In the US, Europe or other countries, one may find family offices that have been around for as long as more than 70 years. However, in India, the term family office is quite nascent in comparison to the West.

Winds of change are set to sweep the investment scenario in the country. The Securities and Exchange Board of India (Sebi) has proposed to curb mis-selling of alternative investment funds (AIFs) and make them more investment friendly. The market regulator released three consultation papers to this effect last week.

Buying real estate overseas is not new to rich Indian investors. But buying physical real estate can be cumbersome. Apart from a physical recce of available properties, it entails managing the documentation, specific licenses and repairs -- a taxing process. Nevertheless, if you have financial interests overseas, investing in real estate may hold long- term appeal. One way to get exposure to overseas real estate without having to buy physical property is investment in REITs.

REITs, or Real Estate Investment Trusts, are special companies set up to own and manage real estate assets. REITs do not invest in just one property. Think of REITS like a mutual fund. A REIT invests in a portfolio of properties across sectors.

Munish Randev, founder and CEO of CERVIN Family Office, says a family with ₹100 crore and more financial capital needs family office. Industry players say a single-family office is needed if liquid wealth is more than ₹2,000 crore.

Team quality and continuity also matter. For example, a promoter set up a single family office where five out of six professionals had only sales experience. "The promoter had no idea that corporate bankers and mutual fund distributors are not experienced in wealth management. Hands-on investing experience is most important in an internal investment team," says Randev. If a single-family office doesn't offer meaningful work or intellectual stimulation, the professionals may move on. Such things can be avoided by opting for a multi-family office which can manage both investment and non-investment needs.

The CIO's job is not easy. Sometimes he needs to raise the red flag to the business owner's investment preferences. "We can't be yes men. For example, a lot of clients asked us to invest in cryptos or other glamorous products because their friends and acquaintances were doing so. We explained the risks but not all agreed," says Randev of CERVIN Family Office.

Family offices keep a check on spending habits too. "Most families get astonished when they take stock of their expenses. Sometimes we even have to highlight why they shouldn't buy a ₹1-2 crore car every year or go on a lavish vacation of ₹2 crore or buy diamond on every other occasion. If there are risky patterns, we highlight them. It's up to them to follow," says Randev.

Munish Randev, Founder & CEO of Cervin Family Office and Advisors, said it was very natural for Indian family offices to start allocating to the start-up space. The key reason is the asset class has grown rapidly in India over the last 10 years and hence provides numerous opportunities.

The momentum of newer founders and start-ups has ensured that there is enough capital entering the industry which has provided the necessary boost, thereby attracting attention from the growing list of family offices, Randev said.

Indian start-ups achieving a fairy tale valuation growth, the increasing buzz around unicorns and stories of multiples of capital made from the industry has attracted the nextgen from family offices who are more comfortable in taking risks.

At the same time, Randev also pointed out that some family offices have just dived headlong into the start-up ecosystem purely due to social/peer pressures (within a family office) or just ‘Fear of Missing Out’ (FOMO).

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From left) Lakshmi Iyer, of Kotak Mutual Fund, Ganesh Ram of BSE, Munish Randev and Gaurav Mashruwala of Gauravmashruwala.com

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