As the family office landscape continues to evolve at pace, Alice Quek, Head of Private Client – Asia and Laura Nevitt, Head of Family Office at Hawksford, explore how trends in Asia and Europe are shaping approaches to family succession planning and investing, and what impact geographical context has when it comes to family wealth planning…
What are the client-driven trends currently shaping the family office markets in Asia and Europe?
Alice Quek (AQ): Thanks to a combination of economic growth, entrepreneurial success, and international wealth transfer in Asia, a lot of families have witnessed rapid wealth accumulation. As a result, we’re seeing clients exploring how they can manage this within the context of a family office framework, and some Asian families are fairly early on in that journey. For instance, we are seeing first generation entrepreneurs engaging professional expertise to help manage their single family offices and explore new investment opportunities.
Laura Nevitt (LN): The concept of the family office has been around in Europe for a while longer, and in that time an understanding of what a family office is has evolved considerably. Generally speaking, European family offices are more focused on long-standing wealth accumulated over several generations, and in that context, the emphasis tends to be more about stewardship, preserving legacy and maintaining social responsibility.
Are there any regulatory or policy measures making an impact across the regions?
LN: The evolution of the family office and an appreciation of the positive impact private capital can have on global markets has undoubtedly made policymakers sit up and take note. EY, for instance, suggest that there were around 10,000 family offices in 2022 – and recent data predicts that increases in family wealth could lead to a further rise in that number worldwide. As a result, we’re seeing countries across the regions introduce new laws and incentives, to both regulate and support this growing sector.
AQ: We’ve seen that play out in Singapore too, where the government has been extremely supportive towards single family offices, offering tax incentives under the S13O and S13U schemes. In tandem, many local and international banks, licenced trust companies and investment management firms are tailoring their propositions to offer family offices an attractive and robust infrastructure.
What are the drivers for setting up family offices in Asia and Europe?
AQ: It’s important to note that the concept and structure of a family office vary across different markets. The definition of a single family office in Singapore, for example, is very distinct – a corporate entity established and run by a family that can avail of certain tax breaks, coupled with value add services, such as consolidation of the financials and concierge services for the family members. With that in mind, in Asia the driver for establishing a family office entity has largely been about consolidating and managing investments, and invariably involves active management by family members.
Singapore has benefited in this sense – its political neutrality and stability, as well as its existing financial services reputation, has meant it has consistently been at the forefront of minds when it comes to families choosing an Asian base for consolidating their wealth and investments.
LN: In Europe, family offices tend to be about bringing about efficient management more broadly, to often quite intricate wealth structures. There’s a far greater emphasis on the family office as a holistic service, that goes beyond investment management to also include tax planning, legal advice, and lifestyle management – much more a private concierge service.
Are there any particular structures or services in real demand across the two regions?
AQ: In Singapore, family offices are still very much in the growth phase. Currently, the focus tends to be on creating a structure that can bring together a family’s investment strategy. Exploring opportunities in the clean energy and sustainability space is a particular trend, while we’re also seeing greater interest in incorporating a Singapore VCC fund within a family office structure, to help streamline investments into different sectors.
LN: In Europe, meanwhile, because the definition of a family office is more diverse, the demand for services looks quite different. The emphasis is on tailoring service requirements to each family, where needs can be both bespoke and far reaching.
In a multi-family office context, collaboration is a definite trend, with families keen to collaborate to access new opportunities. It’s one of the reasons we are seeing such a strong uptake of the Jersey Private Fund among families, who are looking for a flexible investment vehicle that can be established quickly to enable them to pool resources for club deals or co-investments.
Looking ahead, what are the key issues on the horizon in the family office space?
AQ: Within an Asian context, evolution is the key watchword – and, given the policy commitments the authorities have made recently, Singapore stands to be at the forefront of that evolution. It is estimated that around 59% of family offices in Asia are currently located in Singapore, and that proportion may well rise further.
That evolution will come in a variety of forms. The demand for specialised family office services will undoubtedly grow, with families looking more at global opportunities. That will require more international expertise, and in turn that will likely be supported by the adoption of digital solutions.
LN: In Europe, families are focused on governance, succession planning and intergenerational engagement and education – particularly as families gear up for mass wealth transfer to future generations, and with families being increasingly complex and geographically dispersed in their make-up.
Risk management is very much the order of the day, and that is placing a significant emphasis on bolstering IT and cybersecurity infrastructures, and on recruiting talent that can meet their long-term stability and investment ambitions.
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