The What
What exactly is Multi-Family Office? Dictionary defines it as “ A joint office for multiple families to take care of their financial requirement”. Wealthy individuals and families have a wide array of financial requirements including but not limited to wealth management, angel investments, tax planning, succession planning and etc. Such individuals and families may seek to develop a family office with the core intention of preserving the family fortune and multiplying it; they may however like to address other non-core financial requirements like social involvements, property investments, art dealings, luxury travel or anything else that they may foresee through the same setup. Intention of multiple such families in getting together to undertake this activity has led to shoot out of Multi-Family offices. Now these families can either hire common staff to do it with cost consensus or they can liaison with a professionally organised platform for such services.
The Why
Why is it that suddenly this catch-phrase has become popular in Indian subcontinent? Investment and growth story of India has been like a sine wave and it's riding on the high tide from the past few years. It boosted businesses all around leading to liquidity which needs to be manifested responsibly, though still a lot of us are set in the old molds by working with experts who have stagnated long back. We are comfortable with our Chartered Accountant as both our taxation expert and wealth manager, our Banker as both our investment advisor and lending expert, our Insurer as both our medical advisor and financial planner. There is no immediate trigger so why change; but try and allow yourself a second to think about the catastrophe if one of them dozes off… I am sure none of us can afford to navigate through such a continuity peacefully. It has the potential to deter both our financial and mental wellbeing.
We have stopped applying old is gold in many areas but not this, isn't it strange that we don't shy away from trashing our current equipment in lure of using new technology enabled device, but we ignore the wealth we possess making us capable in taking all these decisions. Wealth management is equally important as health management, or probably more in the current times brooded by deadly diseases. We all need an able financial doctor, someone who is qualified to treat our financial illness and can help in creating a plan for prevention. We all have the right to seek personal CFOs, as that's the kind of comfort we would like to be given in terms of trust and power of consolidation. What if we don't belong to Ambani, Mittal, Premji, Adani lineage; there still are requirements which need similar expertise at a mid-level scale. Can only one person take it all? Not really! how much so ever trained this person may be but there is still a chance of getting levelled out as against the ever changing dynamics and regulations. I believe every growth story has an ecosystem playing at the backend, thus the need of the hour is to have an able advisor complimented by an agile platform and that is the recipe of your Multi-Family Office.
The Who
An important question still remains is that who can do it and how? Can a bank do it? May be, though I wonder the amount of juggle a banker has to handle starting from our financial planning to their crazy revenue targets. A salute to the one who has been able to wade through the muddle without comprising the ethics. How easy will it be for them to duck a client's interest pitched against their investor's interest, more so if they have a product manufacturing plant installed within the premises? A banker at best is like a submarine that surfaces only for a little while sailing by your side before diving beneath the ocean under the weight of their own interest than ours. Banking needs are clearly distinct than other financial needs which need an eye and hand of an expert. Glad there is an option of multiple non-banking platforms to choose from these days but why look elsewhere when open architecture platforms exist in the form of Multi-Family Offices. These are platforms offered by firms who want to drive away from the classical conflict of interest between client and the seller. They choose to not manufacture products inhouse and are driven by the value-added approach. They will offer you the freedom to discuss and choose products much aligned with your financial goals rolled up in an investor policy statement which makes sure your goals are always kept above the transactional whirlwind. They can also give you an access to "best in class" service providers for extended financial requirements, the older the platform the thicker will be the network and capability to address complexity. So, an advisor attached with one such platform can be the ship you will like to sail with. The fact that Multi-Family Office works for multiple families' financial requirements makes the learning curve steeper without diluting on the focus that each family desires.
Current Status of Multi-Family Offices and Their Investments in India
As of 2024, the multi-family office landscape in India has experienced significant growth and evolution. According to a recent PwC report, the number of family offices in India has surged from 45 in 2018 to over 300 in 2024, with a substantial portion being multi-family offices. This growth is attributed to the booming Indian economy and the increasing number of ultra-high-net-worth individuals (UHNIs) seeking sophisticated wealth management solutions. Ulti-family offices in India are increasingly diversifying their investment portfolios. While traditional asset classes like equities and fixed income remain important, there's a growing trend towards alternative investments. Many are venturing into startups and venture capital, although they typically prefer to see some traction before investing. The Indian startup ecosystem has become a significant focus, with family offices becoming large investors in this space. Real estate, both domestic and international, continues to be a favoured asset class. There's also a rising interest in sustainable and impact investing, aligning with global ESG (Environmental, Social, and Governance) trends. Some family offices are exploring investments in emerging sectors like clean energy, biotechnology, and digital assets. Geographically, while the focus remains primarily on Indian markets, there's an increasing trend of looking at global investment opportunities. Many Indian family offices are setting up operations abroad to tap into international markets and provide global citizenship planning for their clients. Technology adoption has become a key differentiator. Advanced multi-family offices are leveraging AI, machine learning, and data analytics to optimize investment strategies and enhance operational efficiency. This tech-forward approach is particularly appealing to the next generation of wealth owners. As the multi-family office sector in India matures, there's a growing emphasis on providing holistic services beyond just investment management. This includes succession planning, tax optimization, philanthropy advisory, and even lifestyle management. The focus is on creating comprehensive, long-term wealth preservation and growth strategies tailored to each family's unique needs and values.
In summary, multi-family offices in India are evolving rapidly, adapting to the changing needs of wealthy families and the dynamic global economic landscape. They are becoming increasingly sophisticated, tech-savvy, and globally oriented, reflecting the changing face of wealth management in India.
Further Reading: This article builds upon our earlier work on Multi-Family Offices. For a historical perspective, check out our previous article titled Multi-Family Office - The What, Why and How?, which offers additional context on the evolution of Multi-Family Offices in India.