Client Associates hopes to ride on ‘reallocation’ effect in wealth management industry

Client Associates, a multi family office provider, eyes 30 per cent increase in assets under advice over the next one year, a top official said.

This India-focussed firm, which currently has of $3.6 billion worth assets under advice, hopes to ride on the ‘new client relationships’ arising from the “reallocation effects” of the ongoing consolidation in wealth management industry besides targeting existing clients for growth, Rohit Sarin, Founder Partner, Client Associates, told BusinessLine here.

“The economic slowdown has not affected us in any big way. On the contrary, we are looking at 30 per cent growth over the next 12 months. Of course, when there is an economic slowdown, you will get affected as you are a part of the ecosystem. The extent is what the difference is,” he said.

The ongoing economic slowdown is prompting clients to “reallocate” and move to more defensive portfolios — both on the equity and debt fronts — because of risk aversion, he said. While there has been a flight of capital from small- to large-caps, the advice from Client Associates to its clients is to increase the allocation to small- and mid-caps now, especially given that large-caps have become expensive.

“Even if there is going to be zero growth in the wealth management industry, shift of assets from other platforms to Client Associates will give us growth,” Sarin said.

Sarin also said that he expects the economic slowdown to reverse in the next two quarters and pegged the house view on the Sensex at about 40,000 by end-December this year.

The average ticket size (investible wealth) of each client is about ₹25 crore.

The sentiment in the stock market has been somewhat affected not only because of tepid earnings growth in the corporate sector, but also due to the tax-related issues, he said.

Sarin also made it clear that Client Associates will not look to manufacture its own products and would continue to keep its faith on the “open architecture” model.

By open architecture model, the firm means it does not manufacture products internally to be offered to clients, thereby avoiding conflict of interest situations.

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 a large number of families and is more of an external services provider.

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