Asian wealth is projected to grow at 14% per annum between 2017 and 2022 compared to 11% globally, according to Boston Consulting Group. Singapore continues to stand out as a financial hub for wealth management, offering clients access to global markets and a range of global investment opportunities.
The trend of more family office set-ups in Asia is become evident over the past year, influenced by affluent Chinese taking control of their own wealth. There has been a vigorous growth in the total number being set up in Asia, and Singapore and Hong Kong are becoming increasingly noticeable. Indeed, according to the Monetary Authority of Singapore (MAS), the number of family offices in Singapore quadrupled between 2015 and 2017. Some industry practitioners servicing families put the figure at close to 300 at the end of last year. Supported by tax treaties and tax incentives, this growth is expected to continue.
With the focus shifting to wealth preservation, Gen X and Gen Y are getting actively involved and an increasing number of families are consolidating their wealth through formalised structures, such as trusts and family offices. Some are teaming up with private equity funds and hedge funds, and some, albeit fewer, have co-invested with sovereign wealth funds. Instead of proportioning their assets to certain strategies only, family offices are actively hiring in-house investment professionals from financial institutions in Singapore and around the region to optimise their investments, as well as working with financial services specialists catering to personalised service built around the family offices workflows. The last year has seen more sustainable and impact investing discussions influenced by the younger generations of the families with investments often made via private equity.
The regulatory environment is encouraging for technology and innovation and Singapore’s asset management industry is undergoing a profound transformation to boost competitiveness. With the increasing digitalisation of lifestyles, there has been a rise in expectations of the wealth advisers to provide personalised financial advice and solutions.
The outlook for Singapore’s asset management industry remains strongly positive, supported by robust long-term fundamentals. At the core of the fastest-growing region, global institutional investors leverage Singapore as their base to public and private market opportunities across Asia. To further enhance Singapore’s value, the MAS is looking to partner with higher learning establishments to offer training targeted at family office professionals. European families have also been establishing satellite family offices in the region.
The passing of the Variable Capital Companies (VCC) Bill in October 2018 will further facilitate the re-domiciliation of investment funds in Singapore across traditional and alternative fund vehicles, for both open and close-ended funds.
There is a definite trend toward family offices outsourcing key functions as they look to benefit from customised portfolio reporting and enhanced fund structuring solutions.
Ashmita Chhabra is managing director of business development for the Asia Pacific region at Apex Fund Services (Singapore) Pte. Ltd.
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