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Why are Family Offices a Growing Concept in India?

A family office is becoming a popular way for the ultra-rich in the country to manage, grow, and transfer their wealth across the family. Currently, India has over 200 formally organised family offices and this number is only going to continue to grow rapidly. That’s because a family office is one of the most effective ways for family business succession planning, wealth management, and strategy and governance.

Types of family offices

A family office can either be a Single-Family Office (SFO) or a Multi-Family Office (MFO). SFOs only look after the needs of a specific family and are usually set up by the members of that family itself. On the other hand, MFOs provide wealth management and succession planning services to more than one family and are made up of external advisors and experts. Some of the most well-known family offices in the world first started off as a SFO but later grew into an MFO. It might be more convenient for you to seek the services of an MFO instead of setting up a family office yourself. Especially when you want to rely on the advice and skills of experts.

Benefits of a family office

  • The most basic benefit of a family office is succession planning. This means ensuring that the legacy of your family continues and there is perpetuity maintained. From establishing rules for the succession of crucial management roles of your business to protecting intellectual property rights, a family office looks after preserving your wealth across generations.
  • A family office also plays a crucial role in planning for contingencies such as illnesses, accidents, and deaths and providing for power of attorney for dependents, etc.
  • Often, there must be multiple family members who serve as decision-makers, and hence a family office is essential to ensure the synchronisation of all key decisions. In case of a dispute, a family office has dispute resolution mechanisms in place.
  • Like with all ultra-rich families, you may have several philanthropic pursuits. A family office helps ensure that your resources are utilised in an optimum manner to support causes that you care about and set up trusts, funds, etc., for the same purpose or manage the direct contributions to existing charities.
  • In addition to succession planning, a family office also provides wealth management Apart from preserving your wealth and ensuring its rightful transfer, a family office also looks to grow your wealth through strategic investments, tax planning and compliance, etc.
  • A family office also helps come up with a long-term plan that ensures a balance between the financial needs and required revenue streams of different family members and building wealth.

Family offices also help keep up with the times whether that is digital transformation or increased private investments for better returns. To summarise, the reason family offices are becoming increasingly popular in India is that they are an effective way to look after your financial and non-financial needs. A family office is essentially a trusted partner who aids you in everything, from business advisory to succession planning.

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