Picture this. You and your spouse exited a multi-billion-dollar startup and are suddenly flush with $80 million. What do you do with the surplus funds? There are real estate, mutual funds, stocks, and alternative investments to choose from. Plus, you may also be interested in setting aside some corpus for philanthropy. In this scenario, you need advisors to help you navigate the maze of potential investments. It is here that the services of a wealth advisory firm become essential.

A wealth advisory firm offers holistic services to high-net-worth and ultra-high-net worth individuals (UHNIs), including investment advice, estate planning, philanthropy, setting up a family office, succession planning, and portfolio management and maintenance. This encompasses an entire gamut of bespoke services, from financial to non-financial. HNIs constitute individuals with at least $1 million in assets while UHNIs refer to individuals with at least $30 million in assets.

The necessity for wealth advisory services in India is growing at a time when UHNIs have become wealthier.

India had 13,637 UHNI households in 2021, an 11% increase over the previous year. A Fortune India study stated that India had 142 billionaires with a collective wealth of $832 billion. The country has the third-highest population of the super-rich, and despite a challenging global macroeconomic outlook, the net worth of nine out of every ten UHNI Indians surged in 2022. If you are a member of this burgeoning community, wealth advisory firms can help provide a 360-degree appraisal of your assets.

Wealth advisory works on a one-of-its-kind open architecture framework. While considering investment products, an advisor does not restrict themselves to a handful of product manufacturers, they survey the entire landscape. Moreover, wealth advisors engage with external professionals such as real estate, concierge services, lawyers, chartered accountants, and succession planners as well.

Take Waterfield Advisors, for instance. As an independent multi-family office and wealth advisory firm, we handle over USD 4.5 Bn in assets for 150 business families.

When and how does a wealth advisor step in?

The need for a wealth advisor’s services is perennial, the need for expert advisory is felt at various life stages. For family businesses, eventful phases such as wealth gain, inheritance, second-generation wealth transfer, comprehensive review of the family’s entire estate, portfolio underlying risk analysis especially amidst unfavourable market corrections, and succession planning necessitate the services of a wealth advisory firm.

At the forefront of a wealth advisor’s offerings is setting up and managing a family office, right from ideation to execution. Family offices can be broadly defined as privately held organisations that are the investment vehicles of family wealth. A well-structured governance document enables joint decision-making by the family council.

There are multiple stages at which a wealth advisory firm can perform helpful interventions, whether it is for managing your family office wealth or your personal wealth. At the foundational level, these are some of the services provided:

1. Family Governance: 

Fine-tuning the organisational structure of a family office through reviews at regular intervals is one of the primary service offerings of a wealth advisory firm. If you are still in the process of setting up a family office, a wealth advisory firm will help structure it.

2. Portfolio Lifecycle Management:

The role of a wealth advisor commences well in advance, months before the actual fund allocation for investments. The advisor will conduct hygiene checks of your portfolio to evaluate the exact yields and determine if there are any unaccounted assets. Concomitantly, the advisor will also work with your chartered accountant to plan for tax efficiency. Once this comprehensive analysis is completed, the advisor suggests suitable investment avenues through a mix of financial instruments.

3. Alternative Investments:

Traditional investments may not be sufficient for wealth preservation under dynamic market conditions. Alternative investments are mechanisms to expand your investment horizons beyond extant investment instruments. Wealth advisors offer an array of alternative investments that present unconventional investment opportunities. Advisors identify investment deals through extensive research and by leveraging the existing relationships with top PE-VC network. Advisors can also facilitate strategic deal flows through consortiums of like-minded family offices to take part in group investments.

4. Strategic Philanthropy:

In India, there has been consistent growth in the corpora of well-known family philanthropists, with this segment alone allocating Rs 12,000 crore in FY20 towards social good. A wealth advisory firm can help your family office identify its sustainable development goals, set up a foundation, and assist, in due course, to shortlist non-profit organisations aligned with your goals.

An allied area of focus is impact investing. Almost 83 family offices have contributed $279.5 million towards impact investing according to data from a Waterfield-IIC report. An advisory firm can assist you in achieving your ESG goals through investments that simultaneously generate consistent returns.

5. Succession and Estate Planning:

The baby boomer generation, those born between 1944 and 1964, is expected to transfer $128 billion in wealth to the next generation of leaders. Handing over family businesses and inheritance to the next generation requires strategic planning and a wealth advisory firm can ensure a glitch-free transition. The services involve assisting the family office in jointly working with lawyers and trust administrators to set up a private trust and ensure that the 'will' ties in with the larger interests of the family and ringfence any foreseeable issues.

6. Global Advisory:

In a globalised world, family offices are on a constant exploration of consequential international opportunities. Both at the exploratory stages and the eventual implementation stage, wealth advisory firms can lay out a blueprint for international expansion. In the absence of in-house experts for charting the global expansion roadmap, the advisory firm can also tap into its trusted network of legal experts and FEMA professionals to smoothly build their international footprints. Additionally, advisors can also design investment strategies to gain exposure to foreign investments via the Liberalised Remittance Scheme, wherein up to $250,000 can be remitted by resident Indians annually.

The world of wealth advisors is ever-evolving, which means that advisors need to keep pace with the changes in the global investment landscape and recommend suitable products to capture wealth generation opportunities. For instance, Zephyr Waterfield Megatrends Strategy has identified intelligent machines, genetic science, and 5G as the changemakers of the global economy. This strategy invests in these companies through specialist investors in each segment.

Beyond this, advisory firms walk the extra mile to ensure that family offices operate harmoniously. For instance, if you have family members who need exports to demystify complex financial products, wealth advisors can also hold private financial literacy sessions for your family office. Brand building for family offices is another unique benefit extended by wealth advisors.

How is advisory different from distribution?

When you think of wealth management, there are broadly two sets of professionals that come to mind. The first category is wealth advisors and the second is distributors. The way to differentiate between the two is to observe whose interest the particular entity serves. Is the firm’s purpose to manage the client's interest? A distribution firm may aspire and intend to serve the best interests of a client, however, their revenue generation may not be tied to altruism. Wealth advisors strive to give investment advisory that is harmonious with the client’s long-term interests. Advisory firms don’t earn any commissions from the product recommendation, so what is offered is completely unbiased advice with no clash of interests.

Since wealth advisors typically have a longer-term relationship with the clients and their family offices, portfolio maintenance and growth is the primary motivator. This involves portfolio analysis, and appraisal of the liquid and illiquid assets, followed by the finalisation of an allocation strategy. Future perils such as reinvestment risks are also well thought out by an advisor before investment recommendations are made.

A long-term partner in your wealth creation & preservation, an advisor considers the past, present, and future of your portfolio through extensive financial analysis and only thereafter make investment proposals.

For instance, if you are a UHNI whose portfolio has seen wealth erosion during a downturn, a wealth advisor will be able to assess the portfolio and provide integrated investment options to minimise the losses and the portfolio constructed will be well positioned to achieve maximum returns relative to the underlying risk taken during the subsequent market upswing cycle.

Here for good

Once the foundational guardrails are in place at your family office, everything flows perfectly. Backed by an impeccable track record, advisors offer a helping hand to mould and reshape your legacy business.

In a transformative world, wealth advisory is constantly evolving with a digital-first mindset. New-age offerings such as centralised access to wealth services through mobile applications, fund of funds and co-investments, and thought leadership content make wealth advisory more relevant than ever before.

What makes wealth advisory truly holistic is the nature of it being conflict-free, the ability to offer low cost of investing, the open architecture model, and being a comprehensive service provider. Wealth advisors are the true sounding board who persevere to preserve client interests.