India’s ultra-rich shifting towards compounding wealth over a very long time: Rohit Sarin of Client Associates

India’s ultra-rich families approach today has shifted from maximising the tactical returns on wealth to compounding it over a very long time says Rohit Sarin, Co-Founder, Client Associates, a private wealth management firm based in Delhi. He also said, the younger generation of these ultra rich families are more inclined to participate in the growth opportunity provided by disruptive start-ups.

Most ultra-high networth families today manage their assets through a family office. Family office is basically a private office of a family to manage their private wealth. It takes end-to-end care of the family’s wealth all issues around the management of wealth, how to invest and administer the wealth and how to keep a track of it. Besides managing the wealth, administration of wealth also becomes critical for the family office as the scale of wealth is so large. Edited excerpts:

What has been the growth of family offices in India and what do you think is driving the rapid growth in demand for family office services today?

Past 10 years have seen emergence of family offices in India as proprietary vehicles of UHNW families to manage their family wealth. As per a report published by PwC India, in June 2024 there were about 300 family office in India up from only 45 in 2018. Growing scale of private wealth in India is driving the demand for holistic wealth management which is addressed by a family office which works like a family CFO for a UHNW family. A family with a managed wealth of more than $100 million has a scale of wealth which can last generations. This requires a strategic approach towards managing the family legacy which can get addressed by a family office.

How are Indian ultra-high-net-worth families viewing wealth differently now compared to a decade ago and how is it compared to global standards?

They are seeing wealth as family’s legacy which can serve generations and therefore can be the strategic resource for the growth of the family. Approach has shifted from maximizing the tactical returns on wealth to compounding it over a very long time. Apart from growing wealth they are also seeing it as resource to support enhancement of the family’s lifestyle creating higher demand for luxury products and experiences.  Indian family offices are also adopting global best practices like investor policy charter, asset allocation and philanthropy. However, more work can happen is in the areas of performance measurement, reporting and building a team of experienced professionals. 

Can you shed light on how newer generations is influencing investment strategies within family offices?

Younger generation is more inclined to participate in the growth opportunity provided by disruptive start-ups. Most of them have received their education in developed markets and they understand the best practices adopted by the wealthy families in these countries, hence they are acting as change agents to professionalize the management of family wealth in India.

With the rise of tech entrepreneurs and first-gen wealth creators, how is the profile of your clientele changing?

New age business are becoming a source for first generation wealth creators. This has created a new market segment apart from fueling the growth of the wealth management market. Founders of new age businesses now account for a significant share of our over-all clients. 

How do you see the integration of impact investing and philanthropy evolving in Indian family offices?

It is still early days for impact investing in India perhaps on account of lack of meaningful opportunities. However, philanthropy has grown very well since I guess giving was always ingrained in the Indian culture and it is only getting formalized now.

What challenges do you foresee in scaling the family office model across tier 2 and tier 3 cities? Are there clients in these cities or it's mostly limited to metros?

Wealth creation is happening across the length and breadth of India which includes Tier 1 and 3 cities as well. However, clients in these cities are still being serviced from offices based out of metros since the availability of suitable talent in these cities is not there as of now. As of now ,it is in single digit between (1-9%) but in terms of new enquiries a lot more are coming from such locations.

Lastly, what’s your long-term view on the future of private wealth management in India?

Private Wealth Management if a growth industry in India and will continue to remain so for the next two decades as India marches towards becoming a developed country. Economic growth will lead to tipping of scales across all industries and sectors which shall lead to wealth creation. We expect that if India’s GDP continues to compound at10-11% per annum in nominal terms then the wealth management market should compound at 2X of that which is 20-22% over the next 20 years.