Edelweiss’ Head of Wealth Structuring & Estate Planning Surveys the Rising Needs amongst India’s Wealthy

Since its inception in 2010, Edelweiss Wealth Management’s Asset Under Management (AUM) has grown at a brisk pace to almost USD28 billion. Impressed by the company’s growing potential in wealth business and institutional equity broking platform, a leading private equity group fairly recently made fresh investment of USD325 million in the company, Edelweiss Securities Limited. Currently, the company’s private wealth business has 140 Relationship Managers (RMs) located mostly in three major cities of Mumbai, Delhi, and Bengaluru along with their other offices located in Kolkata, Hyderabad, and Chennai. Hubbis has for many years enjoyed a close connection to Edelweiss and we last interviewed Alok Saigal, President & Head of Private Wealth at Edelweiss Wealth Management in late May. This time, we ‘met’ with Shweta Shah, Head of Wealth Structuring & Estate Planning, who runs a small, dedicated team of experts, all of whom she reports are utterly committed to the service and offering they provide to their clients, whose needs for sophisticated planning and structuring are evolving with the changing times.

Hubbis: What do you do, and how do you manage your clients?

Shah: I take care of the Wealth Structuring and Estate Planning division in the Private Wealth Team at Edelweiss. This desk was set up around 8 years ago at Edelweiss to go one step further in providing our clients a holistic approach to wealth needs. We understand that apart from financial and investment solutions, clients need someone to have a more comprehensive outlook on their wealth by providing solutions to questions such as- How do I ensure that my wealth is protected from certain unforeseen circumstances during my lifetime and even post my lifetime, How do I preserve business continuity even after I am gone, Can I make sure that my family members get my wealth as per my wishes after my lifetime without any disputes or hassles, Which structure should I use to hold my wealth, How do I build my legacy, etc. As part of this division, we aim to provide solutions for these and many such questions for our clients. Some of our clients have a need to plan for their succession, or to provide for some specific member in the family (such as a special child), while some want to restructure the manner of holding their wealth or, unlock value by divesting a part of their business, or obtain residency of another country through investment, etc. We have varied clients who typically are HNIs, UHNIs, Family Offices, Start Ups, C-suite employees, etc,.

A few basis comments first. The HNI and UHNWI community in India has witnessed significant growth in the last decade. This community is further expected to grow substantially in the next decade. There are interesting shifts in the wealth management industry overall on account of the manner in which wealthy families are evolving. One important change is that we are now in a transitional phase, where many of the older and founder generations are passing on some or all of their wealth to the next generations. This involves devising innovative solutions, especially in the joint family businesses in India with multiple family members within the same generation as well as members across multiple generations. The major challenge for the patriarch here is to manage the hopes and expectations of different family members; it is tough act to balance the more materialistic side of business with the emotional side of the families. In such cases, a third party neutral advisor can bring in a non-biased perspective taking into consideration the objectives, needs and aspirations of the family. Another key change include globalisation, not only of assets but also of individual family members. Not only have clients diversified to invest in assets and business abroad, but now there is an increasing trend of most families having at least one family member who is residing abroad. With families more global as well as family assets spread across different geographies, the plan for their succession becomes complex involving different laws of the various countries. They need advisors who can weave in different facets and advise them on the achievable succession plan.. There is also a sea change in the role of women in India, with a gradual shift from a highly patriarchal environment to one where women are assuming more control of businesses and wealth, but of course, that is not an easy transition.

Hubbis: Why do these clients want or need to work with you?

Shah: Well,  the mindsets of clients has changed significantly over the last decade. Earlier, transfer and preservation of wealth was a matter of either some verbal understanding between family members or was “assumed” to just happen appropriately when the patriarch no longer is alive. But now, families realise that without a proper plan in place, their hard earned wealth can be squandered away, their business legacy can be disrupted, and family ties can be broken.

Contentious issues between family members can have a corrosive impact on the businesses, on their reputation and on other shareholders and of course employees. So, clients are open to engaging with estate planning professionals like us because they understand that the effort they made in creating wealth can all be wasted if they don’t have plans to preserve it!

So, preservation of wealth and ensuring financial and emotional security of family members is the primary reason why clients are keen on planning for succession. Also, as I said earlier, with family members residing abroad or their assets being in different geographies, multiple regulations come into play when the time comes to pass on assets on death. In a world of greater regulation and oversight, it is imperative to consider the effect of multiple laws and regulations across various geographies to avoid dissipation of wealth.  Though there were news reports about estate duty being reintroduced in India, we have no estate duties or inheritance taxes in India at present, so I don’t see that as the number one and sole reason for people to plan in advance unlike clients based in countries like US or UK where the impact of estate duty is significant., In a nutshell, very rightfully, families do not want to leave it to chance or to the state or judges to decide on the allocation of their wealth should they pass away without the relevant structures and solutions in place. And I can tell you that there are some very peculiar laws in place in India regarding assets of someone who dies intestate (i.e. without having a Will in place).

Hubbis: Is this a service you can monetise, or is it wrapped into the overall wealth management proposition of Edelweiss?

Shah: The idea behind setting up this desk within the wealth management arm of Edelweiss was to help our clients in matters beyond traditional wealth management. We have been able to successfully do this and cater to clients in the areas of estate and succession planning, structuring, handholding on key tax and regulatory matters, global residency matters, etc. We have built this team as an advisory and execution practice, where we assist the client end to end by finding the best solutions for clients and helping them accomplishing their objectives. As far as monetising the practice is concerned, well, if we have the best interests of client in mind, business does follow!

Hubbis: Can you offer some examples?

Shah: Sure, so a particular client, who was the promoter of a listed company wanted to plan for succession. Some of his children were involved in the business while some were not, so it was tricky as to manner in which his listed shares would be split between his children. Considering that there were multiple family members, decision making in the family was not easy and was subject to changes several times. We worked for almost 2 years on the project and helped the client execute an innovative structure for his specific family need, which the client much appreciated.. As I said, business would follow if we have the client’s best interest in mind and it did! .

Hubbis: What is changing in India?

Shah: I would classify the change into 3Ms- Mindset, Manner and Method. First is the MINDSET of the family members, where they no longer just leave the succession plan to fate or to a verbal understanding that the family members will sort out the succession issues on their own post the lifetime of the patriarch. Now, families are proactive and intend to put in place a proper succession plan because they understand that the price of not planning well is much higher (disruption of wealth, disputes between family members ,etc) as compared to the financial costs of doing it. Next, the MANNER in which succession used to happen earlier has changed. Families no longer just want to create their own planning and keep it tight to one or two older decision makers; it involves more of the next and younger generations, and it is more professionally organised. The manner has also evolved, because of the complexities around international businesses, residence, family members with different career aspirations, more independent and free willed younger generation and the diversity of assets and their locations.

Finally, there is the METHOD, which has changed as a direct result of the changing mindset and manner.

Many years ago, either people did nothing or just made a simple will. Now they talk about having more sophisticated structures - a private family trust, especially for in cases where they want to protect business continuity, where they have some special children in the family or say minor children in the family or they want to ring fence their assets against creditor claims or marital issues, and so forth.

Moreover, we now see greater adoption of a family constitution alongside a trust,  with the families communicating and formalising their beliefs, their hopes, and their governance.

Hubbis: What do you consider your key priorities for the foreseeable future?

Shah: First and foremost, the priority is to create greater awareness amongst more and more clients with respect to ‘WHY’ it is critical to plan for their succession and estate. There is a good progress made in the last 8-10 years and now many clients do understand the importance of estate planning. But more work needs to be done in that aspect, especially in Tier 2 and Tier 3 cities. I think once the clients understand how a sound estate plan can help them, they themselves make it a priority. Of course, what follows this as a priority is to help as many as clients as possible to achieve their estate and succession planning objectives so that their hard earned wealth and legacy is preserved.

Hubbis: Do you enjoy what you do?

Shah:  Absolutely! What gives me a kick is helping people solve their problems, I find tremendous satisfaction in that and seeing that we have added value to a client is definitely exciting and encouraging. This is a niche specialisation and still at a nascent stage in India and I am glad that I am a part of this early on!

Hubbis: Finally, can you tell us a little about yourself?

Shah: I was born and brought up in Mumbai. I studied commerce at the Podar College of Commerce, also in Mumbai and completed Chartered Accountancy with the Institute of Chartered Accountants of India., . I started my career with Ernst & Young (‘EY’) in the Mergers & Acquisitions Tax (now known as ‘ Transaction Tax’) practice. Had a brilliant experience of working with EY where apart from the M&A experience, I also ventured into private client space involving working on estate plans for large multinational families. Joining Edelweiss eight years ago was very exciting as I was brought in to set up the Wealth Structuring desk and to build this team from the ground up. It has been really rewarding on so many levels.

I enjoy a lot of activities and pastimes in my spare moments, including working out at the gym, cooking – a passion in India, yoga and dancing. As to my love of dancing, I am a Gujarati, and it is rather in our blood! I love travelling and Europe is my favourite holiday place, especially London and Berlin!