India has been quite successful in leveraging the smartphone revolution by exponentially improving the network infrastructure and democratizing digital services in the country. The newfound convenience and trust significantly helped the financial industry infuse trust into a vastly untapped market. However, financial literacy is still a work in progress in India, which makes it a mountain to climb for industry segments like Asset Management, despite having grown enormously over the last two decades. Data from the Boston Consulting Group show that India’s wealth management industry is expected to grow at 10 percent per year to reach $5.5 trillion by 2025. While this presents a huge opportunity, it is going to be equally challenging for the industry to explore the market. Anil Ghelani, CFA, Senior Vice President, DSP Mutual Fund, engages in an exclusive interview with CEO Insights to navigate these challenges. Anil is an industry thought leader with more than 25 years of experience in the industry and 20 years in DSP Mutual Fund alone handling diverse roles in the past including the CEO & CIO of DSP Pension Fund. Currently, he also serves in a volunteer capacity as a Director (and was the Vice Chairman) of the CFA Society India / Indian Association of Investment Professionals. Below is an excerpt from the interview.
In conversation with Anil Ghelani, CFA, Senior Vice President, DSP Mutual Fund
Reports suggest that the Indian mutual fund industry's AUM is expected to reach Rs.100 trillion by FY 2029. What are the factors catalyzing this growth?
The asset management or mutual fund industry in India has immense potential for growth. One of the major aspects of this growth is the huge under penetration. Today, we have approximately 3.8 crore mutual fund investors in our country, which is expected to grow exponentially over the next couple of years. Let's compare this number with the total number of tax filings, which is about seven crores. This implies an imminent milestone in terms of mutual fund investment prospects.
Let's take another example. The yearly household penetration of two-wheelers in India is said to be around 11 Crore. Given that vehicle insurance and its renewal are mandatory, we are talking about 11 crore financially literate people. They inevitably access a particular advisor or a website portal when they renew their insurance. Many of them might have some form of investment in physical assets, but it is still a vastly untapped market with huge scope for the mutual fund industry to penetrate. Yes, it is going to be challenging, but the potential is huge in this particular market segment.
How do you perceive the business landscape going forward, and what does it mean for the investors?
The whole business landscape is getting increasingly competitive. We have close to 40 players in the asset management industry, and a few more new big players are set to gain their license and approval. This creates a perfect milieu for the investors, as there is a huge scope and a large number of players offering their services. Such a healthy ecosystem will ensure that companies offer the best product innovation and investment outcomes at the lowest possible cost.
How is the industry responding to the need for technology transformation? How does DSP Mutual Fund assess and cater to this need?
From a business perspective, this environment will induce a strong focus on digital transformation, automating operations, and leveraging data driven decisions. I believe that the industry as a whole will undergo a large-scale transformation in terms of how data and technology are used for business growth.
We at DSP Mutual Fund have a three-pillar approach to investing in technologies: Research & investment management, sales & marketing, and back office & support function. The first pillar pertains to our research and investment decision making function. We invest significantly in investment and research technologies. For instance, DSP has made considerable investments to build our in-house technology platform called JARVIS. This aims to institutionalize the entire history of DSP's investment research and decision-making. This enables us to see how different securities, sectors, and asset classes have performed in different market phases in the past. It provides actionable insights to make the best investment decisions in the future.
My advice to anybody who is in pursuit of a good career in the world of investments is to always place investors first on your priority list and focus on ethics over profits
The second pillar, sales and marketing, is all about client outreach. With an in-house product RMX, we have significant investments in this function, and we drive ourselves to the future through a unique level of hyper-personalization. We endeavor to ensure that each one of our clients is exposed to our product offerings that will suit their risk and return objectives.
The third pillar is the support function, including the back office, accounting, compliance, and HR. We have invested significantly and developed a tool, TITAN, using artificial intelligence, machine learning, and data automation in these areas. In a nutshell, our investments zero in on providing the best investment outcome for the investor at the lowest possible cost.
How would you define your leadership approach? What are the guidelines or methodologies you follow?
I follow a very inclusive approach. I constantly try to ensure complete transparency so that every team member understands the common goals of the team as well as the business objectives of the company. This, in turn, helps in creating an inclusive feeling. Additionally, I always try to provide my team with the right amount of delegation and relevant decision-making power while retaining overall control and monitoring the deliverables. They are entitled to decision-making within the broad spectrum of set parameters.
Furthermore, I always believe that if you want to be a good leader, you need to focus on empowering others. You have to empower your team and be available to take the blame if something goes wrong. That confidence will help your team always do their best.
What are the skills that you look for in candidates who could potentially be on your team?
One of the predominant things I look for is the right attitude & aptitude. If you have the right attitude & aptitude, everything else can be coached, mentored, and taught. Thus, if I'm adjoining somebody to my team, I always look whether that person is a go-getter—will they go out of the norm to ensure the work is done in the best possible manner?
Another thing I look for is whether the person is eager to enhance their knowledge. Our profession needs continuous learning and is like riding a bicycle. Either you keep moving, or you fall down. Last but not least, a non-negotiable characteristic of any member of my team is ethics. We place ethics over profits.
What is a piece of advice that you'd like to give to budding leaders in the industry?
In our industry, trust is the most important factor. If you're willing to place ethics over profits, that could be the key to your success. In the world of finance, if you make even a small mistake where you lose trust, you can never grow back to the old terms of doing good business. Hence, my advice to anybody who is in pursuit of a good career in the world of investments is to always place investors first on your priority list and focus on ethics over profits.
Another crucial aspect is innovation. In finance, if you linger on the same process, you will be left behind at some point. That's the level of innovations happening in the world of finance around everything from managing your money to gathering data to guide in decision-making, approaching clients, and showcasing how to allocate their portfolios. Beyond the traditional skill sets required to excel in finance, such as being good with numbers, having an eye for detail, being a good analyst, having respect for history, and focusing on risk factors, these aspects will help you progress your career.
Hobbies: "I love Swimming and Kayaking. It refreshes your mind as well as your body."
Favorite Cuisines: "I am not much experimental when it comes to food. I like to eat Indian home-cooked food. Even if I'm traveling overseas, I always carry a small bag of vegetarian Indian snacks."
Favorite Movies: "I'm quite a movie buff. I am a fan of Hollywood movies, especially thrillers. I don't like to watch horror movies, though. Movies are a way for me to unwind and also learn about many things, including how different people react or behave in different situations and how things worked in different periods. I used to go to movie theaters almost every weekend before the pandemic."
Favorite Books: "I like to read both fiction and nonfiction. Barring history, I like a wide range of genres, including business & finance books."
Favorite Travel Destinations: Nasik in India, Belgium, New Zealand, and Australia.