Family offices gain ground in Asia with growing wealth and focus on successful intergenerational planning
Economic, financial and regulatory risks, rise of the digital economy, and ageing founding members are main reasons driving the growth of family offices
DBS Private Bank seeks to help wealthy families navigate these issues through establishment of dedicated family office unit
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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