 "Country's 100 richest saw their net worth inch up 2.5% even as Sensex slid over 16% in the year to January")
Founded by Soumya Rajan, an ex-Standard Chartered executive, the firm is all set to achieve $5 billion assets under advisory by FY19.
"Since we started our operations in 2011, the family office concept has matured in India. The conversations that we have now are much more engaged. We have seen our advisory build up at present to $1.4 billion. And we will touch $5 billion by 2019," said Rajan.
The Family Office space is characterised by three emerging global trends - a growing number of high-net-worth and ultra-high-net-worth (UHNW) clients around the world, especially in the Asia-Pacific region; more affluent families seeking out experienced professionals to manage their wealth to fit their specific financial goals and risk tolerances; and ultra-affluent clients demanding professional and customised financial services.
Globally, it is estimated that there are approx. 4,000-5,000 family offices of which only 3-5 per cent are housed in Asia-Pacific, suggesting a significant growth potential over the next five to ten years for the Family Office format of wealth management services in the region.
The number of UHNW families in India is estimated at approx. 2,100 according to the Credit Suisse Global Wealth Report 2015.
Rajan believes that the need of setting up family offices in India is a necessity. "Almost $128 billion worth of wealth will be migrating from the one generation to another in India over the next 10 years. And we believe succession planning and how the wealth is preserved will be crucial," she said.
Rajan is also expanding Waterfiled's presence with offices in Mumbai, Delhi, Chennai and now in Bangalore. "We will soon sign out first client from Hyderabad and Kolkata," she added. The company also received strategic investment in the business by Amit and Arihant Patni in 2014.
Changing trends in Indian family office
Since the launch of Waterfield, Rajan's client profile has moved towards the UHNW families who have wealth in surplus of $50 million. "We have actually seen that we can attract and work with the $50 million asset group. Our ambition is to try and cater to the top 200 families," she acknowledges. At present Waterfield Advisors work with 30 families in India.
Over the last six years, Rajan says that the way UNHW families are looking at family office concept has changed. "The biggest change that we have seen is the interaction with second generation. We have actually found the 2nd generation our biggest supporters, because they want to spend more time on their operating business or their new businesses and don't want to be in the hassle of managing family wealth or charity," added Rajan. The second generation is typically in the age bracket of 35-40-years and because of their overseas education and interaction with counterparts in other geographies realise the need for professional management.
From an investment perspective the Indian UNHW has also gone some changes. While they want to continue to preserve and grow the wealth, many are also becoming more risk averse when it comes to investment strategy.
"One of the clear priorities is to balance their investment. At the end of the day everyone wants to conserve capital. But the risk appetite of families is also going up. Two years back allocation of wealth in risk options was around 5 per cent which has now moved up to 15 per cent," said Rajan. She also added that real estate as an asset for investment has also come down.
The second priority continues to be governance, especially with succession planning the core concern. "What's changed here is the framework or structure that family offices are putting into place for investments, risk management etc. This is common among pension funds or other funds," said she.
The third and an interesting concern among UHNW families is around cyber security. Rajan says that data and confidentiality of data is extremely important and cannot be compromised. "We have had family offices asking us how to deal with cyber security. And many are making use of their internal IT teams to manage this issue," she said.
