The Three Types of Firms: Which one are you?

Amar Pandit , CFA , CFP

Amar Pandit

A respected entrepreneur with 25+ years of Experience, Amar Pandit is the Founder of several companies that are making a Happy difference in the lives of people. He is currently the Founder of Happyness Factory, a world-class online investment & goal-based financial planning platform through which he aims to help every Indian family save and invest wisely. He is very passionate about spreading financial literacy and is the author of 4 bestselling books (+ 2 more to release in 2020), 8 Sketch Books, Board Game and 700 + columns.

My colleague Sowmya had met a distributor Advait Mehta 6 months back to discuss our Client Experience and Advisor Platform. Advait has been in this business for 15 years and has built a decent AUM of Rs. 200 Crore.

He loved the platform that my colleague showed and said “Your platform is simply awesome. I will do it later as I am busy with other things.” Later generally means Never and something has to happen for a person to change. Basic Physics – A body at rest tends to remain at rest. Given a choice between action and inaction, people generally choose to not do anything unless there is a push.

The Coronavirus crisis was a push for Advait as he realized that he had to do something. Inaction would do no good and he will lose a significant portion of what he has been working on for the last 15 years. His revenue was down by 40% as clients were stopping SIPs, exiting investments, panicking in general and he felt he had to do something. He called up Sowmya proactively, signed up, and is now learning new skills to implement and prepare his firm for the future. 

Advait is a classic case of the second type of firm who didn’t innovate much but realized that there is still time to save yourself from drowning. 

Which are the other 2 types of firms?

The first type is the one which has innovated or partnered with an innovator way before the crisis hit. These firms invest in their businesses and look out for opportunities to be the best in this space. They took the time to hire the right people, built proper processes, workflows, client experience and infrastructure. This firm is looking pretty solid now. They will not just survive but will thrive during such times because they have gone through the pain and are well prepared to capitalize on the biggest opportunity that we are witnessing today (Don’t know when the next opportunity will come …7 or 12 more years) .

This firm is signing up clients, getting references from existing clients, getting clients from competition and has a clear competitive advantage. Such businesses create enormous business value and are sought after in the industry.

The third type never ever gets it. They don’t invest in their business, wait and wait (like an investor who waits for the BOTTOM that comes and goes) and then let their business be chipped off 1 small piece at a time. In our business, you won’t lose all your clients at once and thus these firms don’t feel that pain initially. It’s like termite eating your business and by the time people realize it’s often too late. You have assets but no business value created, you are losing clients to competition and at some point, you just give up. No one can help the third type so make a promise to yourself. Never ever be the third type.

This is the Experience and Technology Stack, firms need today to survive and come out stronger when this crisis ends:

  1. CRM
  2. Digital Onboarding
  3. Highly Experiential Goal Based Investing Platform – Most products are complex to use and not visually appealing. Additionally, some of them are confusing and do not engage prospects into a wow experience. The goal here is not to have as many features as possible but to have the ones that are extremely important and necessary.
  4. Portfolio Management

  5. Simple yet powerful Client Reporting that can be understood by a common man.

These are some of the basic components of a world class integrated technology stack that can deliver outstanding client experiences. Also understand that there is a difference between a Transaction Platform and a Client Experience Platform. Just allowing people to buy or sell is not what this is about. Most people think that just because they are transacting digitally, they have a digital business. Nothing could be further from the truth. 

Transaction is one part of Client Experience but a world class digital business 

(True Digital = HI + AI = Human Intelligence + Artificial Intelligence) is all about delivering an emotional experience that is about helping people understand why they invest, if they are doing OK , how much is enough for them and giving them the comfort that they never have to worry about money.

The firms that have upgraded themselves and running on such platforms have prepared themselves to shine. Those who have not upgraded are behind but there is still an opportunity to turn this Crisis Pain into Crisis Fuel.

You should aim to be the first type of business but if you are not, Aim to be the Second Type by learning from Advait Mehta.

I love this quote by Rahm Emaneul You never want a serious crisis to go to waste” and you would do well by remembering and acting on it.