Think Tank

While most wonder how the rich only seem to get richer, little do they know what’s going on behind the scenes. What is it that keeps those wheels of fortune turning? In today’s virtual monetary scenario there are specialists that plan, create and enhance the wealth of their clientele. One of the emerging trends in the wealth management sphere is that of Family Office services.

The ultra HNIs are taking to this trend gradually. Ultra HNIs are bracketed as those whose bankable assets are valued at more than US$ 30 mn. They form the most sought-after and secluded high-end client segment of the private banking and wealth management space. Their financial goals are very different from the larger section of investors. This is where the Family Office plays its vital role – in being a professional financial advisor to the family as regards its wealth.

Typically, a Family Office is entrusted with the responsibility of advising and managing the family’s wealth. The Family Office comprises individual(s) from a financial institution whose services are professionally engaged by the family for this purpose. The family, essentially the client, could be a businessman / family business or even a well established professional. The Family Office spends much time and effort in understanding the family – its needs, aspirations and objectives. Thus, the key element here is that the role of the Family Office goes beyond just investments. Depending on the stage of life that the family is in, its needs may vary. The onus is on the Family Office to serve their plans well – and these could include insurance, budgeting including the payment of bills, wealth planning, wealth transfer, tax services, setting up of a new business venture or expansion of family-owned business, a wedding in the family, family settlement, charitable giving and even succession planning.

Clearly, the Family Office is a one-stop shop for its ultra HNI clientele. Apart from suggesting financial tools for any/all of the above, the Family Office also networks and liaises with the other functions to provide holistic solutions. For instance, a team deployed as a Family Office from a particular financial institution leverages its expertise in providing financial solutions along with other value added services. Moreover, the Family Office could even collaborate seamlessly with other entities and provides outsourced solutions, if so required, for example connecting with an NGO in the case of charity planning. Also, being the set up that it is, the Family Office is proactive in its approach towards investment and other ideas. This implies that the Family Office provides the best solution, irrespective of its origination. Given that the Family Office plans, executes and even manages the various aspects pertaining to the family’s wealth, it ensures that the family can concentrate on its core business, or in the case of an individual he/she can focus on his/her career while the Family Office acts as a personal CFO interacting with various touch points.

One of the key differentiators in this relationship is that the Family Office is economically in sync with the financial goals of its Ultra HNI client. The Family Office, coming from the background of a financial institution, understands not only the family as a client but also the firm/service provider and its intricacies at the same time, thereby striking the ideal balance. All in all, the Family Office furnishes comprehensive and sophisticated solutions, which makes it standout from conventional processes.

As the Family Office explores the art of wealth management in all its diverse forms for the benefit of its ultra HNI customer, what makes it sound is the fact that it is purely based on trust and integrity. In a nutshell, the Family Office shoulders the responsibility of preserving, growing and transferring the family’s wealth.


 

Disclaimer: The views expressed in the articles are personal of the authors and do not reflect the views of Kotak Mahindra Bank Ltd.