Treasury Management

Multi-Family Office: A Need for Growing Wealth in India

Over the last decade India witnessed a phenomenal growth in number of High Net Worth (HNIs) and Ultra High Net Worth (UHNIs) families and in turn creation of huge wealth. India’s consistently expanding GDP, successful entrepreneurial yearning and globalization (both as investor and investee country) are few factors that have contributed to this upsurge of HNIs and UHNIs. It is expected that HNIs and UHNIs will witness a staggering growth of over 100% and 50% respectively in next 5 years.

With this creation of large wealth, the HNIs and UHNIs are actively looking for advice and solutions to efficiently manage their holistic financial needs viz. wealth management, trust & estate planning, succession planning, tax planning/structuring, philanthropy, children higher education etc. Besides core financial needs, HNIs & UHNIs also seek expert guidance on the following:

Cashflow and Debt Management
Routine Accounting
Business Advisory
Legal & Compliance
Lifestyle & Concierge
Family Charter
Financial Literacy Programs

Historically, HNIs and UNHIs have resorted to their bankers, wealth managers and lawyers for these, but with ever expanding needs, evolving environment and increasing complexities, the intervention of experts is fast emerging as this requires core competency, subject matter expertise and futuristic thinking. The concept of Family Office is fast evolving as a solution to address this. As per the reports, the total no. of family offices in India stands at 300 which is a 7-fold increase over last 5-6 years having a combined AUM of ~ $30bn.

While UHNIs and large business families generally prefer a Single-Family Office setup given the complexities, confidentiality and large scope of operations, a Multi-Family Office is seen as an option for HNIs that have fewer, less complex but important requirements needing expert guidance and advice.

Multi-Family Office (MFO)

A Multi-Family Office is a professional set up that serves and addresses the financial needs of multiple wealthy families yet try customizing as per the unique needs of each family. They provide personalized, boutique like services by leveraging economies of scale.

A Multi-Family office is seen to a be preferred choice by HNIs due to the following benefits:

Cost Efficiency: Shared resources and pooled costs make MFOs more affordable.
Expert Access: Teams with domain expertise across investments, tax, and legal fields offer comprehensive advice.
Faster Access: Quick access to information and resolutions due to a networked ecosystem.
Flexibility: Services are adaptable to each family’s unique requirements.
Sharing Best Practices: Clients benefit from collective experiences and insights.
Faster Setup: Ready access to established MFO solutions.

While Multi-Family Office set up has immense benefits, it may not be the preferred choice for clients looking for exclusivity, higher control of activities and maintaining confidentiality of family information. For them, concept of Single-Family Office works better.

To conclude, Multi-Family Office could be a preferred choice for HNIs having relatively limited work scope, lesser complexities and serve as cost-effective solution to access wide range of expertise and resources.