"No one had even heard of this term [family office] 15 years ago, when I started my company, but now Indians are opening up to new ways of protecting and enriching their wealth," said Himanshu Kohli, whose multi-family office Client Associates currently manages $3 billion of assets on behalf of clients.
Globally there are 10,000 single family offices, with India accounting for around 200 of those in addition to a handful of multi-family offices, according to industry estimates. Families with more than 10 billion rupees ($150 million) in assets usually set up their own exclusive single family offices. Others with 500 million rupees to 5 billion rupees may hire the services of a multi-family office, which looks after the interests of several families.
Wealth waiting to be managed
In India, family offices manage about 20 percent of the total wealth in the country, which Credit Suisse pegged at $3 trillion in its Global Wealth report 2016.
Wealth creation in India only accelerated after the economy was opened to the world in the early 90s, which explains both the fewer number of millionaires relative to the size of the population as well as the limited avenues for the rich to manage their wealth.
According to the Credit Suisse report, India has 178,000 millionaires compared to its Asian rival China, which has 1.6 million millionaires. Both countries have populations above 1.3 billion.
"I don't think we have even scratched the surface. Between 2003 and 2013, the ultra-high net worth segment [$30 million and above] grew globally by almost 375 percent, fuelled largely by China," Soumya Rajan, chief executive officer of multi-family office Waterfield Advisors told CNBC. She added that over the next 15 years, India will be doing some serious catching up.
While the Chinese economy is expected to slow owing to structural changes, "India's consumption linked story will drive wealth creation," said Rajan, who manages assets worth $2 billion.
The deepening of capital markets, the maturing of local start-ups and a growing private equity industry, together with historically reticent family businesses in India becoming more open to share sales are going to create wealth like never before, which will need to be managed, experts said.
"India's rich need someone who is sitting on their side of the table, someone whom they can trust," said Rajan, "A family office pulls all services under one big umbrella so that the client is not repeating to five different people but is able to tell one person who knows the entire piece. There is also a question of confidentiality."
Handing over the baton
India's rich are not very comfortable talking about their wealth and winning their trust is a big challenge for the family offices. "The entire space is quite secretive," said Aditya Gadge, founder of Association of International Wealth Management of India. Gadge has been holding family office summits for the past five years to raise awareness around the idea.
Greater global exposure - rich Indian families now routinely go to American universities to take courses on succession planning - and the young inheritors are forcing families to loosen control and outsource certain aspects of their businesses.