With most large businesses gearing up to pass on their wealth to their next generation, family offices are playing a crucial role in the succession planning.

The fortunes of the handful of large Indian business families 40-50 years ago was heavily dependent on inherited wealth and the licence raj.

However, with the country’s liberalised economy growing at explosive rates, today there are many new businesses that are very large and have created wealth in just one or two generations.

Multi-Act, an investment advisory and portfolio management services company, says its findings show that most of the recent wealth creators have no prior experience in managing a large corpus. Their need for professional help in handling their wealth has led to the rise of the so-called family offices.

Also read
(Left to right) Akash, Isha and Anant Ambani

Proxy firms ask investors to vote against Anant Ambani’s induction into RIL board

Venkatakrishnan Srinivasan, Founder & Managing Partner, Rockfort Fincap LLP

India Inc raised 54% more resources via bonds in H1 of FY24

Pointing out that wealth has historically seldom managed to devolve intact to the fourth generation, Ashutosh Bishnoi, Director, Multi-Act, said India is no different.

“At Multi-Act we find that, along with a well thought out strategic portfolio goal, most of the well-structured family offices now have a written constitution and governance structure. There is now much greater awareness of the need to implement a gradual succession plan, than to leave everything to a will and testament, as was the case earlier,” he said.

Launching the latest IIFL Wealth Hurun India Rich List, Anas Rahman Junaid, MD and Chief Researcher, Hurun India, said almost 60 per cent of the entries on the Rs 108-lakh-crore list will witness intergenerational wealth transfer in the next 10 years.

“The young leaders of the family, supported by some of the brightest professional managers and investors, will turbocharge wealth creation in family businesses,” he said.

Recently, several new wealth managers and ‘multi-family offices’ have come up to assist family offices in achieving their goals. However, Multi-Act says many of these are product resellers who add a layer of advice on top of the commission-led sales. Besides, most of them rely on sell-side research or past performance data to assimilate their ‘advice’. As a result, family offices have tended to expensively assemble portfolios that give index-like returns. These are early days in the development of this market and, hopefully, more genuine fiduciaries will emerge in the Indian market to help family offices.

comment COMMENT NOW