Family offices gain ground in Asia with growing wealth and focus on successful intergenerational planning

Singapore, 30 Aug 2019 - Family offices are gaining popularity in Asia, which is now home to more than a quarter of the world’s billionaires. The explosive growth of wealth is opening doors to vast investment opportunities for these Asian families. Yet, they face economic, financial and regulatory risks, as well as the impact of the digital economy as technology brings new opportunities whilst challenging business conventions and dynamics. Further, the desire to preserve family legacy is strong as the founding patriarchs and matriarchs advance in age and expect to pass on wealth in the coming decade.

These are the main reasons driving wealthy families to set up family offices in Asia’s financial centres such as Singapore and Hong Kong, finds a new report by DBS Private Bank and Ernst & Young Solutions LLP, The Asian Family Office: Key to Intergeneration Planning.

Mr. Desmond Teo, EY Asia-Pacific Financial Services Growth Markets Leader says: “As the founding patriarch or matriarch hands over the reins to the next generation, more of the future generation are seeking to institutionalise the family office, hiring professionals with experience in the financial sector and putting in place sophisticated disciplined investment mandates. Further, the next generation may have a preference to forge their own future by pursuing new areas, rather than carrying on the established family business. Wealthy families are seeing family offices as a means to preserve the family legacy – be it the core business or the family name – as well as keep the family together and aligned.”

Mr. Ian Burgess, EY Asia-Pacific Family Enterprise Leader adds: “The need to increase the professionalism in managing the family’s affairs and creating a family office, with employees dedicated to the various tasks, is a natural step for Asia’s high wealth family groups. As families mature, the focus usually shifts beyond the conventional pursuit of capital growth to include philanthropy, other social causes or special interests. Laying down the foundation of continual education of the current and future generations on the family’s legacy, values, and financial management, is also an increasingly important aspect of a family office in helping to strengthen the family for the future and minimise intergenerational conflicts.”

This often is a complex, multi-faceted process and navigating it effectively requires quality professional advisory, strong market knowledge and a keen understanding of the family’s unique objectives. To this end, DBS has established a dedicated family office unit to work closely with clients and help address their needs.

Mr. Lee Woon Shiu, Regional Head of Wealth Planning, Family Office and Insurance Solutions at DBS Private Bank says: “The concept of setting up professional family offices is still in its infancy in Asia, but the need is growing fast as wealth starts to change hands. With our reputation as Asia’s safest bank, as well as decades of heritage and extensive expertise in helping to create and manage our clients’ wealth, DBS stands well-placed to partner them on this journey. Through our robust ecosystem of best-of-breed internal and external advisors, our aim is to ensure clients have access to all the support and resources they need at every stage of their life cycle to effectively manage, protect and grow their assets for generations to come.”

Increased scrutiny on cross-jurisdictional transparency of financial assets a potential risk

The report highlights the implications of the increasing focus on cross-jurisdictional transparency of financial assets for wealth management. International cooperation on tax compliance and information sharing has been a critical development. The Organisation for Economic Co-operation and Development (OECD) developed the Common Reporting Standard (CRS), which requires participating jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.

CRS brings a number of new challenges for family offices. For example, it requires due diligence, registration and reporting. CRS implementation and ongoing compliance will need to be effective in meeting the requisite reporting requirements, while balanced against managing the costs. Additionally, with the sharing of information on certain entities and individuals as part of CRS, families will need to embrace the new norm of transparency while balancing the family’s needs for privacy and security.

For many Asian families, a fully operational family office will be a key component for successful intergeneration planning. Families embarking on this journey should:

• Take stock of where their activities are to be carried out practicably, and align their wealth planning structure
• Accept that transparency across jurisdictions is the new norm, and work to understand what it entails and the compliance that comes along
• Have a holistic management of the sharing or exchanging of financial information across various sources
• Consider the sustainability of the structure, not just in the next decade, but across generations

The report was launched today at an exclusive client event by DBS Private Bank, Charting the Future of Asian Families. The inaugural event brings together the Monetary Authority of Singapore and industry experts from DBS Private Bank, Ernst & Young Solutions LLP and International Planning Group to share insights on key trends and issues faced by Asian families and how they can plan ahead for these challenges.

The full report is available at https://www.ey.com/eydbsasianfamilyofficewealth.

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About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's "AA-" and "Aa1" credit ratings are among the highest in the world. 

Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for ten consecutive years from 2009 to 2018.

DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established a SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.

With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. The bank acknowledges the passion, commitment and can-do spirit in all of our 27,000 staff, representing over 40 nationalities. For more information, please visit www.dbs.com.