Indian Private Wealth Leader Himanshu Kohli on his Expansionary Vision for Client Associates

The last time we ‘met’ with Himanshu Kohli, the founder of a leading Indian wealth management firm, Client Associates, was back in the dark and very uncertain days of the 2020 lockdowns. We met him again recently, by Zoom call, but this time there was a greater sense of optimism about the course of the pandemic and around the gradual ‘normalisation’ of life as we all used to know it. We again found someone whose zest for life in general and for the wealth management business, in particular, had not diminished at all. India’s economy and its private wealth market, he told us, are enjoying expansion, diversification and dynamism, reflected in the rapid growth of AUM and an altogether increasingly interesting environment.

Kohli opens the conversation by reporting that it was back in 2002 that as a pioneer in India, Client Associates started the whole concept of the multifamily office. “Today, we are the largest multifamily office in the country, working with some 900 families and managing over USD5 billion of their assets,” he reports. “Our approach is to work as a private CFO for these clients.”

Six verticals

He explains the firm runs six different verticals. The oldest one is the private wealth management business, which also launched in 2002. In 2005, they started a real estate vertical. The firm then acquired an investment bank in 2016 named WisdomHill, and today that business handles the investment banking requirements or new-age investment requirements for their clients. In the same year, Client Associates opened its estate planning advisory desk to handle estate, wealth, succession and legacy planning, as well as investment migration. They also offer lending solutions and most recently started an insurance vertical covering all types of insurance.

Focused on the HNW and UNHW market

Kohli views the Indian market in four categories of wealth, explaining that the firm operates in the upper two tiers for HNW and UHNW clients that might represent 1% or even less of the total population.

“These clients seek top quality professional advice, trusted advisors who stick with them, they are highly focused on wealth preservation, and they are increasingly cost-sensitive,” he explains.

Rapid evolution in the proposition

He explains that the market for these types of clients had evolved dramatically since he launched the firm two decades ago. “Back then, almost all their investments were in mutual funds representing debt and equity,” he recalls.

“Today, the assets we help curate for clients span all types, including private markets, all kinds of alternatives, and the investments span the globe as well. And as I explained, we offer a comprehensive suite of products, advice and services through our six verticals. Moreover, the technology required and that we offer has dramatically improved, out of necessity and also to drive a more client-friendly offering.”

Four key trends

He observes four key trends in India. First, the financialisation of savings in the past two decades, with financial assets growing dramatically in terms of the country’s total assets from 12% to 35% in the past two decades. “It still has further to go as well,” he reports, “as the world average now is 54% financial assets and 46% physical. And we believe that in the next two decades, we will become more like the US and the UK, which are roughly 75% or more financial assets.”

He explains that the firm’s typical wealthier clients are much further along in this regard, with an estimated 70% of their wealth in equity or alternatives, resulting in higher returns than on average, meaning that they are continuously building additional wealth for the future generations.

The second key trend is the shift of more financial wealth into equities. The typical size of Systematic Investment Plans, or SIPs, which are India’s equivalent of mutual funds, has risen from just USD1 million equivalent 20 years ago to USD1 billion or more. “Every month, more than a billion dollars are flooding into equity SIPs, and soon that will be weekly here in India,” he reports.

Unlocking value, shifting to the new world

The third key trend is the increasing interest amongst business owners in unlocking value. “Whereas the family businesses used to be viewed as passing down from generation to generation, people are becoming more detached from their businesses; they want to create the value, unlock the value, and perhaps also diversify and invest into new-age businesses,” he explains.

On the latter point, he notes that the number of unicorns in India had increased dramatically to 86 by the end of 2021, with 44 arriving in 2021 alone.

“That is one unicorn being minted nearly every week,” he exclaims, “which in turn means the number of billionaires and HNWIs is rising apace. In fact, India is printing a new millionaire every 30 minutes. And new-age businesses are driving the growth that used to come from the more traditional business. And more and more wealthy are transitioning from old to new world investments.”

Two-way flows

The fourth notable trend is diversification well beyond India’s borders. “When the current Modi-led government came to power in 2014, the total approved remittance outflows for investments were roughly USD1 billion a year, and in 2020 this was more than USD18 billion, and it is rising all the time,” he reports.

Kohli also notes that while money is going out of India as well, NRIs are pouring more money back into the country to participate in the domestic growth and diversification stories. “It is a dynamic two-way flow,” he explains. “Accordingly, we offer model portfolios for both types of clients to reflect their interests and expectations,” he adds. “For domestic clients, we created a model portfolio which is multi-asset class, multiple geographies, with passive and active strategies to diversify beyond India. And we devised a model portfolio for international investors and NRIs who want to invest, tailored to regulatory demands as to what they are permitted to acquire here.”

Prime movers

He expands on this, stating that Client Associates has been a pioneer in the MFO space and in driving the concept of the trusted advisor for the past two decades. “We have been prime movers in all the key areas, expanding the offering to a holistic suite of products and services under our six verticals that are personalised and tailored directly to the clients,” he reports. “We provide genuine objectivity, and we strive to be the clients’ true and trusted advisor. And that is why we have been able to build a firm of USD5.2 billion in AUM with a total team of 140, including 60 RMs and advisors.”

Key Priorities

Kohli says that he is immensely proud of having built what he calls a “beautiful platform” on the foundation of the three ‘Ts’ representing Trust, Talent and Transparency. “And our dream now is to become the most admired bank in the country for wealthy clients, so that when we are perhaps 100 years old, we will be the largest and most prestigious private bank in India, like UBS is in worldwide terms. Think about it - they manage assets somewhere near the size of the Indian economy as a whole!”

In the more foreseeable future, the mission is to evolve from a founder-driven professional advisory and services firm in the next decade-plus to a large cap, professionally managed operation that is institutional in nature and design. “We will diversify, professionalise, refine and upgrade continuously,” he reports.

The result, he elucidates, will be a business with three core drivers. One is the private wealth management, which will encompass the full gamut of financial investments, real estate advisory, insurance, lending solutions, estate and succession planning, and investment migration services.

He reports that the second driver will likely be expanding in asset management strategies and fund of funds. “These are becoming extremely important,” he explains. “Today, we offer our model portfolios that are creating considerable interest and renown, as they are really well and very scientifically designed. But we want to enhance the execution platform to bring these and a broader range of asset management and fund of funds solutions to our clients.”

And the third key driver is to expand the investment banking and early-stage investments offering that they launched in 2016 through acquisition at the time. “As many as 70% of our clients are SMEs,” he explains, “and they need help realising and creating value in their businesses, and they then need alignment into other investments and diversification, and that is where IB and private banking combine so well. This is central to the shift I explained towards financialisation of wealth, as those who have created businesses diversify into new investments and new world assets.”

True to the vision

Kohli closes the conversation by stating that the big picture objective from day one in 2002 has been to create and deliver a business model which is utterly client-centric and conflict-free at a time. “And that is what we have achieved,” he concludes. “The next phases will see us consolidate, build more talent, constantly upgrade our technology, expand the AUM, diversify, institutionalise and further professionalise the offering. But throughout, we will remain totally committed to our vision of doing the absolute best we can for our clients.”

Getting Personal

Kohli was born and brought up in New Delhi, schooled in Bal Bharati Public School and then attended the Shri Ram College of Commerce, SRCC, which he says is one of the more prestigious institutions. He completed a Master’s in Finance at Delhi University in 1995 and then worked in Mumbai with London Forfaiting Group, which was involved in corporate finance and investment banking in India.

Three years later, he moved to DSP Merrill Lynch in Mumbai, which is where he learned about private banking. In 2000 the bank asked him to move to Delhi to set up the private client group there. He soon moved to Deutsche Bank in 2001, again in the private banking division but then based out of Gurugram, working as a RM. And then in 2002 he achieved his vision of launching Client Associates.

He is married, and the couple has two children, a daughter aged 20 and a son of nearly 18. His wife teaches underprivileged children and has done so for nearly 15 years; it is somewhat of a calling for her, he explains.

In his spare time, his first love is sports. “In fact, if I had had the opportunity,” he reports, “I would have become a sports person, but I didn’t have that opportunity when I was growing up. I always like to play some sport or another five to six times a week, although lockdowns did get in the way. My favourite passion used to be cricket, and I played for school but these days I play more of racquet games like table tennis, badminton, tennis, squash or racquet ball and even football, whenever possible. And of course, golf.”

“Since we last spoke in 2020, I must admit – with some pride – that my son now beats me regularly at squash,” he adds. “And to be honest, it is not just at squash or racquet ball that he is better than me these days!”

One other development since 2020 is the addition of a Golden Retriever. “My daughter is at Tufts University in Boston in the US now, and our son will soon go off to the University of California in San Diego, all going well with his grades, so we have a bit more time in our lives for our wonderful dog, which is a greatly loved member of the family.”