Wealth and prosperity are universal human desires. Creating abundance for ourselves and our near and dear is something we all strive to do. The advice of experts and financial mentorship play a crucial role in ensuring that these goals are met. Securing assets and holdings is especially critical for high-net-worth-individuals (HNWI), who have created wealth that exceeds common monetary concerns. In such instances, the focus has often shifted to creating legacy and ensuring the growth and stability of wealth that secures prosperity over several future generations as well. The rapid expansion of the Indian economy is creating a growing class of HNWI who have financial needs and goals that require such particular and specialized management and intervention.
Ensuring long term financial security and material abundance is a priority for everyone, but the parameters involved for HNWI are often slightly more complex than many other sections of society. Larger holdings are, on the one hand, indicative of increased financial stability, but they also create the risk of greater losses, should a particular investment decision prove to be inappropriate. This is not simply a matter of taking a pessimistic or negative view. Large holdings are mostly the result of a considerable period spent in consolidating them. Unfortunately losses often have the potential to add up far more rapidly than gains. Apart from this basic concern, one of the big differences between the average investor and a HNWI is that the latter has an opportunity to ensure prosperity that can enrich their heirs for several more generations than is commonly possible.
Growth of the Family Office
The term ‘Family Office’ describes wealth management arrangements between high-net-worth investors and advisory firms. Such services can be differentiated from traditional wealth management on the basis of the sums under management, as well as the financial goals of the individuals or families in question. Services offered by family offices range from expense budgeting, business insights, succession management, managing philanthropic initiatives, as well as insurance and tax services.
Family offices can be focused on these services for a single very affluent family – referred to as single family offices or SFOs – or those that are somewhat similar to traditional wealth management firms but in the service of HNWI – referred to as multi-family offices or MFOs. Recent years have seen the global rise of both SFOs and MFOs due to the widespread recognition of the particular attention that large estates require, as well as the opportunities and risks that greater global economic integration is resulting in. A Wall Street Journal report from a couple of years ago, that is often quoted in this context, reported that dozens of hedge fund management firms had converted into family offices, to leverage their expertise in handling high worth portfolios. Since that time, the trend has spread far beyond its initial growth and is now also making its presence felt in MENA and several Asian markets.
Growing requirement in the Indian context and the launch of Legacy Finvest
The ‘Wealth Report 2019’, issued by the highly regarded and globally active property consultancy Knight Frank, notes that Asia will produce far more billionaires in the next four years, than any other part of the world. The report estimates that more than a third of this category of ultra-high net worth investors (UHNWI) will be from Asia, by 2023. To be honest, I don’t think this is particularly surprising to anyone, but it is a very obvious indication of the fact that two of the largest and fastest growing economies in the world, India and China, are both Asian. What’s more, several of the other prosperous regions in Asia, including the Middle East, are leveraging current holdings to diversify into future-ready profiles as well. What the trend of more ultra-high net worth individuals in Asia also indicates is the even greater numbers of HNWI that are steadily increasing, in the region. According to the Knight Frank report, the growth of both UHNWIs and HNWIs in India will exceed both the global and regional averages, during the period in question, significantly. Clearly, this means that the already growing presence of family offices in India will continue to rise and probably gain further momentum.
The Gemini Group has conceived Legacy Finvest Pvt. Ltd. as a one-stop-shop boutique wealth management firm to address this emerging need. The vision of the firm is to provide HNWIs with comprehensive and all-encompassing financial services. The firm’s primary mission is to assist clients in transforming their current prosperity into an enduring legacy that lasts generations. Clients will have the choice of calibrating discretionary or non-discretionary management, and any tweakable combination in between. The firm’s advisory services extend to the entire spectrum of investments ranging from equity and real estate to commodities, currencies and leveraged products. Its expertise also extends to more specialized consultations, such as mergers and acquisitions, strategic partnerships, raising funds for projects and promoter financing etc. The idea is to create a long term structure for the management, control and succession of wealth, through personalized, comprehensive and risk tolerant solutions.
Benefits to the larger economy
In a free market economy, the transition from being rich to becoming wealthy is a very important leap to make. To me the main difference between the two states is that wealth perpetuates itself. It not only ensures current prosperity, it becomes an engine for greater future growth and even more affluence. While we are all averse to the downside of economic disparity and the creation of an exploitative class, the truth is that every economy needs a wealth holding class that invests in the commercial activities that society needs to thrive. While individual abundance can certainly be created by small isolated units of humans, the economic vitality needed to support the growing human population on our planet needs an investor class that funds growth as well as adding to consumption and high stakes investment. Looked at from this holistic perspective, we can see that HNWIs influence the growth of their society and community at an exponentially higher level than the average individual. Ensuring the ongoing wealth of HNWIs, therefore, is not only a question of addressing the needs to particular high-rollers, but to ensure the perpetuation of wealth and commercial activity within an entire society.
Within the Indian context, I strongly believe that a growth in HNWIs with a new approach to wealth creation, expansion and management is essential to the larger economy. While many of the UHNWIs in India are engaged in industry and commercial activity, too often Indian HNWIs – with substantial holdings – have been content to be invested in areas that do not contribute to additional commercial activity. I believe that more proactive and insightful advice can draw a much greater amount of Indian capital into circulation, thus contributing to the growth of the nation and more widespread social prosperity. A mindset that values entrepreneurship and the creation of greater wealth from current holdings will not only benefit the investor themselves but the larger economy as well.
Enabling prosperity and abundance
The values inculcated in me, since my childhood, have always been about measuring success on the basis of the difference we make to the lives of others. The rise of HNWIs is essential to the wider prosperity of a society and nation, For instance, one can never overestimate the positive effect of the United States’ Ivy League network of institutions and the various philanthropic foundations, to that nations past and ongoing prosperity and social well-being. All of those institutions came into being due to the patronage of a class of wealthy families emerged that consolidated and expanded their wealth across generations. I strongly believe that one of the most efficient and consequential ways in which the re-emergence of Asia in 21st century can be ensured is for the region’s HNWIs and UHNWIs to gain similar power of positive influence. I strongly believe that the role of family offices will play a great part in securing the wealth of particular families, as well as their more consequential involvement in the commercial activities of their nations and society.
