The concept of family offices is not new to India with more and more businesses and banks promoting the services here.
Family office is all about managing and increasing your family wealth independently. But, inherited wealth has its own challenges. With increasing concerns over growing wealth, opulent families are more and more negating the advantages of setting up a family office.
The Entrepreneur India spoke to Soumya Rajan, Co-founder, Managing Director & CEO, Waterfield Advisors, about the need for advisory firms to manage family-owned businesses and trusts.
Waterfield Advisors is a multi-family office service provider that works with entrepreneurs, family-owned businesses and trusts. The firm runs two related business verticals in the domain of multi-family office and corporate advisory services.
Role Of Wealth Advisor
The banker-turned-advisor Rajan said the primary reason for having a family office was to plan succession and efficient wealth transfer.
“When you are an entrepreneur, you are looking at succession from different angles – you look at it from the point of view of the wealth you have amassed. It could be liquid wealth or wealth in the operating companies. You are also looking at it from a philanthropic point of view, in terms of how you are giving back to the society. Your concerns are also whether your next generation will be ready to take on the business and if you have the right company structure,” she explained.
Rajan further added that when one looks at succession and increase of wealth, the wealth advisor pitches in to help a family-owned business or an entrepreneur get investments.
“A wealth advisor does not cover areas such as business succession, philanthropy, right structuring of vehicles and these are fundamentally important in ensuring a holistic picture that a family-owned business wants. A family office will look after all aspects of the financial well-being of a family’s individuals. The wealth advisors will only be restricted to investments. This is primarily the difference between the two,” she highlighted.
Wealth Advisors Or Private Banks Limited to Investment Advice
Rajan, a former Standard Chartered Bank executive came up with the idea of Waterfield Advisors when she realized that there was a huge gap in the market with respect to the advice that was given to ultra-high net worth families.
“Wealth advisors or private banks are restricting themselves to investments at best while reluctantly engaging in succession planning. They were doing nothing else for the families. Hence, Waterfield was set up in 2011 as a multi-family office,” she said.
Rajan also felt that UHNIs required a lot more advice on financial well-being, which banks were not able to provide. So, Waterfield was set up as multi-family office.
Why Would An Enterprise Move From Banks to Family Offices?
If you have a family-owned business, by the time the fourth generation enters the scene, the business ceases to exist. Rajan said India has a lot of first or second generation entrepreneurs, who are looking forward to pass on their wealth either through liquidity or through their operating company. The idea of transfering wealth from one generation to another is not encouraged here. India has a lot of new money, she said.
“A family office will ensure that the family wealth if safely transferred from one generation to the next,” she said.