Comments
Client Associates, a leading Multi Family Office (MFO) provider, is eyeing a quantum jump in growth in the next five years as the ranks of super-rich continue to grow to record proportions in the country.
Professional team
The India-focussed firm, which pioneered the concept of MFOs in India 16 years back, expects to double its professional team to 200 by 2022 from the current level of 100, its founder partner, Himanshu Kohli, told BusinessLine .
With the number of wealthy families in India expected to swell in the coming years, Client Associates is eyeing assets-under-advice (AUA) of about ₹1 lakh crore by 2022, a four-fold jump from its current AAA of about ₹20,000 crore, said Kohli.
India is widely expected to become a $5-trillion economy by 2025. An MFO is usually an independent organisation that supports multiple families to manage wealth. While a Single Family Office (SFO) is a dedicated and usually a proprietary office focussed on serving the interests of one particular family, an MFO caters to any number of families and is more of an external services provider.
Client Associates offers wealth management advisory to 550 clients, of which, about 200 are family office clients. The average investible wealth of a client is about ₹40 crore. It now expects its client base to grow to about 1,250 by 2022. “Our sweet-spot for Multi Family Office service offering is ₹25 crore,” said Kohli, adding that the concept of domestic advisory is a big pull factor towards Client Associates.
Asked as to what differentiates Client Associates from other wealth management providers, Kohli said the fact that the firm adopts an open-architecture model is a big plus for it in the Indian market.
By an open-architecture, Kohli meant the firm does not manufacture a product internally to be offered to clients, thereby avoiding conflict of interest situations.
“We are a pure services firm. We don’t have any products. We don’t want to be product pushers. I can only offer you a service,” he said. The growth of Client Associates, which was founded in May 2002, can be gauged from the fact that it now serves as many as 10 of the top 100 wealthy families in India.
In India, 90 per cent of investments go into just four asset classes – property, gold, fixed deposits and insurance. While the average retail investor (with low equity investments) compounds his money at 6.8 per cent per annum, a high net worth investor (with equity contribution at 37 per cent) compounds his money at 10.3 per cent per annum. On the other hand, a family office – with 50 per cent invested in equities – compounds money at 11.3 per cent per annum. “A family office uses far more sophisticated asset allocation,” he said. Kohli noted that wealth in India was shifting to new-age businesses and from physical assets to financial assets, prompting many players to jump into wealth management space. But the unfortunate part is that many have preferred to manufacture products in-house for higher margins and, therefore, do not adopt an open-architecture model.
“Family offices work on lower margins with larger set of assets. They (wealth advisors) see margin compression in family office and, therefore, preferred to move away from open architecture. Very few have the patience to do this (family office) as it does not get the best margin,” he said.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.