Podcast: An Adviser's Point of View - Samik Mukherjee

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Podcast transcript

Simon Cooper: Welcome to an Adviser's Point of View, Cazenove Capital's new podcast series for financial advisers. I'm your host, Simon Cooper, Head of DFM Relationship Management at Cazenove Capital. Our guest today is Samik Mukherjee, co-founder of Keystone Capital, a wealth advisory boutique based in London. Samik worked for Citibank, Coutts and Kleinwort Hambros before founding Keystone in 2019. Samik, thanks for joining us.

Samik Mukherjee: Thank you for having me, Simon.

Simon: Could you start by telling us a bit about Keystone and what makes it different from some of the other advisers in the market?

Samik: Sure. Keystone Capital was established in the summer of 2019, as a wealth advisory boutique, by my business partner, David McLellan, and myself. Between us, we'd spent 50 years in private banking, advising high net worth clients and their families.

In our experience over those 50 years, the wealth advisory industry has gone through significant changes, and sadly, some of the focus has shifted from finding the best solutions for the client and offering a highly personal service to perhaps looking for the most cost-efficient for the providers, and processes that primarily aim to satisfy, first and foremost, all the regulatory requirements that we face. A human touch, and doing what's right by the client, is not quite as it used to be.

David and I wanted to turn that on its head. Being a small outfit, offering bespoke solutions for our clients without having to satisfy any external shareholders, allows us the opportunity to do just that. We took a step back to look at all the things that are good about a private bank and those that an IFA perhaps does better, and we've tried to bring together the best of both worlds for our clients, if that makes sense.

Simon: Your background is obviously financial advice and you've come from some very big companies but now you're running your own business. I'm very interested in which of the two comes more naturally to you and how you split your time on a daily basis.

Samik: Setting up a business has certainly been a big learning curve for us but it's been a thoroughly enjoyable experience and we've learnt a lot from this journey. If anything, I think it's made us more rounded as individuals, with a better appreciation of challenges typically faced by entrepreneurs.

There is a bit of a juggling act to be done between the two roles but, to be honest, it's never really felt like work. I realise that sounds a bit strange but creating a new entity with its own identity has been quite an exciting journey for the two of us, and it's very rewarding to see it taking shape, being recognised by clients, colleagues, industry peers.

Simon: Do you feel as though you put more of your own passion into it than maybe you would have done if you were working for a corporation?

Samik: Oh, without a doubt, it's your baby, so you're proud of everything that's gone into it and it's your ideas that you've brought to life. There's a lot more passion around it, quite naturally.

Simon: In your experience of having set up your business, has there ever been conflict between doing what's best for your clients and doing what is best for your business?

Samik: No, I don't think so. You're asking about conflict of interest and how we handle it perhaps, and the answer's very simple there. There really never has been one so far, and it's a short time, I admit, but David and I share a very similar philosophy, that if you consistently do what's right by the client, then eventually they will realise this.

They'll trust you more with their own money, but also be very comfortable in introducing you to their friends, family, other business associates. If there ever was a conflict of interest, we are very clear, in our own minds, that we will bear any pain and put the clients' interests first. It's really that simple.

Simon: I'm assuming referrals are 100% of your business?

Shamik: It is the life-blood of our business really, yes.

Simon: How has the business grown since you started in 2019? Can you describe a little bit of the journey and how it's been?

Samik: The business has done well in establishing itself as a viable business in a fairly short time, not that we had any doubts about it. This is largely due to continued support of clients both David and I have advised for the best part of two decades now. The journey's been very rewarding and enjoyable, but equally, it's not been without its scary moments.

If you look back to when we launched the business, it was around late summer of 2019, six months in, we were in a lockdown. All phone calls, email traffic just died. Thankfully, it lasted only two or three months, after which, things started to pick up again. It has been a journey with ups and downs.

Simon: Was there a moment when you thought "This is it, I've got a viable business now."? What's next for Keystone?

Samik: We wrote our business plan before COVID struck, and I'm pleased to say we're pretty much on plan, and despite all the serious disruptions that many small businesses faced in the last 18 months and continue to grapple with even now, we're incredibly grateful for the support we have had from just about everyone in making it happen. No complaints there, and we do think we should be thankful for the position we find ourselves in.

In terms of looking forward for Keystone, we are conscious that sometime in the next 12 to 18 months, we will reach an inflection point, where we have to sit down and seriously consider our future growth strategy. Whether that's simply to grow organically, albeit at a slower pace, or to take on other advisers, we'll have to make a decision on that. We are very keen to ensure that, in a rush to expand, our ethos is not lost. We need to be quite careful in picking the right set of people who share our core values.

Simon: Are you saying this is the end of the beginning?

Samik: You could say the first stage of the business cycle is drawing to a close. Now we're hitting, or very soon likely to hit, the phase where we think "What next? How do we grow?"

Simon: How have you balanced the concept of outsourcing some of your business functions? Can you give us a little bit of background on what you might have kept in-house and what you've outsourced?

Samik: One of the things that we have done, well two areas, I suppose, we are outsourcing quite frequently, one of the things is compliance. Right at the outset, we decided we'd try to reduce the amount of time, we don't want to get bogged down so much with compliance, of course we have to be compliant, we live in a regulatory world, and we have to abide by all the regulations and make sure we're compliant. We don't want to be so bogged down that we don't find time for clients and time to shape the business.

That's some elements of it, not all of it, we can't really outsource everything in compliance but some parts of compliance, we have outsourced. That's really worked very well. It's given us that additional time to focus on our clients. The other thing that we have done is, as a business, we tend to use discretionary fund managers quite heavily, and the reason for that is we do believe in professional management of investments, so we do outsource a lot of the underlying investment manager to a select few asset managers who we feel are best in their peer groups.

Simon: We touched on the pandemic, how did Keystone cope?

Samik: Surprisingly, it coped quite well. Initially, we had a lot of concerns on how we would need to adapt our business model to the new environment, but actually, we realised that being a very young company, we had embraced technology to be able to continue exactly as we had started out, without having to rush to implement new technology and changes to our processes. We simply were not using the existing technology to the full capacity, pre-pandemic, as we are now.

For example, we set up to be paperless from the very outset. Everything's stored on the cloud. We had apps like Teams and Skype, we just simply didn't use them as much, but we had the ability to accept electronic signatures. Mobility was just quite simply built into our model, but we were just not using it to the same extent before.

Simon: The whole concept of technology in itself, do you see it more as an opportunity for the industry, rather than a threat?

Samik: Absolutely, we think technology has been great for our clients and for us. The tools we have now at our disposal allow us to gather information very effectively, carry out analysis, that simply would not have been possible a few years ago. This has meant, in the market for financial products, they've become more and more transparent and competitive. Yes, technology has been fantastic. The only caveat there is, although we use all the latest technology that's at our disposal, we always try and be that human interface between new technology and our clients.

Simon: It's still a people business, no matter what?

Samik: Very much so. I think, whilst the market may evolve in the years to come and clients of the future may start becoming more comfortable getting their advice from a machine, we still think there's a place for a business like ours that offers a very personal and human touch.

Simon: Another area that we've been thinking about has been demographics. The nature of the service you offer means that your most active clients are getting older - but you also have to appeal to the next generation. Do you find that there's a difference in the priorities of older and younger clients, and how does sustainability fit into it?

Samik: It's a good question. You're right that generally, by the time someone has accumulated substantial wealth, they're quite likely to be in the later stages of their careers. There are, of course, exceptions to that but that's generally the case. We are quite fortunate, as a business, that in the majority of the cases, we advise clients and their families, which usually includes the next generation.

I think the relationship is far deeper and more meaningful if you're advising across generations, so we always try and engage with clients on that basis from the very outset. Again, if you were to generalise, younger clients tend to be a bit more conscious about the impact they're making through their choices, investment choices. It's not always the case but you'll find that more in the case of younger clients than our older clients.

The asset managers we work with have sustainable strategies for investing and are actively changing the way in which they invest to take account of these important considerations - whether the client is specifically asking for it or not actually.

I think, as an industry, we are still at an early stage in embracing these changes, but the direction of travel suggests to me that sustainability will simply become a core criteria in the investment management world, and in the not-too-distant future, if companies do not embrace changes, they will eventually find themselves out of business.

Simon: Sustainability becomes the norm eventually?

Samik: Absolutely, I think. At the moment, it seems like a buzzword but I don't think that'll always be the case. It'll just be a way of life.

Simon: Another change that my colleagues and I have noticed over the pandemic is how much people's demand for and access to information was heightened by being at home all the time and looking at screens. Have you seen any of your clients getting, I don't want to use the words 'caught up in it' but have you seen an interest from retail clients in the things they've been reading about?

Samik: I think we've definitely seen more interest from clients in understanding what their investments are doing. There are more questions and more interest when you have annual reviews and when you talk about asset classes etc. That's definitely there.

A handful of clients may have started dabbling a little bit in purchasing their own stocks and shares. The point of our role really is to educate clients on the risks of the various types of investments, and to ensure that they fully understand the risk-return profile of a particular asset and how that fits in in their overall investment strategy. I think, in the vast majority of the cases, they've been happy to delegate the role of picking investments to a professional.

The few clients who run their trading accounts on the side, they're usually restricted to a very small portion of their overall wealth, play money, for the want of a better term. Unless you're a financial services professional and have the capacity to stay close to the market at all times, I don't think we'd be very comfortable advocating clients taking up retail trading as a hobby.

Simon: Thank you very much for joining us.

Samik: Thank you very much for inviting me, it's been a pleasure and I look forward to catching up in the future again.

Simon: Thank you.

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