Advancing family-office solutions in Asia
Family offices in the region are taking a more strategic, professional and organised approach – a transformation that presents both opportunities and challenges
IN THE dynamic landscape of Asia’s burgeoning wealth, family offices have emerged as the guardians of prosperity for affluent families.
In recent years, Asia has seen a notable rise in these family offices, which oversee intricate financial and personal affairs for ultra-high net worth (UHNW) individuals. Driven by the region’s increasing wealth, there is an evolving need for personalised financial management and a focus on long-term financial planning.
These family offices are shifting towards a more strategic, professional and organised approach – a transformation that presents both opportunities and challenges, requiring a harmonious blend of tradition, innovation and thoughtful navigation to ensure they grow and remain effective.
Professionalising family offices in Asia offers better wealth preservation and growth. By learning from established family offices around the world and considering local cultural differences, Asian family offices can build strong governance and manage risks effectively.
Developing a sound investment strategy is crucial for the professionalisation of any family office; by working with experts, family offices can receive advice on creating comprehensive plans that align with the family’s future goals.
While there is a desire to work with trusted experts, some family offices, particularly mid-sized ones, may face unique challenges in professionalising their operations, which often requires significant investment in talent acquisition, technology and infrastructure development.
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Running a family office typically requires access to a wide range of expertise, including that from financial advisers, investment managers, legal specialists, tax consultants and even philanthropy experts.
This multidisciplinary approach enables family offices to navigate complex financial landscapes and regulatory environments effectively.
Julius Baer advocates the importance of integrating external experts and technology into family-office operations to provide comprehensive wealth management solutions.
Such expertise is crucial in making informed decisions, managing risks and, most importantly, ensuring compliance with local and international regulations.
In our Family Barometer Report 2023, a key challenge identified for wealthy global families was navigating complexities in investment related matters.
Equally important, however, were wealth-related matters beyond investments. The report revealed that families are particularly interested in the structuring of family assets and wealth, as well as establishing collaborations with advisers.
The regulatory environment in Asia is diverse and constantly evolving. Different markets have varying regulations concerning wealth management and investment.
It is vital to keep up with these changes, and navigating these complexities requires a comprehensive understanding of local laws to ensure compliance.
Another interesting finding from our Family Barometer Report 2023 was that the rising generation (aged between 18 and 40 in UHNW families) is more risk-tolerant than their parents’ generation. Unsurprisingly, this extends to their use of technology.
The rising generation also values strong relationships with their advisers. UHNW families today are looking to establish robust frameworks for managing their family offices, with high expectations for efficiency and effectiveness.
In today’s digital era, in which access to data is more convenient than ever, analysing data and deriving meaningful insights are key in holistic risk management and identifying opportunities.
Consequently, family offices must prioritise access to talent, information, and technology, while also developing an ecosystem of external advisers with diverse expertise.
Given the level of maturity and resource limitations faced by many family offices, Julius Baer is able to add significant value by collaborating closely with clients.
Our family-office experts will partner with UHNW families and their family offices to help them navigate these complexities and access the whole Julius Baer platform and ecosystem.
Through this partnership, family offices can leverage decades of experience and embrace an institutional approach to investment management.
Succession planning is another critical aspect of family-office operations – particularly in Asia, where family businesses are a significant source of wealth.
Professionalising family offices can facilitate structured succession planning processes, ensuring a smooth and orderly transition of leadership and wealth to the next generation.
This involves creating clear governance frameworks, defining roles and responsibilities, and establishing mechanisms for conflict resolution. Effective succession planning helps in maintaining family harmony and business continuity, thereby preserving the family legacy.
Many wealthy families in Asia are also increasingly focusing on philanthropy to give back to society. A professionalised family office can significantly enhance the impact of philanthropic efforts through strategic planning and effective implementation.
By leveraging expertise in social impact investing and philanthropy, family offices can identify meaningful causes that resonate with them, measure the impact of their contributions and create lasting positive change.
We recognise that for mid-sized family offices, allocating funds to talent acquisition, technology and infrastructure development can be challenging, especially when they are balancing other financial obligations and objectives.
With opportunities growing to help family offices bridge the gap between resources and expertise, they can explore robust ecosystems of carefully curated specialists to help in safeguarding their wealth for future generations.
By leveraging the expertise of investment professionals and adopting a structured investment approach, family offices in Asia can optimise investment returns through well-planned asset allocation and diversified portfolios.
The professionalisation of family offices in Asia presents a wealth of opportunities for enhancing wealth preservation, accessing expertise, facilitating succession planning and maximising philanthropic impact.
Successfully navigating these opportunities and challenges requires a balanced approach that respects family values while embracing the best industry practices.
By doing so, family offices in Asia can achieve long-term sustainable growth and effectively manage the complexities of wealth across generations.
The writer is head of family-office service advisory, Singapore, at Julius Baer
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