INTRODUCTION TO A MULTI-FAMILY OFFICE
Family offices are private firms that manage a wide range of responsibilities for High and Ultra-high Net Worth families. Their obligations cover, but are not limited to, the areas of tax planning, investment management, estate planning as well as non-financial duties such as assisting with art and wine collections.
Gaining popularity since the 1800s, Single Family Offices (SFOs) devote their resources to attend to the needs of a single wealthy family.
To take advantage of economies of scale, many SFOs progressively began to offer their services to other families over time, hence distributing the operating costs of running the firm. This molded the foundation of the Multi-family Office (MFO).
Today, an MFO is typically an independent organisation that supports multiple Ultra-high Net Worth families in managing their wealth, day-to-day administration and other family affairs.
SERVICE PROVIDED BY MULTI-FAMILY OFFICES
The diagram below shows the typical services provided by Multi-family Offices.
MULTI-FAMILY OFFICE COMPETITIVE EDGE
Having no allegiance to private banks or other financial institutions, MFOs have no obligation to promote a particular organisation’s products or market view. They represent their clients’ best interests, exercising the autonomy to only introduce the most suitable products that cater to their clients’ individual needs.
Although MFOs are independent of private banks, they have a complementary working relationship. MFOs have access to product research and investment recommendations from an array of financial institutions. This allows them to offer clients well-informed advice, while enjoying competitive pricing due to economies of scale.
Diversification of risks
MFOs are typically in partnership with various established banks. As such, clients have the choice to entrust the custody of their assets to different banks, as well as accessing a wide variety of products and services, thus spreading their risks significantly.
MFOs tailor recommendations in-line with their clients’ risk appetite, return objectives and investing experience. Portfolios are reviewed and altered periodically, based on clients’ evolving requirements.
Ultra-high Net Worth families often find that maintaining relationships with multiple service providers to be a time consuming and challenging process. MFOs offer their clients a single point of contact and a bird’s eye view of their portfolios through consolidated statements. With a robust Customer Relationship Management (CRM) system, MFOs are able to efficiently deliver tailored reports and recommendations to their clients.
MFOs do not maintain custody of their clients’ assets. Instead, clients’ assets are kept with custodian banks of their choice, with them retaining full ownership and access.
TRENDS IN ASIA
Rising demand for family offices
As Asia’s Ultra-high Net Worth families mature, there is an increasing demand for family offices to help them manage their investments and assets.
According to the 2015 World Wealth Report, wealth across Asia’s emerging markets is expected to total USD8.4 trillion by 2017. In an article for the Singapore Business Review, Damiaan Jacobovits de Szeged, a member of the Aegon Asia Executive Committee said, “Asia is expected to surpass North America as the world’s wealthiest this year , with rapid, concentrated growth of wealth especially across emerging markets.”
Proliferation and consolidation of family offices
Foreign banking professionals from European and American markets, where the family office model is well established, have begun setting up MFOs in Southeast Asia. The past few years have also seen an increase in the number of Asian home grown MFOs.
Growth in associated industries
The growth in the wealth management industry has also seen a gradual increase in law firms and trust companies, set up to support the higher level of activities that have arisen.