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Guiding clients with their succession planning

Gautami Gavankar

Kotak Mahindra Bank

Gautami Gavankar, Executive Director, Kotak Mahindra Trusteeship Services tells Hubbis about how the team she leads helps its clients with succession planning within India’s myriad regulatory and societal challenges.

Succession and wealth planning is becoming much more important within the wealth management mix in India, according to Gavankar.

“A lot of wealth has got generated in the Indian context,” she says. “But at the same time, succession planning is also getting a lot of importance because clients want to put down a proper plan in place so that their next generations do not start fighting over their wills.”

According to Gavankar, India’s wealthy want to protect themselves from a possible ring-fencing of their assets, if they are still into businesses.

“There is a lot of discussion on whether estate duty should be reintroduced in the Indian context,” she notes. 

Keeping that in mind, Gavankar says that clients want to ensure that they have structures in place whereby they do not own the assets and thus protect themselves from a possible reintroduction of estate duty.

Clients may get some of this advice appropriately from investment advisors, but at the same time may need more professional help in succession planning, and thus entities like Gavankar’s team come in play, she explains. 

Kotak Mahindra Trusteeship Services (KMTSL) is a 100% subsidiary of Kotak Bank, which focuses on estate planning services, which includes succession planning, putting down structures like trusts. 

“The team talks to the clients individually, explains them the nuances and differences between the will and a trust and sees what the client is interested in, and then helps them structure the trust,” she says. “We also act as trustees to the trust that we create for clients and that is  a very specific proposition.”

Explaining why that is crucial, Gavankar tells that when one chooses a trustee, it is very critical to select an entity that can one day just close the shop and go away. 

“We are, today, a subsidiary of a banking company, and thus we are indirectly regulated by SEBI and RBI,” she says. 

“It is important to choose a trustee company which has appropriate regulatory authorities reviewing their processes and their work because today there is no regulatory body which governs the trustee business in specific.”

But does being bank-owned represent a conflict of interest to the firm’s clients? 

“It is an extremely important and a good question because a lot of clients think that,” she says. “That because I am a subsidiary of Kotak Bank, I will want to give them quoted bank products.”

But Gavankar points to a distinction. “The role of the trustee is to act as a trustee of a trust and to administer and manage the trust,” she says. “So, KMTSL acts as a trustee of the trust, but the client decides who will be their investment advisor, or wealth advisor, or family officer, whatever name one wants to call it.”

“We have situations where we are trustees of trusts, but we are not wealth advisors,” she points out. “It will only be a conflict if I dictate or tell them that if I am the trustee I have to have Kotak Bank as my investment advisor.”

Going forward, Gavankar says that effort is being put in to grow the business. “One of it is introducing new IT systems to ensure that all the data that we have of clients is captured and protected properly,” she says. “We have employed new people, and region-specific requirements are being looked at, and we will have a more regional presence in place.”

From a perspective of knowledge increase, the firm is continuously getting employees into training on succession, tax, and philanthropy. “So knowledge, people, and systems are some things which we are looking at from a business development perspective.” 

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