Expansion of Family Offices in Singapore

The last decade has been good for Asia as wealth has been created at a remarkable pace. This has resulted in the expansion and spurt of family offices in Singapore and Asia which are basically set up to assist the ultra-high net worth (UHNW) families to handle their wealth and also to help organise for the handover of wealth to the next generation.

The Monetary Authority of Singapore (MAS) hinted that between the years 2015 and 2017, the total number of family offices based in Singapore had multiplied four times. Though there is lack of official data which confirms the real number of family offices established in Singapore, the industry has seen a constant and stable growth in the years 2018 and 2019.

Singapore has been one of the preferred private banking and wealth management hubs for families in Asia, and it is thus a natural choice for setting up family offices.

Singapore is also a top choice because of its political stability, its highly educated, professional and efficient work force and a robust financial sector. It is surely advantageous that a good percentage of its proficient workforce has fluency in more than one language. This is because Singapore is a multi-cultural society and the education system there has always laid a lot of stress on its bilingual educational policy. Various UHNW families in this region usually feel more at home and comfortable in Singapore because of its culturally sensitive and global-minded workforce helping them with investment management and also on sensitive subjects like property planning needs.

Though most of the family offices based in Singapore are set up by Asian families, but there are many European and American families also who are opening their family offices in Singapore because they want to use Singapore as a doorway for their investments in Asia.

Service range provided

The main services offered by family offices based in Singapore are usually investment management or financial advisory. Since the growing Asian wealth reaches the inflexion point for inter-generational wealth evolution, many a times family office mandates also involve supporting with consolidating family governance and doing required arrangements to enable a smoother transition.

As the investments range across multiple countries or family members who dwell in various parts of the world, there is a rising consciousness of cross-border tax, legal, and regulatory challenges and for family offices to help the families to have a thorough plan for these matters.

In case where hiring a full-time in-house adviser is not possible or appropriate, then there are many international advisers based in Singapore who can help and guide family officers. Nowadays, family offices also invest a lot of time in arranging data and gathering information for families to comply with the dynamic regulatory and filing requirements internationally.

With regards to the range of investments, certain family offices have a primary task to handle the financial portfolio investments conservatively so as to stabilise the higher risks that they are exposed to in their domestic jurisdiction. However, some other family offices are operated like investment banks and also act as advisers to the chief family members. They assist in giving professional advice on a variety of matters such as how to handle the strategic listed stake in the founding business, find apt business opportunities which could be complementary to the existing businesses or otherwise, and assist in creating joint ventures or other club deals with various strategic partners. Though the family offices are based in Singapore, the several deals and investments they deliberate and do could be anywhere around the globe.

Singapore is an attractive destination to these family offices as it is a conducive place where one can actually expand and grow their business operations. It is reasonably simple to do business in this country, and there is a variety of liberal tax incentives that are available for sectors which the Government is wanting to foster. Proper structuring can usually be done efficiently, gaining from multiple tax and investment treaty networks which Singapore has to offer.

Family offices can also participate in offering a philanthropy advisory service and assisting in developing more well-thought-out and strategic policies for various families and their foundations. Asian families are gradually giving more meaningful amounts to several international philanthropic causes. Family offices enable in bringing a more professional attitude to the philanthropic projects and endeavours of the family. They could also offer administrative support to the family foundations or handle the funds that are donated to the foundations. It is important to note that not all family foundations handled by the family offices based in Singapore have to be registered as a Singapore charity; however, they may be designed to be eligible for such registration if it is advantageous to get registered. Income and profits of a registered charity in Singapore gets a tax exemption and some specific donations can eligible for a very substantial tax deduction of 250 percent for the donor.