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Soumya Rajan: Doing the math

The founder and CEO of Waterfield Advisors on growing a wealth management company in India, and dinner-table conversations with her family of super-achievers

Soumya Rajan, founder and CEO of Waterfield Advisors 
Soumya Rajan, founder and CEO of Waterfield Advisors  (Illustration by Priya Kuriyan)

It has been a decade since Mumbai-based Soumya Rajan took an out-of-character leap of faith, shunning a steady salaried job for the adventure of entrepreneurship. While her family stood firmly behind her, naysayers predicted a quick downfall for the wealth management consultancy, Waterfield Advisors, she set up in 2011. There was even a time when she considered shutting it down, before a few—what she calls “serendipitous”—changes in regulation made the path easier for her.

Initially, Waterfield, which now has close to 100 employees, looked at personal financial planning. It soon realised, though, that many families in India wanted to discuss succession and philanthropy, and there were few dedicated players in the category. Today, the firm manages close to $4 billion (around 29,000 crore) in financial assets for around 70 business families and continues to do personal wealth management.

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One of India’s largest multi-family office and wealth advisory firms, Waterfield announced in June the first close at 200 crore of its 500 crore Fund of Funds (FoF)—getting 40% of its target corpus within three months of approval from the Securities and Exchange Board of India (Sebi). An FoF diversifies risk by investing in other schemes of the same mutual fund or other mutual funds.

Waterfield has been through two rounds of funding, in March 2014 and December 2019. The first round came from the Patni brothers, Amit and Arihant, who acquired a minority stake in the company—they continue to be directors in it. This helped the company scale and open offices in cities like Delhi, Bengaluru and Chennai. Her ambitions now include setting up offices in the US, UK and Singapore, reaching the $5 billion mark in assets under advice by March, and more philosophically, working to reduce wealth inequality.

“What I had to deal with,” says the founder and chief executive officer on the early days of Waterfield, “is that whoever I spoke to about the business model, said ‘you will never make it’. They didn’t think that people would adapt to advisories and assumed that Indians don’t want to pay fees. I went in with fairly idealistic notions about how business should be done.”

“Secondly, I was coming off a high-profile job, heading private banking at Standard Chartered, to being a nobody, starting all the way from the bottom of the ladder. Everywhere I went, I introduced myself as head of the private bank. I didn’t let go of it for some time. I had to be linked to some organisation in some role.”

Today the soft-spoken 51-year-old, with interests in math, music, movies and playing badminton, is clear that “your brand is about you, your competence, confidence, how you communicate.... I was apologetic in the early stages of entrepreneurship. I thought of myself as integral to the role I had and entrepreneurship liberates you from that.”

Rajan’s initial reluctance to venture into private enterprise came from years of middle-class conditioning about jobs and security. Her parents were bankers with the State Bank of India (SBI). Born in Mumbai, 20 minutes before her twin Sriya, she moved to the US when her father was posted there—the girls were five at the time. Those formative years made a difference to her outlook even though the family moved back to India five years later. Her father’s work took them to Bengaluru, Kolkata and Delhi, a nomadic existence made easier by having a twin she could go to every new school with.

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The family valued education—Rajan’s great-grandfather was India’s second president, Sarvepalli Radhakrishnan, in whose honour Teacher’s Day is celebrated. She had decided in school to pursue a career in math, so she joined St Stephen’s College in Delhi for a bachelor’s degree, followed by a master’s from the University of Oxford, where she met her future husband, Mukund Rajan. This was the early 1990s, when India was liberalising and opportunities were opening up in the financial sector and for businesses. This was one of the reasons the couple decided to return to India.

Rajan started at ANZ Grindlays (acquired by Standard Chartered in 2000) in 1994 as a management trainee in Bandra, Mumbai. It was situated in the Waterfield Road area, which would one day give its name to her company. That was the beginning of a 16-year stint with the bank, including two years in Singapore, moving from front-line branch work to private, consumer, SME banking and risk management. By the time she left, in 2010, she was managing director and head of Standard Chartered’s private banking.

One of her defining moments, Rajan recollects, was being handpicked by the then group chief executive, Mervyn Davies. On a visit to India, he was taken to the bank’s showcase branch at Breach Candy, where she was the manager. He invited her to a global conference, among five such youngsters from around the world. In Kuala Lumpur, Malaysia, she got offers for other international offices.

“I had to make an important decision to continue (in India) or to take my career international—a classic problem with so many men and women who both want careers,” she says. Mukund, then with Tata Sons, could not move—so she spent two years in Singapore, learning credit and risk. “I learnt in the process that you can’t be a banker if you only look at the front line and the client. It’s great when people push you into the deep end, out of your comfort zone,” she says over a Zoom call from her residence.

She moved back to India to manage SME risk for two years before shifting to private banking—the “other side of the balance sheet”, she says, laughing. Even as the chief executive’s position “serendipitously” became vacant in 2008, Rajan found herself, at age 38, heading private banking, a position most people reach in their 50s and 60s.

“I considered myself lucky—all the breaks came at the right time. When you get things early in life, you want more. In 2010, I turned 40 and wanted something more fulfilling than going to work and managing people’s money. Maybe the desire to be an entrepreneur was always lurking. I kept moving from my comfort zone through my career, which meant I have an innate risk-taking ability.”

There was no significant regulation for investment advisers when Waterfield started in 2011. At their firm, the fee was paid by the client, a contrast from business models where financial product manufacturers paid distributors to sell their products, leading to conflicts of interest.

It was again providence that in September 2012, Sebi came out with a guideline enabling clients to directly access an asset management company without going through the intermediary layer of a distributor. This hit Waterfield in the short term, with clients questioning whether they needed its services at all. “Everyone said I am paying the distributor and you. So why should I come to you? I said that you are right,” Rajan says, laughing.

She came close to shutting down the firm. Then, in January 2013, Sebi’s investment advisers regulations made companies like Waterfield regulated entities.

The pandemic has driven home new lessons. “What covid-19 taught us now,” she says, “is that the financial models you have to forecast go out of the window when something like this happens. The linkage with ESG (environmental, social and corporate governance) and investors is, will traditional financial models be able to predict risks that are not linear, are more complex and systemic? Climate change is an example—in the UK, they see if you have climate risk in your portfolio.”

She says the pandemic made the wealthy wealthier and the bottom of the pyramid, poorer. “It’s incumbent on the richer to give back to society. If you have made money—because the markets have given you staggering returns—please give it back to people less fortunate.”

Rajan, who believes the rest of the world will come out of the pandemic much faster than India, says domestic investors tend to have a limited area of focus. “From the risk diversification point of view, you do need more exposure outside of India. The Indian lens looks at US markets—they want Amazon, Tesla, Microsoft…. They don’t look at great companies in Europe, emerging markets like Taiwan. Global allocation was a big piece of what we did last year. Geographical diversification is prudent.”

She says there is a whole “FOMO effect” in alternatives (investments in assets other than equity, cash, stocks, bonds, etc.). “People wonder why have they not got on to the next unicorn. We are on the cusp of creating several unicorns. This is the beginning of a wonderful opportunity when great business will come out in the next 10-15 years,” she predicts.

The pandemic taught her, like several others, what is important. At a personal level, one of the great opportunities she got during the lockdown was relearning the bhajans of her childhood—Rajan learnt Carnatic music as a child and Western classical music at Jesuit schools. The family spent most of last year in Kotagiri, in the Nilgiris, from where her mother, also a music teacher, would take bhajan classes. “Every Tuesday, she would record and send to students—so I would end up singing as well,” says Rajan.

Her sister, a reader in economics at Cambridge, and brother-in-law Raghuram, a former Reserve Bank of India governor, form an illustrious extended family with a deep knowledge of the world of economics and finance. But she says family dinner-table conversations are usually about movies, streaming shows, family updates and the state of the world.

I ask her if she considered anything besides a career in finance—or math. She tells me about her interest in design, looking at things that are aesthetically pleasing. “What happens with work is it brings out the structured and mathematical side of me. Given half a choice, I would say I want to be a designer.

She pauses for a moment, before adding: “You never know. I may just do it...”

Arun Janardhan is a Mumbai-based journalist who covers sports, business leaders and lifestyle.

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