In recent years, family offices are experiencing a remarkable surge in popularity throughout Asia, signifying a profound evolution in the region's wealth management landscape.
Private capital markets have seen tremendous growth over the past decade and remain resilient in 2023. According to EY analysis, Asia-Pacific private capital grew at 13% CAGR between 2013-2023, fastest compared to other regions. Of the various subsectors within the private capital market, family offices continue to play an important role in the rise of private markets.
Despite the exceptional surge in private wealth in mainland China, Southeast Asia has also witnessed substantial economic growth over the past decade, propelled by factors such as foreign direct investment, urbanization, and infrastructure development. Countries like Singapore, Indonesia, Thailand, and Vietnam have been at the forefront of this economic expansion, creating favorable conditions for wealth accumulation. Meanwhile, wealthy families are increasingly recognizing the need for professional structures and governance frameworks to manage their complex financial affairs.
This paradigm shift is driven by a strong desire to ensure long-term sustainability and preserve wealth across generations. In particular, a greater urgency to do so arises from an expected mega wealth transfer ahead. Within the next decade, baby boomers – born between 1946 to 1964 – are expected to impart close to US$20 trillion of collective wealth to future generations1. Consequently, SFOs are adopting best practices from institutional investors, focusing on robust risk management, transparent reporting, and adherence to stringent compliance standards. This growing need for an institutionalized approach to wealth management and asset preservation is reshaping the family office landscape.
The trend toward institutionalization has been further accelerated by favorable government policies and regulations in Asian financial centers such as Singapore and Hong Kong. Over the years, Singapore has actively pursued the family office business by streamlining regulations and introducing tax incentives, attracting over 1,400 SFOs as at end 2023. Such initiatives have created an enabling environment for families to establish and operate SFOs, further fueling their growth in the region. To ensure the sustainable and impactful growth of family offices, the Singapore government has also supported the establishment of training programmes targeted at family offices principals, professionals and advisors, launched initiatives to better connect family offices from around the world, as well as introduced tax incentives to encourage philanthropic giving from Singapore.
On the other hand, the Hong Kong SAR government has also unleashed an ambitious plan to cultivate a flourishing environment for establishing itself as a global hub for family offices. Through an enticing array of offerings such as tax concessions, the introduction of the Capital Investment Entrant Scheme, talent development initiatives, enhancement of service provider network capabilities, and development of art storage facilities and a philanthropic center, Hong Kong aims to further solidify its position as a premier destination for family offices, offering an attractive and supportive ecosystem for their establishment and growth.
Whilst wealth management remains as their foremost priority, family offices eagerly embrace a broader vision that spans the realms of the family office ecosystem, asset diversification, sustainability, impact investment, and philanthropy. Wealthy families are recognizing the importance of aligning their investments with their values and societal impact. As a result, they are actively seeking opportunities to invest in sustainable and socially responsible assets, supporting the transition toward a more inclusive and sustainable future.
Philanthropy has also emerged as a central theme in the SFO landscape. Many families are leveraging their resources and expertise to create significant social impact. By establishing philanthropic foundations, supporting education initiatives, and driving innovative solutions to social and environmental challenges, SFOs are becoming key players in advancing philanthropy in Asia.
As Asia continues to assert its prominence on the global economic stage, family offices are playing an instrumental role in unlocking the region's wealth potential. With their focus on tailored solutions, sustainable investing and philanthropy, family offices are reshaping the future of wealth management in Asia. The ascendance of family offices in the new era is poised to leave a lasting legacy on Asia's evolving wealth landscape.
