Why Southeast Asia is an ideal family office location

As the number of family offices in Southeast Asia continues to grow, Agnes Chen, CSC’s managing director for Fund Services in APAC, discusses the changing face of wealth management in the region.

The South China Morning Post’s recent China Conference: Southeast Asia focused on “powering regional growth through technology, talent and collaboration”.

It included an insightful panel discussion on the rise of family offices in the region, and the role of Singapore and Hong Kong in attracting and servicing wealth management structures.

Highly experienced industry experts discussed issues around shifting priorities in wealth management, generational wealth succession, and the wider financial services ecosystem in the region.

Here are four key takeaways from the discussion.

1. The future for family offices in Asia is bright

Asia seems to generate billionaires faster than anywhere else in the world, perhaps faster than in any period in history. Hong Kong has the highest concentration of significantly wealthy individuals in the world.

At the same time, wealth management is becoming more sophisticated. ​​Wealthy families are now prioritising the preservation and succession of their assets, with a focus that was less evident a decade or so ago.

This provides a huge market opportunity for family office service providers. In the next 10 years, USD 30trn of wealth is expected to be passed from one generation to the next in Asia.

Family offices will help enable what is the biggest wealth succession in history, but they will need expertise. As wealth preservation, risk management and regulatory compliance become more complex, outsourced wealth administration services will support family offices as they diversify and grow.

2. The role of the family office is changing

As that suggests, the role of family offices in Asia is evolving. Many wealthy families seem to prioritise sustainable wealth, regulatory compliance, and robust inheritance strategies over higher returns from investments.

They are looking for support on managing wealth for the long term and turning current business success into multigenerational prosperity.

It has been suggested that heads of wealthy Asian families tend to be less confident the next generation is properly equipped to take responsibility for managing family assets. This is where family office providers have a major role to play—by designing and managing robust inheritance strategies that protect wealth as it passes from one generation to the next.

Family office providers have a major role to play here—by designing and managing robust inheritance strategies that protect wealth as it passes from one generation to the next.

3. Attitudes to risk are also evolving

As Asian investors become more sophisticated, their attitude to risk is also becoming more nuanced. On the one hand, those who have enjoyed multigeneration wealth for decades or longer still tend to favour the traditional 60/40 split between fixed income assets and public equities.

However, a new generation of Asian ultra-high-net-worth individuals sees risk differently. These investors see security in diversity beyond traditional assets. Family offices in Asia are having to create and manage more complex investment portfolios as high- and ultra-high-net-worth individuals demand more exposure to alternative investments.

In the next few years, digital assets such as cryptocurrencies are also likely to feature strongly despite the current climate, and family office providers will have to be ready.

As well as diversification, wealthy families are more focused on the risks of non-compliance. They want to know their reputations are secure.

As such, they see family offices less as a way to grow wealth, and more as a way to help them navigate regulatory environments and comply with tax and reporting demands. They are also becoming more interested in factors such as sustainability and ESG.

Compliance, administration and due diligence are complex and could be time-consuming tasks, which is why many multi-family office providers reach out to third-party administrators to help them keep private client entities in good legal and regulatory standing.

4. It’s not just about Asian investors

There was discussion of strengths of Singapore and Hong Kong as centres for family offices.

Singapore benefits from a positive regulatory and tax environment, and the recent rollout of investor-friendly initiatives, such as the Singapore Variable Capital Company (VCC).

Hong Kong, meanwhile, is the de facto gateway to China and offers all the benefits of a deep and liquid capital market.

This is, however, a story of collaboration as much as competition. One rarely finds a family office headquartered in one city that doesn’t have dealings in the other.

There is also a wider context. Asia is becoming more attractive to a new generation of US and European investors with an international outlook.

As these wealthy and globally connected individuals look to manage and preserve their wealth, they will not be limited by geography. That is an opportunity for family office providers in both jurisdictions.

Why Intertrust Group?

• CSC completed its acquisition of Intertrust Group in November 2022. Together we offer a global solution for corporate solutions, private wealth structures, family office administration, subsidiary governance, fund administration, and capital markets transactions, and navigate the ever-changing compliance and regulatory environment that our clients face. With capabilities in more than 140 jurisdictions, we are able to do business wherever our clients are—and we accomplish that by employing experts in every business we serve.
• We have a depth of experience across all deal types and structures. We support corporates, HNW private clients, family offices, funds, issuers, investors, arrangers, originators, and advisers across all asset classes.
• Sophisticated transactions require expert support from a partner that operates globally and understands even the most complex deal structures.
• We offer a comprehensive suite of administrative services and wealth administration services for family offices.