In my quest on writing blogs in money related topics that I do not have any expertise..I thought I will get an expert on reputation to write about Reputation and Financial status. Who is this? It is Mitu Samar…Board Member at India’s top media group…and you can read more about her at www.eminenceonline.in

It was a call from Subra and I picked up assuming it was our usual catch up call.

Subra being himself got directly to the point, “Why don’t you write an article on the cost of not managing reputation for my blog subramoney.com.”  I responded, “Who will read about reputation on a personal finance blog, Subra?”

“Why not? Don’t you think personal finance and reputation are highly connected?”, he said.

If we think deeper, it will be clear that this connection applies to everyone irrespective of their stage in the wealth journey: affluent industrialists, SME owners, professionals, senior executives or other salaried employees.

Coincidentally, just before starting to write this piece, I was scrolling through my FB timeline and I noticed an interesting video talking about how Mukesh Ambani and Anil Ambani inherited an equal amount of wealth but their wealth status differs substantially in less than two decades. Business acumen certainly is at play, but reputation also has a role to play here. I was still in school when the two brothers became active in business, so I observed their media appearances closely for decades. While Mukesh Ambani was referred to as a shrewd and sharp industrialist, Anil Ambani was bestowed the tags of being flamboyant and a smart communicator. (I am not even talking about other non-business media coverage that the younger brother enjoyed).  This is where the difference started setting in.

Outcome?

Perception – one brother is sharper than the other when it comes to business. This regular public comparison plays a lot on a psychic level. It has the potential to make one believe that ‘I am not good enough’, a self-fulfilling prophecy that influences one’s behavior too. Possibly, amongst many other business reasons, this is also one of the reasons why Reliance Communications is bankrupt, and Reliance Jio is regarded as the biggest disruptor in the telecom space.

Another example comes to my mind is that of a well-known wealth advisor from Ahmedabad. Though he started his business about two decades ago and today his company is worth Rs. 250 crores, he has a peculiar fear that he may be shortchanged wrt business valuation impacting his networth; hence he wanted us to work on his reputation. His son has studied in the US and has settled in Mumbai with no plans to shift back to Ahmedabad. He is pursuing a career in the entertainment industry. Knowing that there is no clarity of business succession, the wealth manager’s clients are worried about their money in case something unfortunate happens to him. So, increasingly they are opting for more established institutional advisors, resulting in a loss of business for him. This was despite the fact that he has institutionalized his business too and has nearly 20 employees but he didn’t showcase that enough. Secondly, even if he thinks of selling off his business, he may not get a good deal as the buyers know his challenge of no apparent successor. What we are doing is consciously investing in building his reputation, with two approaches – highlight the organisation that he has built, thereby bringing comfort in the minds of investors, and also raise his profile nationally, so that interested buyers approach him for the business that he runs and not for his succession conundrum. This, in turn, will get him better business outcomes and strengthen his net worth.

These and many such examples made me believe that it is not only about the cost of not investing in your reputation but also about what kind of reputation you are building. Not paying attention to either is equally damaging. In the case of this wealth advisor not having consciously built his reputation posed challenges and we are already observing the positives of our conscious efforts towards building one. On the contrary in the case of the Ambani brothers, investment in reputation is not a challenge; the quality is.