Whichever measure you take, India is a country that’s going places. The subcontinent is attracting record levels of foreign direct investment, emerging as a global offshore services and manufacturing hub, and ranks among the fastest-growing countries in the world. What’s more, it benefits from a ‘demographic dividend’, a young and ambitious working population which is set to cross one billion by 2030 and which acts as a powerful engine of economic growth, providing labour resources and consumption demand.
Entrepreneurial, financially savvy and well-travelled, Sonali Pradhan embodies the spirit of modern India down to a tee. A wealth planner at Julius Baer for the past nine years, she advises Indian clients on topics such as succession and estate planning. She says the subcontinent’s emergence as a global economic powerhouse make it a particularly exciting time for her and her clients.
“In India, we talk about Amrit Kaal, which means the ‘Era of Elixir’, referring to the new dawn for our country over the next 25 years that will give us the chance to progress significantly and achieve ‘higher skies’,” she explains. Sonali and her husband, a product designer, spent the early years of their marriage working abroad in countries such as Singapore, Hong Kong, the Netherlands, France and the US. These days, they stay in their hometown Mumbai. “There’s a palpable sense of optimism among the Indian population. It feels like we’re living through exciting times.”
Strong digital affinity among India’s youth
Nearly three individuals each day join India’s ultra-high-net-worth (UHNW) club with a net worth of more than USD 30 million as start-ups go to market, and the number of UHNW individuals in India is set to rise by 58 percent in the next five years. Sonali says India has always been a country of entrepreneurs: “Indians dream of creating top-notch businesses at home with a global market in mind.” She epitomises this enterprising mindset: having started her career as a cashier in a retail bank, she progressed through the ranks before moving into the world of fintech, where she was asked to develop software for writing wills. “I found it so interesting that I decided to study law and change fields. Ever since then I’ve been helping clients understand Indian succession laws and advising them on their estate planning and succession.” The software Sonali was part of developing for writing wills was later bought by one of the leading depositories in India and is still being used by retail investors to this day.
As somebody who has explored the intersection of wealth management and technology, she’s proud of the burgeoning IT affinity of her country’s youth. The country has even given its name to a set of digital public goods, the “India Stack”, to unlock data, identity and payments on a population-wide scale. “This is evident in the number of Indians who conduct their financial affairs online. We no longer use credit or debit card payments for smaller transactions. Most of our digital payments are done through a mobile phone.”
New wealth strategies needed to address global connectivity
India is also enjoying greater financial inclusion, with the profile of the country’s per capita GDP moving from ‘developing’ to ‘developed’ and giving rise to a burgeoning middle class with growing purchasing power and an increasing spread of UHNW representation across the country. Connectivity with other parts of the world is also intensifying, as illustrated by the rapid growth in demand for air travel – with the number of air trips set to increase from 200 million trips per year to 1.5 billion trips per year by 2047 – and the continuing growth in Non-Resident-Indians (NRI), which sees India boast the world’s largest diaspora of some 30 million people.
Sonali says that India’s newfound connectivity with other parts of the world make it all the more critical that clients seek out sound wealth management advice, especially when it comes to topics like wealth transfer and succession planning. “Almost no Indian family is only Indian nowadays. Most of the families I advise have one leg or another in the United States or Europe, often because the family’s next generation, the inheritors of the wealth, live overseas, or because the wealth is created overseas. There’s almost always a cross-border element involved.”
As Sonali explains, however, transferring wealth outside of India is complicated, even among family members, due to the country’s strict foreign exchange control regime. She cites one scenario where a UHNW client, whose wealth ran to tens of billions of dollars, sought her counsel for his plans to pass the family’s assets to his children, who were NRI. “It would have been particularly difficult for him to transfer large quantities of wealth to his children,” explains Sonali. “When I explained the foreign exchange rules to the family, they were very downhearted.”
Thanks to Sonali’s experience in managing cross-border, cross-generational wealth transfers, she was able to present alternative options. “I insisted that the children dial into our next meeting from the US because I wanted to propose certain lifestyle changes.”
She says the family had two options: either the parents move to the US and become NRIs, giving them greater flexibility to pass on their wealth to children, or the children move back to India and become residents, opening up a wider range of options for transferring their assets outside of India. “After careful deliberation, the children opted to move back to India and took up Indian residency,” says Sonali. “Thanks to our support in restructuring their wealth, they were able to transfer greater quantities of wealth when they later moved outside India.”
Impact of social change on wealth preservation
The modernisation of Indian society also poses new succession planning considerations for clients. It was long the tradition in India, for example, to bequeath wealth exclusively along the male line. Sonali recounts the case of a family “whom I’ve had the honour of serving along three generations” who approached her for advice on trust planning, with the mandate that only the boys should receive a share of the family’s business.
“I had to make the client aware of the changes in India’s legal landscape that put girls on a par with boys,” she says. Keenly aware of her country’s traditions, she realised the importance of taking a tactful approach. “Rather than calling out their mandate directly, I used case studies to press home the message that gender-biased distribution of wealth was no longer permissible,” she says.
“The client could see for himself that the old ways of doing things wouldn’t preserve the family’s wealth going forward and we were able to come up with a wealth plan that was more inclusive, more logical, and more acceptable for the next generation. Ultimately, we were able to resolve the situation in the best interests of the family and the business. The client was delighted that we achieved this without the slightest hint of a dispute, even though 25 family members were involved!”
Career benefits of challenging yourself every day
As these two client scenarios show, Sonali likes to ‘go beyond’ by thinking deeply about the challenges facing her clients and providing the most practical and simple solution. What does she most enjoy about her role as a wealth planner? "Every structure that I advise on is unique, as is the client situation and the requirements. The regulatory framework is also constantly evolving. There’s never a dull mundane moment in my professional life, which is what I enjoy the most about my role. As the saying goes, love what you do, and you won’t have to work a day in your life. That’s how I feel – new day, new mandate!”