Family office has been a popular route among ultra-high networth (UHNW) individuals across the world for managing their family's wealth. In the US, family offices of Rockefeller and Rothschild have existed for more than a century now, but in India the practice has taken off only recently.
"The rapid expansion of UHNW individuals in India has led to a growing appetite for more efficient, effective and prosperous ways to invest money and manage assets," says a report on Indian family offices by Edelweiss and Campden Family Connect.
"Fuelled by global trends and a desire to further professionalise a family's practice, families of great wealth are starting to set up family offices as vehicles through which they can invest their wealth into different asset classes such as equities, private equity, real estate, fixed income and hedge funds," it adds.
According to the report, which studied 78 families of wealth in India, nearly half (49 per cent) utilise family office services. The report says that these services most often come in the form of hybrid family offices which are family office services that are embedded in the family business (22 per cent), which is a common form of early family office development.
The report says the wealth community in India has shown signs of further professionalising their wealth management structures and has been establishing single family offices that are independent of the family business, as denoted by 19 per cent of respondents, or establishing/joining multifamily offices as noted by 8 per cent. The remaining families either do not use wealth management services (32 per cent), take their wealth management advice from family or friends (18 per cent), or they rely on external advisers (31 per cent).
The report defines family office as a private office for a family with considerable wealth. Some of its functions include, but are not limited to, wealth management, investing, managing corporate and family governance issues and performing administrative and concierge duties. The average assets under management (AUM) of the family offices represented within this report stands at $318 million. The average net worth of the families is $645 million.
Here are some other insights from the report.