The Change that is Family Office

16 months ago, before we opened our Singapore office on 1 Oct 2018, I wrote why we decided to setup a family office in Singapore. Fast-forward to today, much has been said about the rise of family offices; wealthy individuals and families are beginning to understand the needs and benefits of family offices. Over the past 20 years, the exponential growth of wealth here in Asia has been nothing short of staggering. According to the latest Hurun report published in February, Mainland China recorded 182 new billionaires in 2019 – representing 3.5 new billionaires per week, outpacing North America, and fueling the boom of family offices in Asia.

Evolving forms of Family Offices

However, what exactly is a family office and how does one differentiate itself in such a crowded space? By simple definition, a family office is an integrated hub for the family’s financial and operational administration. It may be easy to understand on the surface but in reality, the actual representation of this sector is much more complex than it seems. The family office space is ever changing, and change is necessary for growth. For without change, there will only be obsolesce. A family office must be nimble, agile and decisive, always moving in tandem with the families it serves. For the newly minted rich and upcoming generations, family office options will be more diverse, more personalised and more exciting than ever.

At RFO, we are determined to stay ahead of the curve and be a pioneer in the industry. Although the recent uptake of family offices and its services have been on the rise, there is still a lack of true independence in acting solely with the clients’ interest at heart. Currently, most typical family offices have a limited service offering which may not be able to cater to their clients’ holistic needs.

“Fam-Tech”

As technology and the digitalisation of processes continue to become deeply interwoven into our daily lives, we cannot ignore the demand and need for new and alternative solutions to complement traditional wealth management tools. With many families undergoing a transition period between generations, it is of utmost importance that this transition remains as smooth and painless as possible.

A family’s wealth cannot be managed on a piecemeal basis. An account here and an investment there do not suffice. It demands an active and coordinated investment management, with comprehensive planning that will withstand the test of time. At RFO, we partner with a data aggregator provider called Canopy to provide consolidated statements across a variety of assets for our clients as well as our Relationship Managers, so that they can have a clear comprehensive overview of their portfolios.

As such, many families at this juncture are seeking customised solutions and structures for wealth preservation, ensuring proper succession planning, while also taking into consideration intangible factors and family governance. These may include the likes of establishing family trust or foundational structures, legacy planning, education, philanthropic activities and other ad-hoc services.

Points for Consideration

In my opinion, when it comes to setting up an efficient and well-structured family office, there are three crucial points to consider:

1. What are the types of services that the family will require?
2. What are their asset management objectives, both financial and non-financial?
3. Will it be feasible to fund the setup costs and operations of the family office?

The purpose of a family office is to manage wealth efficiently and effectively across generations in order to preserve and protect it, preventing its dissipation by subsequent generations of its original creator. Therefore, the ability to clearly define what the problems and areas of issues are paramount to the setup of a certain family office. When these families come together and are able to work with professional parties and consultants offering expertise in their respective fields, we can then provide answers and design solutions on-demand. This in turn provides unique values not found in traditional organisations.

Furthermore, when we align our interests with our clients’, we ensure cost-efficiency, maximum effectiveness and minimal conflicts. This allows them to further focus on important structural planning and family governance, ultimately working towards their end goals – that is exactly what we aim for: creating true values at Raffles Family Office.

Posted by Jaydee Lin