The Exchanges

Q Why do you say that if you can just share some data points?

A Yeah, because see, India today is the fastest growing large economy. So the maximum compounding effect is going to come because of two things. A, your scale, and second, at what rate you're growing that. So if you multiply the two, then in absolute terms, your compounding will happen maximum there, right? So this is there in case of India. So I gave you an example of, uh, the per capita GDP. So we're already at 3000 over about 20 years. I think there's a good chance that we should get to about 15,000 or so, and that is where we will get categorized as a, as a mid market, you know, affluent nation from a poor nation currently. Uh, so I think within this century, uh, which belongs to India, I think next 10 years could be India's best years because After that, also, India will keep compounding and keep growing, but I think your base effect will start catching up with you as it is catching up with China now. So I wanted, basically, awareness of that to come to every Indian, right, because especially in a country where the average age of every Indian is 29 years, right, we are still very young, and compared to China, that's about 38, 39 years. In case of Pakistan, it's about 23 years. So, 65% of the population is below 35 years of age. So, we are a very, very young country. If I go to public places, I hardly see people of my age group, right? It's all, it's a very, very young countr…

AI assessment note: “per capita GDP. So we're already at 3000 over about 20 years.”

Q So I think, uh, today your clients are roughly 39% family offices, 33% CXOs, 25% entrepreneurs, and three percent trust. How was this split, um, then?

A So largely I would say that point in time this would be about, uh, 60% would be family in business because that is where the source of, the wealth was actually sitting at that point in time in the society. These could be from small businesses like, you know, exporters to mid-sized businesses into manufacturing. Then the rest, about 48%, could be senior corporate executives and professionals. But then over a period of time, as the entrepreneurship bug, you know, hit the Indian society, and that is where the third segment emerged, which is the new wealth segment, which is through entrepreneurship, where the first generation, you know, entrepreneurs, they created ventures, and they then unlocked wealth, you know, monetized wealth through their ventures. So over a period of time, there's a second, or rather the third bucket, which emerged over a period of time.

AI assessment note: “about, uh, 60% would be family in business... rest, about 48%, could be senior”

Q When did you see this trend in India, like the interest for equity?

A I think you've seen this, uh, strengthen more so in the last 10 years, but then it has started creeping in the 2000 onwards. You know, before 2000, it was a market which is very opportunistic, very trading oriented, based on everybody used to look for a tip. Because that thought that's the only way to make money from equities. Uh, but then later on, I think when people started participating in it, and it's just in an organized manner in a long-term approach in 2000, And then they experience the markets going down during the global financial crisis and then coming up and so on. So, you know, when investors have gone through different market cycles, they've understood the asset class. And that's the reason they've understood that this is the nature of the asset class. And the best way to benefit from the benefit of this asset class is to stay in the game.

AI assessment note: “strengthen more so in the last 10 years, but then it has started creeping in the 2000 onwards.”

Q What type of family business these were and what was the scale? If you can just give me some idea.

A Yeah, so, see the economy and the markets were of a different scale at that point in time, and I remember that we had kept a client qualification threshold. At that time, one billion dollar used to be two CR. And we had kept that because, uh, that time Merrill Lynch also used to be there as one of the wealth managers, non-banking, and they used to have that threshold. And we said that we will keep the same bar for ourselves also. So one million dollars has always been the threshold for our industry globally. We started off with that. It used to be two CR. At that point in time, the wealth largely used to be embedded with the generational business families. You know, where it was, and then there were some professionals, which is senior corporate executives, which has started coming into wealth. So entrepreneurship had just started developing. So it was largely two buckets, two segments. It is the families in business. And secondly is the corporate professionals, where the, which was a go-to market.

AI assessment note: “one million dollars has always been the threshold for our industry globally.”

Q Uh, can you please explain this point, uh, why Indian family offices are diversifying beyond India and what are the key reasons and how do you see this panning out in the next 10 years?

A See, the reason is that if you are, it's like good old, you know, adage of don't keep all your eggs in one basket. So if you are invested fully only in India, yes, given that India is the fastest growing large economy and stuff like that, they'll continue to grow. But then it is also important to diversify from the point of view, not maximizing your wealth, but also bringing in as a cushion into your portfolio. When you invest outside India, uh, in a global portfolio, which is poorly correlated with the Indian markets. So then you are basically bringing in the benefits of diversification into your portfolio. It is not maximizing your wealth, right? But it is making your portfolio more stable.

AI assessment note: “When you invest outside India, uh, in a global portfolio, which is poorly correlated”

Q So what happened in the early years? Like, uh, you set up the shop in 2002. How did you identify the next first five customers, your pitch to them, how they, you know, took the idea?

A I think the first year was a very interesting year, because suddenly I think we, as founders of a new venture, bootstrapped, grown up in middle class homes, you know, deciding to quit our multinational jobs, which were a huge privilege in the society at that point in time. And from a full salary to a no salary, you know, coming into that, it was a massive shift. And I remember when I started, I had a negative net worth at that point in time of 32 lakhs. And which you now you can do inflation adjusted. So no salary, negative net worth of 32 lakhs. But then we had done our financial planning because if we were getting into wealth management, then we pretty much, you know, should know about our own financial planning. So we had done our financial planning, uh, which can, you know, keep us afloat for next 12 months. And we decided we would not take any salary in the first year because rather we focus on building revenue instead of building cost. Uh, but I think we got a good response. Uh, we had a go to market because we had had been in the industry. Uh, we had our own network to go to. So we started going to them with a proposition of family office. It was a new proposition. It was a very client centric proposition, uh, which made a lot of sense to customers.

AI assessment note: “we had our own network to go to. So we started going to them”