Your money, their business

Last Updated: Mon, Dec 10, 2012 03:55 hrs

pWould you like to acquire a small stake in a company Or do you have a succession plan to ensure your children do not squander your hard-earned wealth Or even buy a second-hand helicopter There are bankers willing to do all this for you The requirement 10 million or Rs 50 croreppAccording to Credit Suisse&rsquos research India has 158000 dollar-millionaires and this number is expected to rise 53 per cent by 2017 It is little wonder then that most banks have a family office business Morgan Stanley RBS and Barclays have thesepp&ldquoWe manage the wealth of HNIs high net worth individuals and families with an investable surplus of at least 10 million&rdquo says Satya Bansal CEO Barclays Wealth Indiapptable cellpadding2 width350 tbody tr styleheight 15pt height20 td width315 bgcolor95acb3 height1font faceTahoma colorffffff size2strongWHAT A FAMILY OFFICE DOESspan stylemso-spacerun yes spanstrongfonttd tr tr styleheight 15pt height20 td width315 bgcolorccd7dd height7 pfont faceTahoma size2strongA Managing family and professional financesstrongfontp font faceTahoma size2 ul liFinancial planning for the familyli liRisk and return managementspan stylemso-spacerun yes spanli liFamily governancespan stylemso-spacerun yes spanli liPerformance monitoring and analyticsspan stylemso-spacerun yes spanli liAccountingspan stylemso-spacerun yes spanli liLending and banking-related servicesspan stylemso-spacerun yes spanli ul pstrongB Co-ordinating tax trust and succession planningstrongp ul liFiguring out tax optimising investments for the familyspan stylemso-spacerun yes spanli liEstate and succession planningspan stylemso-spacerun yes spanli liAssistance in will makingspan stylemso-spacerun yes spanli liLegal servicesspan stylemso-spacerun yes spanli liAssistance with philanthropyspan stylemso-spacerun yes spanli ul pstrongC Miscellaneous servicesspan stylemso-spacerun yes spanstrongp ul liConcierge servicesspan stylemso-spacerun yes spanli liMake arrangements for schoolingspan stylemso-spacerun yes spanli liTravel arrangementsspan stylemso-spacerun yes spanli lispan stylemso-spacerun yesfont faceTahoma size2aying billsfontspanli ul fonttd tr tbodytableppWhat are the services these family offices or private investment banks offer to rich families That depends on your approach Be clear about the services you are looking for Just investment options or do you want a bigger package which could include tax accounting and succession planningppAmit Khandelwal head of private wealth management Credit Suisse India says &ldquoGiven that wealth is in many cases generated out of the success of business ventures business and personal wealth are often interchangeable at the early stage of wealth generation There is a need to create formal structures that demarcate business wealth from personal ones&rdquoppCredit Suisse is the latest entrant in the family office spaceppThere are three types of family office models The first is an independent boutique firm not associated with any bankppThe second is the single-family office providing in-house services to big business houses Wipro&rsquos Chairman Azim Premji runs Azim Premji Charitable Foundation and a private investment firm Azim Premji Investments through his family office It invests in listed firms and debt but also sees itself as a venture capital and private equity firm that makes both early-stage and late-stage investments Mukesh Ambani too has his own family office through which he invests in start-ups Others such as Infosys&rsquos Narayana Murthy and the Mittals of Bharti Airtel have their own through which they pick up minority stake or board positions in companies These companies are typically start-upsppThe third category comprises institutions that have specialised family offices such as Kotak RBS and BarclaysppMost family offices customise services to family needs &ldquoAmong our client segments are promoters of small- and mid-size companies who are looking at acquisitions&rdquo said Prateek Pant head of products and services RBS Private Banking &ldquoWe not only help them in identify target companies but also guide them through the banking regulatory and operational aspects of the transaction&rdquoppMembers of a family could have varying investment objectives Wealth managers through the family office will help assess investment opportunities across all individual and business entitiesppFamily offices also act as private investment banks &ldquoAs a family office we help families interested in picking up stakes in other businesses&rdquo says Barclays Wealth&rsquos Bansal &ldquoWe assist the families in identifying such opportunities be it private equity or cross-border transactions We also help in managing their investment portfolios Along with all this we help with their financing needs Lending has an important role to play as it helps families deal with any temporary liquidity requirements and at the same time invest in lucrative businesses&rdquoppIt is not uncommon for a super-rich individual to not disclose professional and personal needs to an outsider and instead rely on the family lawyer and the family chartered account Family offices of wealth management firms work around such problems by working with the family lawyers and chartered accountants As a matter of fact they complement each other Recent trends have seen wealth managers gaining a lot more trust and work in partnership with the family lawyer or CA and solutions created by the wealth manager are vetted by the family lawyer or vice versapp&ldquoOur experience is that most families are adopting the family office concept offered by wealth management firms through an investment advisory model&rdquo says Sutapa Banerjee CEO Private Wealth Ambit Capital &ldquoFor the rest they tend to pick and choose depending on the level and complexity of services they require They may rely on wealth management firms to refer them to lawyers and accountants for succession planning and taxation as these are specialist services In many instances they may already be having long-standing relationships with their own accountants and lawyers&rdquoppSuccession planning is an important necessity for many business families The transfer of family businesses from one generation to the next can be a source of family friction There are plenty of examples of succession leading to a split within the family The family office attempts to make sure that wealth is passed on from one generation to another smoothly by working with the family lawyers Such firms apart from succession and estate planning also assist in creating trusts and willsppPhilanthropy is another reason to set up a family office helping you articulate your philanthropic needs and establish charitable trusts and funds The firms can even vet the non-government organisations or agencies you have chosen to donate your money toppIn short the family office will help you manage your investments buy stakes in companies plan seamless succession and sort out your philanthropic needs among other thingsppThe costs of such consultants would vary on the services the family uses The charge generally is a percentage of the assets being managed It can be between 05 per cent and 1 per cent taken annuallyppThe family office could also charge for additional services such as succession planning and advice on philanthropic activitiesppIn sum family office dons several hats from investment advisor to travel agent to broker to lawyer and chartered account All for a fee of coursep

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