Family Office Investment Advisory
Family Office Investment Advisory
In a world brimming with uncertainties—geopolitical tensions, fluctuating markets, evolving regulations—the one thing ultra-high-net-worth individuals (UHNIs) should focus on is simple, yet profound: preservation of wealth.
When we examine historical returns across asset classes in a market like India, fixed income has typically yielded between 7% and 9% across cycles, while equities have delivered around 12% to 15%. Understandably, someone might ask, “What if I had invested in Flipkart or another unicorn? I could have made 10x returns!” Yes, that’s true. But for every success story, there are many silent failures—investments gone wrong, capital permanently eroded—stories that rarely see the light of day.
Having spent decades in wealth management and investment advisory, my belief is unshakable: every serious investor needs a trusted investment advisor—someone with a proven track record, depth of experience, and, most importantly, alignment of interest.
Alignment matters.
Unless the advisor’s fee structure is truly aligned with the client’s interests, there will always be room for mis-selling, portfolio churning, or embedded product incentives. Take banks, for example. They may offer “low fees” or bundled services—but how do they cover their costs? The answer is simple: there is no free lunch. Subsidized fees are often recouped through product commissions or cross-sells. Investors must pause and ask: What am I not seeing here?
Once this clarity is achieved, the investment process must begin with discipline.
Step 1: Risk Profiling
Every investor must complete a comprehensive risk profile. This isn’t a tick-box exercise—it’s a foundational tool to gauge the true risk appetite. If there’s a mismatch between stated and actual risk-taking ability, that variation should be acknowledged, documented, and signed off by both client and advisor.
Step 2: Crafting an Investment Policy Statement (IPS)
The IPS is the investor’s financial constitution. It requires deep thought, time, discussion, and honesty. It must reflect the investor’s goals, fears, expectations, boundaries, and principles. A well-constructed IPS brings clarity to both the client and advisor, acting as the compass for all future decisions.
Step 3: Portfolio Construction and Review
If an investor already has a portfolio, the advisor’s role is to review it critically, map it to the IPS, and suggest realignments. If fresh capital is to be deployed, the portfolio should be constructed from scratch, carefully calibrated to the return expectations and risk framework outlined in the IPS.
And from there begins the most crucial phase—ongoing review and discipline.
The Danger of Over-Involvement
Many UHNIs tend to get overly involved in day-to-day portfolio decisions. While understandable, this hyper-engagement can lead to stress—for themselves and their advisors—and can often trigger poor decisions driven by emotion, not logic.
Once a well-informed investment decision is made, it’s vital to allow it time to play out. Reacting to every market dip or quarterly fluctuation only creates unnecessary pressure and fosters fear-of-missing-out (FOMO) behavior—often leading to suboptimal outcomes.
The Road Ahead: Back to Basics
From 2020 onwards, we’ve ridden a powerful bull market. But now, signs are pointing toward a time correction, if not a slowdown. Volatility has returned. Patience and prudence must take center stage.
This is the time for investors to return to the basics:
Let the portfolio work. Let time do its job. Let calm replace chaos.
Because true wealth isn’t just about returns—it’s about resilience, clarity, and peace of mind.
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In a world brimming with uncertainties—geopolitical tensions, fluctuating markets, evolving regulations—the one thing ultra-high-net-worth individuals (UHNIs) should focus on is simple, yet profound: preservation of wealth. When we examine historical returns across asset classes in a market like India, fixed income has typically yielded between 7% and 9% across cycles, while equities have delivered around […]
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