Lucia Perchard, Family Office Director at Highvern, shares her insights into the Indian wealth market following a recent event-filled trip to Mumbai.
Having spent a very productive few days in Mumbai it is clear that there is a lot to talk about when it comes to family wealth in India. Wealth in India is on the rise and as a country it is estimated to become the third largest global economy by 2030. The concentration of wealth is predominantly being built up by families through their privately owned businesses.
With this increase in wealth comes the increased responsibility of effectively passing it on for the benefit of future generations. The need to secure the future of family businesses is becoming a more readily discussed topic in that context. With many more of the next generation studying abroad they are also returning with a desire to safeguard their family’s futures and become more involved in planning and structuring their holdings. This has already resulted in a marked increase in the use of domestic trust structures in India and several of the firms met are seeking to meet this need by increasing the number of private client partners within their businesses, with many finding that this this is now becoming their fastest area in terms of growth across their practice. It is clear that this does not just hold true in Mumbai but also in Delhi, Bangalore and Chennai, with private client partners being in high demand.
Succession planning, whilst an important area of practice, is still relatively young and it is evident that more is needed to meet the demand of this local market. Talented and well experienced trustees for the local market are currently fairly few in number also but will no doubt increase in line with the increased demand. Whilst cultural familiarity can yield a sense of trust it is important not to underestimate the need for experience when working with families in this area. The world is shrinking and families are holding a wider range of assets across the globe. The complexities involved in that cover not too the assets themselves but the interplay of reporting and regulatory requirements across multiple jurisdictions. Understanding what structures and services may be available to these families was a constant topic for discussion throughout the trip.
Whilst there may never be a one size fits all solution for these families the conversations they are having display that there is an increasing desire to engage. Based on the need for experience and trust in the face of such issues many of those spoken to are keen to work with family offices as they feel they can act as a focal point for catering to all the issues faced by the modern Indian business family, be it succession, taxation, investment or philanthropy. Families are keen to leverage the use of technology and develop deeper relationships that provide not only protection and enhancement of their wealth but the opportunity to learn and develop further into the future. As such the family office model is one that is felt can meet their needs and is an area marked for growth.