Private wealth management advisory offers various types of services like portfolio management, financial planning to individuals than corporate, trusts, funds. It helps a client achieve his short, medium, or long-term financial goals by analyzing his finance-specific need. The private wealth advisory offers the full gamut of offerings that fuel the requirement of clients.

Individuals have busy schedules and so do not have time to manage their finances nor do they have knowledge of it. They must require certain catalysts that guide them in order to manage their wealth. Wealth management advisors usually treat high net worth individuals (HNIs) with a variety of product offering that suits them well.  Not only that they offer product suits, however,  wealth advisor  helps client execute proper financial planning, succession planning, tax planning among others advice.

Normally, broking houses, financial advisors or banks offer such kinds of services to clients because they have a variety of portfolio and investment assets classes to invest in. A private wealth advisor having its institutional focused on domestic and global perspectives assist clients to diversify risks and receive a very good return.

A Private Wealth advisor having a team of experts guiding clients on selecting various instruments and investments be it domestically or globally. They are highly qualified people having domain expertise in their respective areas. They help clients build their portfolios while identifying their risk profiles efficiently.

Most Private Wealth Advisory firms work on the fee-based model. They normally charge fees as a percentage of assets under management. The fee-based model is more congenial compared to the commission-based model.

It may range from small tickets to mid-level ticket depending on the size entertained by Private Wealth Advisory firms. Now that the fintech companies have grown well in India and globally, the process to appoint a Private Wealth Advisor becomes easier and faster thereby reducing various costs associated with the perspective.

Family offices are the next buzzed word trailing Private Wealth Advisory. Family offices are private wealth management advisory firms that offer innovative solutions to ultra-high-net-worth (UHNW) investors. What differentiates family offices from wealth management advisory is that the family offices manage their clients’ financial needs from large perspectives. The size of services usually large compared to Private wealth advisory firms.

There are two types of family offices namely Single-family offices and Multi-family offices. A single-family office assists one single HNI or family, on the contrary, multi-family offices more expanded in order to support multiple families and individuals. The major benefit of operating as multi-family offices is to attain economies of scale which allowing cost-sharing with clients. Some businessmen or HNIs are inclined to set up a family office for UHNIs by a variety of boutiques of offerings.

A Family office advisory serves its clients with a detailed financial plan, succession plan with collaborative efforts performed by a team of highly qualified professionals having expertise on legal, finance, compliance front on global perspectives. The family office advises its clients on various investment alternatives and applies sufficient risk management tools to ward off uncertainty. It helps clients resolve complex financial, tax, or estate-related issues.

Besides handing a client’s financial, succession planning needs, there are many family offices handle personal affairs in order to cater to client’s specific needs namely travel planning, lifestyle planning, providing security checks, arranging foreign trips among other facilities.

Those who have achieved a milestone by accumulating wealth have exhausted later in their life to deal certain complex tax, compliance-related issues when it comes to planning, managing their estate, assets, wealth. That’s where a Family office advisor will come in to play to assist to streamline the entire process. All the practices that a Family offices perform for their clients by holding a holistic, philanthropic approach. A family office advisor acts like a family member of a client with who a client can trust to manage his wealth wisely. The team of professionals holding scholastic approach works at the Family office for its clients.

Liberalized Remittance Scheme (LRS) facilitates Resident Individuals to remit funds outside of India in tune-up to USD 250,000 or its equivalent with freely convertible foreign currency each financial year from April to March with permissible capital.

Let me give you an example to run you through the LRS scheme. If you suppose to remit funds abroad in order to educate your child or help someone in urgency, you will probably find the immediate solutions to remit the fund. Following this, the Reserve Bank of India (RBI) introduced the Liberalized Remittance Scheme (LRS) in 2004. The entire LRS structure is made to assist resident India that wishes to remit money overseas.

The LRS enables you to send money to your loved one who is staying abroad. The amount to the tune of $250,000 can be sent abroad in each financial year. The entire LRS is not available to use for corporate, or those partnership firms, HUF or Trusts. Only authorized dealers including banks to help facilitate the transaction between a resident of India and their beneficiaries abroad. The PAN card is mandatory in order to execute transactions.

There are a variety of transactions under which remittance of funds made like,

• Immigration,
• Gift or donations to legitimate beneficiaries
• Going abroad for employment
• Business trips
• Maintenance of close relatives living abroad
• Paying for education abroad
• Expenses in connection with medical treatment abroad
• Any current account transaction that not covered under FEMA

Other Capital Account Transactions involved while using LRS are –

• Opening, holding and maintaining a foreign currency account abroad with a bank
• Making foreign investments in equity shares, mutual funds, debt instruments, ETFs, venture capital the fund, etc.
• Purchase or property abroad
• Extending loans to Non-Resident Indians who are relatives as defined under the Company’s Act.
• Setting up Wholly Owned Subsidiary (WOS) or a Joint Venture (JV) outside India that comes under the Overseas Direct Investments (ODI) regulations as a bonafide business purpose.
• Besides certain benefits attained through LRS, it has certain remittances prohibited under LRS as per RBI guidelines, like,
• When executing transactions involving direct or indirect remittance to individuals and entities poses a significant risk conducting terror-related activities.
• The transaction involved purchasing Foreign Currency Convertible Bond issued by Indian companies in the secondary market overseas.
• Remittance for trading activities in foreign exchange abroad
• All those countries identified by the Financial Action Task Force (FATF) to execute direct or indirect capital account remittance.
• As per the RBI guidelines, any remittance prohibited explicitly under Schedule-I and Schedule-II of current account transaction rules (2000).

From the transaction perspective, remittance from India for margins or margin calls to the overseas counterparty.

Investors have always preferred choice to diversify their investments. Exchange Trading Funds are amongst the best investment choice to diversify portfolios. ETFs are considered to be passive investments replicating the underlying index. ETFs are transacted by buying and selling on a stock exchange. However, the price of ETFs fluctuates throughout the day. The value of ETFs is determined by the Net Asset Value of the underlying assets. What makes ETFs attractive are their cost, time, flexibility and liquidity. The National Stock Exchange of India (NSE) through which ETFs are traded in India. The major benefit to investing in ETFs is if an investor invests in individual securities which may seem to fluctuate, on the contrary ETFs by their nature tracking either equities or bonds or gold indices mitigate against the individual volatility of stocks.

Likewise Stock trading, ETFs can be bought on margin, sold short, or held for long-term purposes in order to gain profit. Transaction over ETFs is flexible and safe enough compare to individual securities trading when it comes to investing across geographies, sectors, or various asset classes. With this retail investors can transact with ETFs in the secondary market. Relative to mutual funds, ETFs have a much lower ratio ranging between 0.05% to 1% of the net asset value.

Usually, ETFs fall into four categories namely  Index ETF, Gold ETF, Sectoral ETF, Thematic ETF which may further bifurcate into Index funds ETF, Gold exchange-traded fund ETF, leveraged ETF, sector ETF, Currency ETF, Commodity ETF, etc.

ETFs can also be transacted domestically as well as Globally. The Global Exchange Traded Funds allow domestic investors to invest in international indices comprises of various securities, bonds, and investment assets.

ETFs can also fall in the category of debt nature wherein an investor takes exposure to fixed income securities.

Transacting with ETFs attract Securities transaction tax, brokerage. The expense ratio comprises various costs like administration, auditing, management fees, brokerage, rebalancing costs, etc.

• Dividend Income can be earned by investing in an individual ETF that comprises a couple of equity securities. When an ETF fund receives dividends from companies it has invested in, it will pass those dividends to the investors or else it may invests those dividends in companies as reinvestment in order to gain more on returns. Dividend income earned is subject to Tax.
• Capital Gain is accrued by trading/selling of units of ETFs in the market, mostly secondary market in a stock exchange. The capital gain is taxed based on short-term as well as long-term perspectives.

In the case of Sovereign Gold Bonds (SGBs) which fall into the fixed income criteria where it offers 2.5% p.a. interest to be paid semi-annually on the invested amount no matter whether the current market value increases or decreases.

Transacting with ETFs attract Securities transaction tax, brokerage. The expense ratio comprises various costs like administration, auditing, management fees, brokerage, rebalancing costs, etc.

Taxes applicable on both – Dividend income, and Capital gains when it comes to transacting with ETFs.

Taxes on ETF Dividend

The Government has abolished the dividend distribution tax (DDT) since 2020-21 which was 15% earlier. The Dividend income will be considered as income and comes under the gamut of total income of investors where there will be a certain tax slab applicable for the deduction. Additionally, companies are liable to get their taxes deducted at 10% on dividends paid to investors which have been reduced to 7.5% till March 2021 due to the Pandemic sprawled. While in the case of NRIs, companies can get deducted 20% tax, however, the tax computation will be different especially for NRIs based in a country where Double Tax Avoidance Agreement (DTAA) applies.

Taxes on ETF Capital Gain

The tax treatment for long-term capital gain and short-term capital gain varies from ETFs to ETFs.

Equity related ETFs or Equity ETFs

If an investor invests less than one year (less than 12 months), ETF attracts Short Term Capital Gain Taxes (STGC) of 15% along with 4% CESS.

Moreover, investments above one year (more than 12 months) considered to be a long term investment that attracts Long Term Capital Gain Taxes which is 10% (without indexation benefits) however the investments above 100,000.

Gold ETFs, Global ETFs, Debt ETFs, Sovereign Gold Bonds (SGB)

The taxation in the case of Gold ETFs and all those ETFs other than Equity is different. For Gold ETFs investment less than 3 years (less than 36 months) considered to be a short-term horizon where the gain is added to the total income earned and taxed as per tax slab.

On the contrary, if the investment horizon is 3 years or more (more than 36 months) then considered being a long term one attract tax rate 10% without indexation and 20% with indexation (with any respective cess applicable) as per the comfort level of the investor. Thanks to the inception of ETFs as investment instrument launched in India in 2002.

There is no additional tax burden like sales tax, VAT, Wealth tax other than the long-term capital gain tax applicable.

The long-term capital gain tax is exempt for SGB only if you redeem it between 5 and 8 years. Moreover, if you would like to redeem the SGB, it can’t happen before the fifth year.

For SGB taxes on interest income is 2.5% under the income tax slabs namely 10% or 20% or 30%. So the pre-tax 2.5% will be converted into post-tax returns of 2.25%, 2% or 1.75% respectively.

Global Stocks

The dividend income generated from investing in stocks globally attract tax as per income tax slab.

The Short Term investment is globally recognized only if it is held for less than 24 months. The income generated under short term period fall in the various income tax slabs.

The Long Term Investment is globally recognized only if it is held for 24 months or more than that will attract 20% tax on the long-term gain with indexation benefits available.

Investors can also take Tax credit under the DTAA compliance. In this case, the investor has to furnish Form No. 67 as per the Income Tax rules especially when he/she files a return on income.

India's first launched its Global ETF in 2007. In case of Gold ETF, the underlying asset is none other than Gold which exposes to Indian Gold market. The entire scheme is based on an open-ended fund wherein you can buy and sell anytime. It is also fluctuated based on the fluctuation in the gold price. Instead of buying gold, investment in Gold ETFs looks attractive as an investor can buy even a small unit by investing in Gold through this scheme. One can invest in Gold ETF thereby avoiding warehousing charges and taxes applicable when buying a physical Gold. The transaction is executed in the same way how it happens in the case of stock trading. Transacting with Gold ETF is highly liquid which can be traded in the stock exchange during a trading session at the prevailing price. There are certain costs involved while trading with Gold ETF namely broker fee and Govt. duty. However, transaction in Gold ETFs are executed in a transparent manner.

The Net Asset Value of Gold ETF fluctuates likewise Equity ETF. While investment in Gold ETF ensures that the physical Gold is bought respective of the transaction occurs.

The Sovereign Gold Bonds is also a preferred choice of the investor comparatively Gold ETF.

Before investing in either domestic ETFs or global ETFs, you must perform your analysis as to whether you would like to invest across certain sector-specific funds or geographical investment. Also, look at the factor whether you are inclined to invest in index specific or gold or debt-based ETF funds. While investing short-term or long-term Fund attract certain taxes along with costs associated that you should consider before investing.

Always keep a top-down approach in order to invest in an ETF as one of the diversified strategy.

So Happy Investing in ETFs!!!

Global investments have become a preferred destination for residents of India. It helps Indian investors, individuals diversified portfolios by reducing risk against certain volatility.

When it comes to investing globally, an investment strategy plays a key role in order to select investment classes namely ETF, Equity, Indices among other various classes. There is a various fin-tech platform through which an individual can invest globally however by complying with RBI guidelines.

An investment company works with fin-tech technology to assist invest globally. Not only that, it assists how to diversified portfolios by way of a variety of strategies. The diversification is not limited to the portfolio; however, it assists to invest across different geographies. It comprises a mixed bag of markets and assets.

• Direct investment in global markets
• Funds or instruments invest in Global funds, where one can invest in the funds
• Funds of funds that invest in several funds globally

There are various risks involved while making investments globally like,

• Market value changes
• Exchange rates volatility
• Macro events affect the global assets