SINGAPORE – Asia’s super rich families prefer single-family offices for tighter control over their wealth, compared with their Western peers who are more open to multi-family offices that serve more than one family and offer services at a lower cost.
“The core difference is the professionalisation of the family office governance model, which is well established in the West,” a McKinsey & Co study said, adding that family offices in Asia tend to have a heavier influence from the family on investment strategies.
Family offices can be either multi-family offices (MFOs), which manage assets of more than one family, or single-family offices (SFOs) that manage assets belonging to only one family.
Professionalised SFOs have in-house chief investment officers and have higher than average assets under management. They follow a clear portfolio strategy, aiming for wealth preservation with conservative returns of 5 per cent to 6 per cent or growth-oriented strategies seeking higher returns of about 15 per cent.
Family offices have been slower to catch on in Asia than in Europe and North America, where wealth has been inherited for many generations, the study said.
About 5 per cent of the region’s super rich, or individuals with more than US$50 million (S$65 million) in personal financial assets, have SFOs. In Europe and North America, the share is greater than 15 per cent.
Hong Kong and Singapore together are home to 15 per cent of the world’s SFOs, each city managing roughly US$1.3 trillion in offshore assets, the study said. The figure is poised to climb, with both cities actively wooing the rich.
An estimated US$5.8 trillion is expected to be transferred in Asia from one generation to the next between 2023 and 2030.
The super rich are expected to account for about 60 per cent of the total