, Unlocking Wealth.
• 42:24
  SPEAKER_02: You talked about uh it focuses a lot on building wealth uh early.
• 42:29
  SPEAKER_02: So, if you can share more about that, like why did you focus a lot on this topic in your book?
• 42:36
  SPEAKER_00: Yeah, no, thanks for asking that.
• 42:38
  SPEAKER_00: Because see, that was I'll tell you the core of writing this book was because uh see, thankfully, I'm in a profession where I'm able to get to see data about uh the potential of India to create wealth, which uh I guess my all my fellow Indians do not have the advantage to see that data.
• 42:56
  SPEAKER_00: And I think that uh this century will going to be India's century.
• 43:01
  SPEAKER_00: You know, that's uh very a fact which is very, very uncontested and largely will should happen.
• 43:08
  SPEAKER_02: Why would you say that if you can just share some data points?
• 43:13
  SPEAKER_00: Yeah, because see India today is the fastest growing large economy.
• 43:17
  SPEAKER_00: So the maximum compounding effect is going to come because of two things.
• 43:21
  SPEAKER_00: A, your scale, and second, at what rate you're growing that.
• 43:24
  SPEAKER_00: So if you multiply the two, then in absolute terms, your compounding will happen maximum there, right?
• 43:30
  SPEAKER_00: So this is there in case of uh India.
• 43:32
  SPEAKER_00: So I gave you an example of uh the per capita GDP.
• 43:36
  SPEAKER_00: So we already had 3,000 over about 20 years.
• 43:40
  SPEAKER_00: I think there's a good chance that we should get to about 15,000 or so, and that is where we will get categorized as a mid market, you know, effluent nation from a poor nation currently.
• 43:54
  SPEAKER_00: Uh so I think within this century, uh, which belongs to India, I think next 10 years.
• 44:00
  SPEAKER_00: Could be India's best years because after that, also India will keep compounding and keep growing, but I think your base effect will start catching up with you as it is catching up with China now.
• 44:10
  SPEAKER_00: So I wanted basically awareness of that to come to every Indian, right?
• 44:15
  SPEAKER_00: Because especially in a country where the average age of uh every Indian is 29 years, right?
• 44:23
  SPEAKER_00: We are still very young, and compared to China, that's about 38, 39 years.
• 44:28
  SPEAKER_00: In case of Pakistan, it's about 23 years.
• 44:31
  SPEAKER_00: So 65% of the population is below 35 years of age.
• 44:35
  SPEAKER_00: So we are a very, very young country.
• 44:37
  SPEAKER_00: If I go to public places, I hardly see people of my age group, right?
• 44:40
  SPEAKER_00: It's all it's a very, very young country, and I and I want every young Indian to know that you know next 10 years is going to be perhaps India's best years in the entire century.
• 44:50
  SPEAKER_00: So they should and must start early because that is how they will benefit from the benefit of compounding.
• 44:59
  SPEAKER_00: Right?
• 44:59
  SPEAKER_00: So A, they will bring into their lives an atomic habit of saving.
• 45:05
  SPEAKER_00: So today, if they are saving 100, tomorrow they'll be able to save 1000 and then 100,000 because they'll keep growing in life.
• 45:13
  SPEAKER_00: So they will become perpetual wealth creators, right?
• 45:16
  SPEAKER_00: And then not only will they become wealthy, but they'll also kind of amplify the wealth effect in the entire country because wealth is what creates wealth.
• 45:28
  SPEAKER_00: So I think that is what the central uh motivation of writing this book was that this message, and the book was written in a very, very accessible language, it's not written for economists because they know it all or they don't know it all.
• 45:40
  SPEAKER_00: It was written for every Indian, you know, who should know that what times you are living in.
• 45:46
  SPEAKER_02: What are the common mistakes you see people in their early life making when it comes to wealth creation, saving, or investment?
• 45:56
  SPEAKER_00: Yeah, the common mistake is that they they become late savers, you know.
• 46:01
  SPEAKER_00: Uh I would say late investors because savers are the ones who basically keep their money in a savings account.
• 46:08
  SPEAKER_00: That's where the name savings account comes from.
• 46:09
  SPEAKER_00: It's largely liquidity.
• 46:11
  SPEAKER_00: But they become late investors because they keep thinking that Abhi to Maripa's haini.
• 46:16
  SPEAKER_00: So let me come into money, some surpluses, some meaningful, I'll start investing.
• 46:20
  SPEAKER_00: I would say that you should start becoming investor right from the first paycheck.
• 46:24
  SPEAKER_02: How smart they are, what data says when it comes to investing early.
• 46:30
  SPEAKER_02: The younger generation.
• 46:32
  SPEAKER_00: See, the younger generation, especially post-COVID, largely, I think they've gravitated towards trading platforms.
• 46:39
  SPEAKER_02: And uh which isn't a great sign.
• 46:41
  SPEAKER_00: This isn't a great sign because see a trading platform.
• 46:44
  SPEAKER_00: See, in trading, it's only the platform which makes money.
• 46:49
  SPEAKER_00: Most investors, most traders don't make money make money.
• 46:52
  SPEAKER_00: Right?
• 46:53
  SPEAKER_00: So it's like in gambling, the house is always in the money because it's always taking you know a fraction of using a toll or a user charge for using the platform, right?
• 47:02
  SPEAKER_00: So trading basically creates short-term profits.
• 47:06
  SPEAKER_00: Uh, investing is what creates long-term wealth creation.
• 47:09
  SPEAKER_00: And I'll and my own personal experience and belief is that trading is a zero-sum game.
• 47:14
  SPEAKER_00: And I'll share my own personal example.
• 47:16
  SPEAKER_00: See, way back when I used to work with a bank as a very young kid, you know, I was very excited and opened a D-MET account, and those were the days, beginning 2000 tips and all that.
• 47:26
  SPEAKER_00: I thought I'm in this business, I'm a smart guy with access, and I know much more than everybody.
• 47:32
  SPEAKER_00: So, my own experience was that yes, I have done 10 trades, seven out of ten were I made money.
• 47:40
  SPEAKER_00: But then those three where I lost money, the cumulative loss on those three was higher than the cumulative gains on those seven.
• 47:51
  SPEAKER_00: Right?
• 47:52
  SPEAKER_00: So you don't realize that because once you're making successful trades, you keep on committing more and more.
• 47:58
  SPEAKER_00: But then you don't know that one loss can that one hit because the one loss can actually wipe out all your gains.
• 48:04
  SPEAKER_00: So eventually trading doesn't make you money, and that's the reason I think somewhere last time, last year, Sevi also shared data that in derivatives about 90% of Indians are losing money.
• 48:16
  SPEAKER_00: Right?
• 48:17
  SPEAKER_00: Institutions are making making profits at their expense.
• 48:21
  SPEAKER_00: So I think the younger generation in India they should move away or graduate from trading to investing.
• 48:29
  SPEAKER_00: Because that is where they will sure short, they will create wealth.
• 48:33
  SPEAKER_00: You know, they just and the basic habit and atomic habit of investing is accumulation.
• 48:37
  SPEAKER_00: So right from your first paycheck, pay yourself, whatever amount it may be, it doesn't matter.
• 48:43
  SPEAKER_02: There is lack of awareness or there is like lack of patience.
• 48:48
  SPEAKER_00: I would say lack of awareness.
• 48:49
  SPEAKER_00: Patience will come if awareness is there, because you know, if you know or I know that by remaining patient it is in my benefit, why will I or anybody will not be patient?
• 49:00
  SPEAKER_00: So I think lack of awareness because financial literacy is very, very limited in our country, it is not taught in schools.
• 49:08
  SPEAKER_02: Yeah.
• 49:08
  SPEAKER_02: Is it ever too late uh when it comes to investing, wealth creation, that uh if somebody is in their 50s, 60s, um, they feel that there are certain things they missed out on.
• 49:23
  SPEAKER_00: So I would say that uh anybody who's got at least a 10-year cycle to invest, it's never too late.
• 49:32
  SPEAKER_00: It's never too late.
• 49:33
  SPEAKER_00: And especially now in a society when we are seeing that the society is living longer, you know, don't we see uh the senior generation, our parents, their friends, they're touching 90.
• 49:44
  SPEAKER_00: 60, you still have a 30-year time horizon as per that markup, you know, and it's a long way.
• 49:50
  SPEAKER_00: Let's talk of Warren Buffett, you know, he's in his late 90s and he's become Warren Buffett because of 70 years of compounding.
• 49:57
  SPEAKER_00: He started investing when he was 21 years old.
• 50:00
  SPEAKER_02: Yeah.
• 50:01
  SPEAKER_02: I'll uh close our conversation with a rapid fire.
• 50:06
  SPEAKER_02: The best investment you have ever made.
• 50:10
  SPEAKER_00: I guess client resources would be the best investment, but uh jokes apart, I think traveling is the best investment because not just me, our family and family loves traveling because we see traveling as not uh as a leisure activity, but as a source of education.
• 50:28
  SPEAKER_00: You know, that is what it really helps you to get to see the real world, what's happening, it opens your eyes.
• 50:34
  SPEAKER_00: So I think that is the best investment.
• 50:36
  SPEAKER_02: The book you gift most often.
• 50:39
  SPEAKER_00: So it's a very nice Japanese uh book on a Japanese concept called Ikigai, which is what I also believe it to the core, and this thing of retirement actually comes from that belief because you know Ikigai means that if you love doing something and it also helps you make a living, it also is aligned with your purpose in life, then keep doing it to the last day of your life.
• 51:01
  SPEAKER_00: Yeah.
• 51:02
  SPEAKER_00: So Ikigai is a great book, which I think every human on this planet should have on their shelves.
• 51:08
  SPEAKER_02: One anecdote in history that amazes you since you're a history before.
• 51:14
  SPEAKER_00: There are various, but I think the one is that uh Mark Twain said that history doesn't repeat itself, but it often rhymes and it happens.
• 51:24
  SPEAKER_02: Yeah.
• 51:25
  SPEAKER_02: One financial belief you have changed your mind on.
• 51:29
  SPEAKER_00: I just gave you an example that trading doesn't lead to wealth creation, it's a zero-sum game.
• 51:35
  SPEAKER_00: Yeah.
• 51:35
  SPEAKER_00: And I close my DMED account, and for long I don't even have a D-MET account.
• 51:40
  SPEAKER_02: Oh wow.
• 51:41
  SPEAKER_00: Yeah.
• 51:42
  SPEAKER_02: This will be the highlight of the conversation.
• 51:46
  SPEAKER_02: Anyone from the financial industry that you are rolling off?
• 51:50
  SPEAKER_00: Of course, uh, among uh millions of fans of Warren Buffett, I'm also one of the fans because it is such a commonsensical and very inspiring story of patience and longevity.
• 52:02
  SPEAKER_00: But apart from that, I think from a sense from my from that industry, Jamie Demin is also I of JB Morgan.
• 52:08
  SPEAKER_00: I follow a lot because he's you know, in a place like America where people don't really survive in the corporate world, he's been there with the longest time and continues to steer the institution with long-term values.
• 52:21
  SPEAKER_02: Uh, from newer generation entrepreneurs, given a chance, who will you like to hire for your team at CL?
• 52:28
  SPEAKER_00: Well, this is a hypothetical question, I know I can't do that, but uh just to answer uh something, you know, somebody like uh say Ashish Mopatra of business and Alok Vachpai Iksigo because see, these are the generation of founders or a breed of founders who built profitable, sustainable businesses.
• 52:51
  SPEAKER_00: You know, they are the ones who believe that what's the point of building market share if it will not lead to profits, and they build very sustainable businesses because of that, because in a true sense, you know, they are it makes them less dependent on external stakeholders.
• 53:08
  SPEAKER_00: So I something like that that aligns with your philosophy.
• 53:12
  SPEAKER_00: Philosophy, you're able to build your business though as per your vision.
• 53:16
  SPEAKER_02: One person who has inspired you the most in life and while building client associates.
• 53:22
  SPEAKER_00: So I think there are several, but since you asked one, I'll just take an excuse to add one more and uh from the sporting world.
• 53:31
  SPEAKER_00: So from our own very own Mahendra Singh Doni, and uh second is Roger Fetra.
• 53:37
  SPEAKER_00: And I think what makes them attractive to me is uh patience.
• 53:45
  SPEAKER_00: I think the focus and their patience and their ability to just stay focused on what they're supposed to do, even if they have to execute their task surrounded by 100,000 people around them.
• 53:59
  SPEAKER_00: And perhaps that's the reason they are who they are.
• 54:01
  SPEAKER_02: Yeah, how to be focused when the world is watching.
• 54:03
  SPEAKER_00: Well, the world is watching.
• 54:04
  SPEAKER_00: You captioned it so very well.
• 54:08
  SPEAKER_02: Thank you so much, Rovita.
• 54:09
  SPEAKER_02: I really enjoyed our conversation.
• 54:11
  SPEAKER_00: Thank you for having me with you.
• 54:13
  SPEAKER_02: Thank you.
• 54:13
  SPEAKER_02: Really appreciate you traveling all the way uh to our studio and recording this.
• 54:18
  SPEAKER_00: Thank you, Nancy.