from double-digit growth in the Asian family office market in the
coming years, according to a VP Bank survey.
The number of formalised
single family offices in Asia is likely to increase from 20 to
around 250 by 2015, according to the study, carried out by
Liechtenstein-based VP Bank and University of St Gallen,
Switzerland.
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It examined 11 emerging market economies in Asia which have
around 10,000 wealthy individuals or families with
$30 million or more at their disposal. The findings were presented
by Patrick Wild, head of private banking clients, overseas, at VP
Bank, at PBI’s 18th annual wealth management summit in
Singapore.
Wild said: “We think in Asia there is a desire to get some more
order into the financial affairs of the families and to increase
the level of education and financial sophistication in the
families, within the younger generations. If that happens we will
see a change in the role of the family office in Asia.”
The survey emphasises the need to assess Asian family offices
within a different framework to US and European models because of
cultural differences, particularly regarding price sensitivity and
the need for confidentiality. It says there is a greater level of
unwillingness to give anyone, even family members, full disclosure
about wealth.
The main conclusion is that success in the Asian market depends
on the tenets of good old-fashioned private banking – successfully
building trust and relationships with clients.
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By GlobalDataOther important points include the role the second and third
generations are likely to play in the strategy of wealth managers,
with substantial amounts of inter-generational transfers expected
in the coming years.
The survey showed family governance and succession planning was
one of the most significant motivations for clients to set up
family offices. This transfer will have impacts on the type of
service required, and may create increased demand.
Currently patriarchs tend to have an entrepreneurial background,
which leads to them being more active in managing their wealth,
though the attitude of second and third generations is expected to
be different.
Wild said there is still no formalised family office concept
which has dominated the Asian market so far – unlike Europe and the
US – with families generally developing their own hybrid
approaches.
While it will be tricky for private banks to develop a general
business structure to serve these wealthy families, they are
important partners in all of the five models it identifies.
They include:
• Family office networks led by the current or previous CFO of
the family business;
• Models mainly dominated by global
(private) banks;
• Networks guided by independent advisers and/or lawyers;
• Models led by external asset managers; and
• Those with a well structured single family office model.
These different models highlight how families often create
structures based on the way they might have operated their own
business, using core competencies and existing relationships to
cater for their wealth needs.
The study does not anticipate a significant increase in the
number of multifamily offices because of cultural issues.
The countries studied in the survey were China, Hong Kong,
India, Indonesia, Malaysia, Singapore, South Korea, Taiwan,
Thailand, the Philippines and Vietnam.
