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Family Offices in Asia

What is a Family Office?
A family office is an entity set up to manage and oversee the wealth management affairs of High Net Worth Individuals and their families.

Typically, family offices act as a multi-disciplinary organization offering tailored expert services centered around tax and financial planning, trusts and estate planning, investment management, risk management, accounting and compliance issues. Increasingly, many also focus on governance, philanthropy, family legacy and succession planning, and personal family needs with concierge and lifestyle services.

The role of the Family Office is to integrate and coordinate all of the wealth affairs of a family and act as a gatekeeper to the family.

Traditionally family offices were Single Family Offices (SFO), with dedicated staff serving the needs of one single family, with their origin dating back from European land-owning families and the Industrial Revolution. The Rockefellers were one of the first family offices created by ultra-wealthy American families with other legendary affluent families such as the Mellons, Pitcairns following suit that became the foundation for many of the larger U.S. family offices. 

The decision to set up a family office stems from the need for a more centralized, dedicated organization to the wealth management affairs of a family offering a high level of control and privacy and total alignment with the family’s values, goals and interests. A SFO also contributes to foster better communication among family members and create a boundary between the family business and the business of the family.
 
There is no one family office and no “one size fits all” model. Each structure is catered to the family’s specific needs with some focusing more on the investment function, others more on the administrative and compliance matters or legacy building with a strong focus on wealth transfer, family education and philanthropy. The first step in determining the family’s wealth management needs is to identify the services that most apply to their circumstances and the cost to administer or outsource these services.
 
SFOs vs. MFOs
Given the costs of running a SFO with an average asset size of USD100m required to set up a SFO, the Multi-Family Office (MFO) concept has become increasingly popular to include a wider range of wealthy families with the benefit of consolidating cost due to the fact that the infrastructure, staff and technology are already in place and shared between several families. MFOs may also offer off-market co-investment opportunities to their family clients.

The MFO model has become an important alternative to the SFO model with an average number of 80 families being served, offering similar services as SFOs for a fraction of the cost with a wider array of services including fiduciary services, tax preparation, concierge services, property management, and art collections management as they have the ability to scale expertise, make their operating model more cost effective and attract top-tier talent.
 
Family offices in Asia
With Hong Kong and Singapore’s growth as offshore centres for private wealth and an attractive tax regime, both jurisdictions have witnessed an increase in the number of overseas wealthy individuals looking to relocate to Hong Kong and Singapore to set-up a structure to manage their wealth backed up by local specialists and experts in law firms and trust companies to support their activity. Estimates show that there might be as many as 200 family offices in Asia currently with 75% that were started since 2000, compared to about 1,000 in Europe and 3,000 in the U.S.

Driven by the region’s economic expansion, the number of wealthy individuals is expected to rise substantially. In addition, with an overwhelming majority of family wealth in Asia that remains concentrated in the hands of first-generation wealth creators and a major wealth transfer expected within the next decade, these factors will undoubtedly support the trend to set up family office structures.
 
Rosemont can assist you with advice on the choice of the most appropriate family office structure, and can help you with putting this structure in place.

January 2016
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