Wealth is being created at a remarkable pace in Asia, particularly over the last decade. This has fuelled the growth of family offices in Asia which are established to help the ultra-high net worth (UHNW) families manage their wealth and also to prepare for the transition of wealth to the next generation.
The Monetary Authority of Singapore (MAS) indicated that between 2015 and 2017, the number of family offices in Singapore had quadrupled. Although there is no official data confirming the actual number of family offices set up in Singapore, the industry has observed a continuous steady growth in 2018 and 2019.
Singapore has long been one of the favoured private banking and wealth management centres for Asian families, and it is therefore natural that when it comes to choosing a place to set up their family offices, Singapore remains one of their top choices.
Singapore is valued for its political stability, strong financial sector, and also its highly-educated and efficient work force. It is certainly beneficial that a good proportion of its professional workforce is fluent in more than one language as Singapore is a multiracial society and its educational system has always placed a strong emphasis on its bilingual educational policy. UHNW families from the region can feel more at home in Singapore with a culturally sensitive and globally-minded team assisting them on not just their investment management but also on more sensitive topics such as their estate planning needs.
Although the bulk of the family offices in Singapore are established by Asian families, there are also European and American families setting up family offices in Singapore as they are keen to use Singapore as a gateway for their investments into Asia.
Range of services provided
The key services provided by family offices in Singapore are generally investment management and financial advisory. As maturing Asian wealth approaches inflexion point for inter-generational wealth transition, quite often family office mandates also include assisting with strengthening family governance and making suitable arrangements to facilitate a smoother transition.
With investments ranging across different countries or family members living in different parts of the world, there is an increasing awareness of cross-border legal, tax and regulatory issues and for family offices to assist the families to plan properly for such matters.
Where it is not efficient to hire a full-time in-house adviser, there are a good number of international advisers in Singapore that family officers can work with to help provide guidance. Family offices nowadays also invest a significant amount of time organising data and collating information for families to meet the ever-changing regulatory and filing requirements globally.
When it comes to the range of investments, some family offices are tasked primarily to manage the financial portfolio investments conservatively in order to balance the higher risks that the family businesses are exposed to in their home jurisdiction. Other family offices, however, are run more like investment banks and as advisers to the principal family members. They help to advise on a range of matters including how to manage the strategic listed stake in the founding business, identify suitable business opportunities whether complementary to the current businesses or otherwise, and help put together joint ventures and club deals with strategic partners. While the family offices themselves are based in Singapore, the range of deals and investments they consider and make can be anywhere in the world.
Singapore is attractive to these family offices as it is a place where it is conducive and efficient to actually grow and expand business operations. It is comparatively easy to do business in Singapore, and there are a range of generous tax incentives available for sectors that the Government is keen to encourage. Proper structuring can generally be done efficiently, benefiting from the wide tax and investment treaty network Singapore has to offer. In a world where there is greater focus and need to demonstrate economic substance, Singapore can be a feasible option to replace the unthinking practice of using an offshore special purpose vehicle.
Singapore is also a strong draw for families who want to be around other important family offices. As very substantial families from different parts of the world are attracted to congregate and set up offices in Singapore, they now have more opportunities to interact, network, exchange ideas and explore business opportunities together. This adds to the vibrant ecosystem for family offices here.
Family offices can also be involved in providing a philanthropy advisory service and helping to develop a more considered and strategic policies for the families and their foundations. Asian families are increasingly giving more meaningful amounts to global philanthropic causes. Family offices help to bring more professionalism to the family's philanthropic endeavours and projects. They may also provide administrative support to the family foundations or manage the funds donated to the foundations. Not all family foundations managed by the family offices in Singapore are required to be registered as a Singapore charity but they may be structured to qualify for such registration if it is beneficial to do so. Income and gains of a registered charity in Singapore is tax exempt and certain donations can qualify for a very generous 250% tax deduction for the donor.
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