First up, McKinsey & Co., September 9:
Banks, insurers, multi-family offices, and WealthTechs can serve the many family offices in Hong Kong and Singapore by using a framework focused on solutions, service, scalability, and security.
According to McKinsey analysis, between 2023 and 2030, ultra-high-net-worth1 (UHNW) and high-net-worth2 (HNW) families in the Asia–Pacific region are set to experience an intergenerational wealth transfer estimated at $5.8 trillion. UHNW families are expected to account for about 60 percent of the total wealth transfer (Exhibit 1), and many are setting up family offices to facilitate the process. Accordingly, the number of single-family offices in Hong Kong and Singapore, the hubs for such entities in Asia–Pacific, has quadrupled since 2020 to about 4,000 across both jurisdictions.3
The growth trend presents a substantial opportunity for banks, insurers, multi-family offices (MFOs), asset managers, and WealthTechs (technology-enabled wealth fintechs that offer low-cost, personalized, automated advice), all of which can offer differentiated services to new and established family offices.4 Family offices manage a family’s or individual’s financial portfolio, including estate planning, investments, philanthropy, taxes, and more. The employee base varies significantly across the single-family offices, with the largest employing dozens of people. The smallest might have one or two investment specialists, outsourcing to third parties various tasks such as investment management, custody and security services, and family office setup and governance—which can be customized for each family.
Banks and MFOs have been at the forefront of serving Asia–Pacific’s wealthy families. However, other types of providers are expanding into the family office space to target the needs of wealthy families in line with consumer demand. Insurers, in particular, are setting up teams to directly engage with family offices to provide highly customized solutions with a focus on estate planning; asset managers often receive direct mandates from family offices for traditional and alternative investments; and WealthTechs are gaining traction in the family offices ecosystem. This results not only in innovation for customers but also in the opportunity for providers such as banks and insurers to collaborate and expand their offerings to meet this segment’s needs.
To understand this evolving business, we have analyzed and assessed intergenerational wealth transfers based on our proprietary wealth pools data, initial results from our proprietary family office survey, and interviews with representatives of multiple family offices, leading private banks, insurers, and WealthTechs.
The article covers an examination of Hong Kong and Singapore’s dual status as magnets for family offices. We also explore key ways in which Asia–Pacific’s family offices and their Western counterparts differ (see sidebar, “Key differences between family offices in Asia–Pacific and the West”). Next, we analyze the various archetypes of family offices in the region, detail their unmet needs, and present ways for various providers to address these issues through a framework focused on solutions, service, scalability, and security. Finally, we detail granular ideas for providers to consider as they build targeted operating models to serve and partner with family offices.
Hong Kong and Singapore as family office hubs....
....MUCH MORE
Earlier this year (June 13) we looked at a concurrent trend and included some favorite links:
Wealth: Fake Family Offices From Singapore To Hong Kong
From Bloomberg, June 11:
Asia’s Family Office Frenzy Comes With Plenty of Imposters
A
rapidly growing wealth management industry is spurring a rise in
allegations of fake family offices from Singapore to Hong Kong, forcing
many in the sector to go “full CSI” to weed out imposters.
As Edoardo Collevecchio was getting ready to speak at a conference in Singapore, he recognized the family office that employed a fellow panelist. But as they exchanged small talk, Collevecchio noticed something was off — the executive couldn’t answer basic questions about his firm and didn’t even recognize the name of an owner.
It soon became clear the ‘executive’ had never worked for the family office directly, and had misrepresented his status. An awkward snip later, the panel went ahead — minus one speaker.
From the conference halls of Singapore to events hosted by top Hong Kong officials, the ultra-wealthy clans that control family offices in Asia are encountering a new and bizarre problem: fake or exaggerated ‘peers’ created seemingly overnight with little or no substance.
The family office space has become so big, it’s attracting “legitimate players but also people trying to make a quick buck or hustle,” said Collevecchio, the managing director of Oppenheimer Generations Asia, a family office that represents a branch of the clan that once controlled diamond giant De Beers.
The alleged imposters are forcing many in the sector to play detective to distinguish between the real and the fake, according to principals or professionals from 10 Asia-based family offices and six service providers who spoke to Bloomberg News about the issue.
Messaging groups once used to arrange social soirees and golf matches have suddenly become impromptu vigilante groups, with members using their diligence skills to review resumes and firms, in what some have dubbed “going full CSI.”
“The entry barrier is low, founders’ wealth is often private information, and it’s hard to do due diligence,” said Joe Qiao, chief investment officer of Globaltec Capital, an office for the Yeh family of Taiwan chip designer Realtek Semiconductor Corp. “There are chances for misrepresentation and scams.”
At stake is a growing risk of fraud, both for the world’s richest families and the governments rolling out the red carpet to attract them. It could also cause reputational damage to a relatively unregulated industry getting huge tax breaks to set up shop. Multiple family offices with tax exemptions were implicated in Singapore’s S$3 billion ($2.2 billion) money laundering scandal last year.
Industry players say the ruse can take many forms. In some cases, as Collevecchio discovered, these alleged imposters exaggerate their role within a legitimate family office to gain access and trust. Other times, they set up a new firm with little money backing it — call it cosplay family office executives — with scant or questionable sources of wealth.
While it’s impossible to put a precise number on the wanna-be family offices, most of those interviewed said it’s a growing problem. That’s particularly true in Asia, where governments from Singapore to Hong Kong have offered tax breaks and simplified visas in a pitched battled to be the regional hub for the growing business. Ray Dalio and James Dyson are among the billionaires who have set up these offices in Singapore.
Both financial centers have had family office embarrassments of late. In March, the Hong Kong government hosted its second Wealth for Good summit, an invitation-only event with more than 400 guests designed to attract the global elite. Chief Executive John Lee mingled with captains of industry and boasted of Hong Kong’s “unwavering support for family offices.”
One of the guest speakers was Sheikh Ali Rashed Ali Saeed Al Maktoum, whose website claimed the ruler of Dubai was his uncle. On stage between Mao Zedong’s granddaughter Dongmei Kong and Robert Rosen of the Bill and Melinda Gates Foundation, he spoke about philanthropy and wealth legacy. Bloomberg News and other media reported on his pledge to invest up to $500 million in a Hong Kong family office.
But a day after the event, as media outlets started questioning his background, Sheikh Ali abruptly delayed plans to open the office and left the city, citing “urgent matters in Dubai.” The South China Morning Post later reported his past career was as a singer called “Alira,” and that officials never vetted his identity and financial background before he attended the event....
....MUCH MORE
Among dozens and dozens of posts on the subject:Competitive Intelligence Macquarie Style: First Establish a Fake Family Office...
Family Office/Outside Managers Not Quite Cutting It? Maybe What You Need Is A Family Bank
"Are You Fit to Be a Family Office CEO? Work on These Must-Have Qualities"
The most important character trait expected of a family office leader is discretion. And it is only mentioned in passing in this article, which focuses on nuts-and-bolts issues.
You also have to have the mindset of a principal while simultaneously psychologically embracing of the humility to subservient yourself to the needs of the family, including, if need be, running a concierge service....
...Our package: complete Family Office services including concierge and butler, art appraisal, succession and estate counseling and life-coaching.
Or, for the truly discriminating, ask about our Luxe programme with unbiased private equity ROI analysis.
(includes party planning option)
News Your Dynasty Can Use: How The Habsburgs Stayed So Powerful For So Long
Tips on playing the long game....
Should you be contemplating establishing a dynasty, you have come to the right place.
You are going to want a seat of power and Construction Physics has a primer on "How To Design A House To Last 1000 Years."
Finally, how to pay for it all without risking everything on that dissolute great-grandchild that is sure to pop up:
Anti-Piketty: Merrill Lynch's Tips on Creating a Financial Dynasty
The progenitor of the House of Habsburg may have been Guntram the Rich, a count in the Breisgau who lived in the 10th century....
Oh Crap, I Almost Forgot Karl, The Last of the HabsburgsAnd finally:
Why Real Estate Ownership Is Required For Intergenerational Wealth
We've looked at the importance of housing as a cornerstone of intergenerational wealth a few times, and not just for piles like this:
That's the courtyard of Arundel Castle, it's been in the fam (Fitzalans; Howards; Fitzalan-Howards) since the mid-1200's (with a few reversions to the Crown). More after the jump....
