Family Offices: Preserving Wealth
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.