Compliance and Ethics in Finance: A Conversation with Pranjali Madnani

An interview with Pranjali Madnani, Director—Estate Planning & Compliance at a SEBI-registered, fee-only investment advisory firm based in Bengaluru

In this exclusive interview, we delve into the insights of Pranjali Madnani, Director of Estate Planning & Compliance at a SEBI-registered investment advisory firm in Bengaluru.

With her expertise, she sheds light on the critical role of estate planning in wealth management and the importance of compliance in the financial sector.

Can you tell us about your professional journey and what drew you to specialize in estate planning and compliance?

Pranjali Madnani: I started my career in this field. A few years into it, and I was hooked because of its niche and challenging nature. As a fresher, I found it extremely challenging, as the laws, rules and regulations in this field are not straightforward.

There is no rulebook. But gradually, as my research deepened, the gates started opening, leading to a much coherent understanding of the subject. I continue to study as a fresher even today.

What differentiates your firm’s approach to estate planning?  especially as a SEBI-registered, fee-only investment advisory?

Pranjali Madnani: We believe in a client-first approach and refrain from drawing overcomplicated structures as far as possible. Our clients appreciate hands-on resolution of queries and doubts and the fact that we do not cross-sell.

In your experience, what are some of the most overlooked aspects of estate planning by Indian families and HNIs?

Pranjali Madnani: In my experience, the most overlooked, ignored or underrated aspect of estate planning amongst Indian families is not revising their estate plans.

One must revisit their estate planning documents once in at least 2 years in general. However, changes in family dynamics, marital changes, birth, death, purchase and sale of assets, migration to a different country, etc. call for changes in the estate plan.

How do you help clients navigate complex intergenerational wealth transfers while ensuring legal and regulatory compliance?

Pranjali Madnani: There are a myriad of laws involved in intergenerational wealth transfers. Indian Trust Act, Income Tax Act, Stamp Duty Rules, FEMA, SEBI regulations, laws of other countries (where jurisdictions other than India are involved) and many more laws are to be referred and complied to.

While complex transfer plans demand application of multiple laws, the simpler ones are also not easy to be chalked.

With rising asset values, especially in gold and real estate – what new challenges are you observing in estate planning today?

Pranjali Madnani: Rise of asset value is mostly a welcome situation. However, the major challenge in real estate is stamp duty. Transferring real estate to a trust attracts stamp duty. Hence, wills of wills in combination of trusts prove to be a better estate plan.

As far as gold is concerned, especially physical gold, the major challenge is posed at the time of distribution.

A lot of owners gift gold during their lifetime without leaving any communication  as to who has been gifted the same. This can lead to disputes in the family.  

How are you seeing the conversation around estate and succession planning evolve among younger investors and first-generation wealth creators?

Pranjali Madnani: Times have changed for sure. People are aware that death is certain and uncertain. It can knock at any time. We come across many people in their late 30s and early 40s who are starting to talk about wills and trusts.

People are getting started with wealth management and investment planning at a young age. Once they have created wealth and invested the same, estate planning becomes the logical next step.  

Can you share an example (anonymized, if needed) that reflects the impact of structured estate planning on a family’s long-term wealth strategy?

Pranjali Madnani: A business family with a large family tree wanted to segregate the family branches while keeping the business and properties intact. They also wanted the business to be run professionally with leaders being appointed on professional parameters.

We helped them in creating a trust structure where the master trust held all the holdings with the sub trusts as its beneficiaries. Each son and his family were beneficiaries of respective sub-trust. The Sub-trusts were only income beneficiaries thereby keeping the capital intact in the master trust.

Documents were created to outline the wishes of the head of family. The wishes and guidelines gave a roadmap as to how he wanted the business to be operated after his lifetime time.

This protected his business from being sold and dealt with irresponsibly after his lifetime while also protecting the needs of his family.

What advice would you give to individuals just starting to think about wills, asset protection, or succession planning?

Pranjali Madnani: There is no better time to start than now. Keep updating your plans. Warren Buffet changed his will recently making major changes due to change in family dynamics and possible change in relationship with Gates Foundation.

Pranjali Madnani’s perspectives highlight the evolving landscape of estate planning and compliance. Her commitment to ethical investment practices not only empowers clients but also sets a benchmark for the industry, ensuring that financial advisory remains transparent and client-focused in an increasingly complex financial world.

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