Rich Asians spark fam­ily of­fice boom in Hong Kong, Sin­ga­pore

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Rich Chi­nese and other Asians are in­creas­ingly seek­ing more con­trol of their wealth, driv­ing a rapid rise in the num­ber of so-called fam­ily of­fices, or pri­vate in­vest­ment ve­hi­cles, be­ing set up in Hong Kong and Sin­ga­pore.

As the wealthy tar­get greater in­vest­ment di­ver­si­fi­ca­tion and as busi­ness own­ers hand over the reins to suc­ces­sors, fam­ily of­fices are sprout­ing in the Asian fi­nan­cial hubs, tak­ing ad­van­tage of in­cen­tives such as tax breaks and res­i­dency be­ing of­fered.

The fam­ily of­fice is a rel­a­tively new con­cept in Asia, with less than 500 such en­ti­ties, com­pared to thou­sands in the West. There is no pre­cise num­ber avail­able, given the pri­vate own­er­ship struc­ture and se­crecy around these busi- nesses.

They of­fer a one-stop so­lu­tion to man­ag­ing the wealth of the rich, in­clud­ing in­vest­ments, char­i­ta­ble giv­ing, tax­a­tion and wealth trans­fer. Staffed by bankers, fund man­agers, lawyers and tax prac­ti­tion­ers, some even pro­vide over­seas pri­vate school­ing and travel ar­range­ments as add-on ser­vices.

The rich are favour­ing fam­ily of­fices as they get per­son­al­ized at­ten­tion and are able to have a big­ger say in their wealth man­age­ment.

“This year the ac­tiv­ity for set­ting up fam­ily of­fices is def­i­nitely more,” said Lee Wong, Swiss pri­vate bank Lom­bard Odier Asia’s head of fam­ily ser­vices. “The growth of fam­ily of­fices in Asia should con­tinue on its cur­rent tra­jec­tory.”

Asia Pa­cific had 814 bil­lion­aires at end-2017, ac­count­ing for 38% of the global bil­lion­aire pop­u­la­tion, with China mint­ing two new bil­lion­aires ev­ery week, a re­port by UBS and PWC said last month.

That mo­men­tum was aided by the boom in Hong Kong for ini­tial pub­lic of­fer­ings which saw a record $27.7 bil­lion raised in the first nine months of 2017 mostly by Chi­nese tech firms, turn­ing many founders into mil­lion­aires and bil­lion­aires.

Six pri­vate bankers on av­er­age es­ti­mated the num­ber of new fam­ily of­fices in Asia had risen 15% in the first three quar­ters of this year over the year-ago pe­riod. This could pick up pace with a world­wide wealth tran­si­tion of $3.4 tril­lion ex­pected over the next two decades, as per the UBS/ PWC re­port.

Asian fam­ily of­fices are evolv­ing from be­ing just in­vest­ment fo­cused to of­fer­ing a plat­form for dis­pute res­o­lu­tion and suc­ces­sion plan­ning, as the new gen­er­a­tion in the fam­ily-owned busi­nesses ex­pand into newer ar­eas, bankers said.

Buoyed by the growth prospects, pri­vate bank units of global firms in­clud­ing Cit­i­group, Credit Suisse, HSBC, and UBS are look­ing to ex­pand fam­ily of­fice ser­vices, head­hunters and bankers said.

Stephen Camp­bell, chair­man of the global fam­ily of­fice group at Citi Pri­vate Bank, which serves over 1,500 fam­ily of­fices glob­ally, said the bank had seen “dra­matic growth” in the num­ber of its clients, in­clud­ing in Asia.

Citi plans to make a new Hong Kong-based hire in its Asia Pa­cific fam­ily of­fices team, he said.

Credit Suisse’s Asia Pa­cific head of wealth plan­ning Bernard Fung said that due to the surg­ing de­mand from North Asia for fam­ily of­fices, the bank would set up a team for this ser­vice in Hong Kong by the first quar­ter of 2019, adding to its hub in Sin­ga­pore.

“Off­shore Chi­nese wealth will con­tinue to grow, so fam­ily of­fices busi­ness is go­ing to be a mul­ti­year trend,” said Ivan Wong, co-head for North Asia at HSBC Pri­vate Bank­ing.

HSBC Asia pri­vate bank will add 700 peo­ple by 2022, and some of those new hires will fo­cus on fam­ily of­fice clients, he said. UBS de­clined to com­ment. REUTERS

The fam­ily of­fice is a rel­a­tively new con­cept in Asia, with less than 500 such en­ti­ties, com­pared with thou­sands in the West.

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