Family offices set to boom in Asia says landmark UBS and Campden study

Family offices set to boom in Asia says landmark UBS and Campden study

Singapore (21 February 2012) - Despite the massive growth in wealth to the Asia-Pacific in the last 20 years, the development of family offices continues to lag in the region, according to a new study by UBS and Campden on family offices. Estimates show that little more than 100 single family offices are based in Asia. Comparatively, there is estimated to be at least 2,500 family offices globally, a majority of which are based in the US and Europe.

The new study finds that the rapid growth of the number of ultra-high net worth individuals in Asia – with for example, China having the second highest concentration of billionaires in the world— coupled with the upcoming intergenerational transition of assets and control in the region, points to a boom in the numbers of new family offices over the next few years.

The size, features and the concerns of family offices in the Asia-Pacific are the subjects of a major new study by UBS and Campden entitled Growing Towards Maturity: Family Offices in Asia-Pacific Come of Age. The study is the first extensive survey on the family office landscape in Asia-Pacific.

The study was conducted through an in-depth analysis of family offices in the region, using survey data and information gathered from personal interviews with members of the family office community. The survey includes detailed case studies of family offices in the region.

Other key findings include:

  • There is a strong link between existing family offices in the region and their family businesses, with more than 80% of family offices still connected to the primary business where the money was first made.
  • Asia-Pacific family offices (both single and multi family offices) on aggregate have a large proportion of their assets tied up in core family business holdings and illiquid assets. Liquid assets only make up 40% of their total wealth.
  • The number one cultural imperative is confidentiality, which affects family offices willingness to outsource services and appoint third party providers (eg. global custody services).
  • Only 38% of family offices have written risk policies and guidelines, even though when surveyed, 100% responded that they formally manage their banking and custody risk, and 93% said they managed investment related risks.
  • Hong Kong, Singapore and Australia are perceived to be the most attractive locations to set up family offices due to favorable economic, social and tax conditions.
  • When it comes to staff numbers, family offices in the region are not big employers; indeed, almost 40% employ less than six full-time staff, with 63% of offices saying they employ family members. In Europe, Single Family Offices employ an average of 13 people.
  • Family offices in Asia-Pacific are more likely to want to bring services in-house, like the chief investment officer role, than outsource. In Europe and the US there is more of a tendency to want to outsource investment functions.

“It is astounding that the family office model hasn’t taken hold in Asia-Pacific to a much greater extent given the dramatic growth in wealth there in the last twenty years,” said David Bain, co-author of the report and Head of Research at Campden Wealth.

“But as wealth continues to grow in the region and face more multi-generational pressures there is likely to be a huge demand for the services of family offices, leading to a boom in their numbers.”

Kathryn Shih, CEO of UBS Wealth Management Asia Pacific said: “UBS has a long tradition of working with successful families and their family offices globally. With the immense wealth being created and generational transition in assets and control, we expect to see an increasing number of Asian families wanting to professionalise the way they manage their wealth. Our dedicated Family Advisory Services specialists have seen increasing client interest on topics such as family governance, asset allocation, risk management, global custody and philanthropy. While still a relatively new concept in Asia, we expect to see growing interest in family offices among wealthy families in the region as a means to structure their families’ wealth for the future.”

“It is worth noting that there are differences across Asia. While family offices are well established in financial centres such as Hong Kong and Singapore, we see a growing interest in family office setups from entrepreneurial families in India, China and Taiwan, as well as in South East Asia. In China, in particular, in the last 2 years, there has been a high level of interest among wealthy families to understand the western or Hong Kong-based family office concept to create their own models which fit their cultural and regulatory framework.”

“We hope that the perspectives provided by the UBS/Campden study on the evolution of family offices in Asia will provide a useful reference point for families for whom Asia continues to be a location of choice for their family office. As the family office concept matures in Asia, we believe it should contribute to the continued prosperity and sustainability of Asia’s development as the world's fastest growing region for wealth creation,” she concluded.

Methodology/research

More than 35 family offices from across Asia-Pacific participated in the research by means of an extensive questionnaire and/or an interview. Participants varied from long-established operations servicing at least four generations of the same family across multiple jurisdictions – and with an extensive range of investment, advisory and personal services – to newer establishments, currently developing their services to second-generation family members, or non-related families. The level of wealth managed by participating offices also varied enormously, from under $100 million to well over $1 billion.

Editors note:
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Contacts for media:
Singapore:
Rachel Lin (UBS)
Tel: +65 6495 8633
Mobile: +65 9666 1855
Email: rachel.lin@ubs.com
Aston Tan (Ryan Financial Communications)
Tel: +65 6412 0123
Mobile: +65 8112 5432
Email: aston@ryanfin.com

Hong Kong:
Fiona Chan (UBS)
Tel: +852 2971 8837
Mobile: +852 9676 7515
Email: fiona-y.chan@ubs.com
Lauren Goble (Ryan Financial Communications)
Tel: +852 3655 0513
Mobile: +852-9703 9161
Email: lauren@ryanfin.com

About UBS:
UBS draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. Our business strategy is centered on our pre-eminent global wealth management businesses and our universal bank in Switzerland. Together with a client-focused Investment Bank and a strong, well-diversified Global Asset Management business, we will drive further growth and expand our premier wealth management franchise.

About Campden Media:
Campden Media Ltd, founded in 1987, is a mixed-media publishing and events company serving the private wealth management community. Campden Research is a business specially formed to further extend this information offering. Campden Research supplies market insight on key sector issues for its client community and their advisors and suppliers. Through in-depth studies and comprehensive methodologies, Campden Research provides unique and proprietary data and analysis based on primary
sources.

Campden Conferences is the global leader in providing knowledge and private forums for significant business and financial families and their private offices. For over a decade, Campden has been bringing together families from throughout Europe, the United States, Asia and the Middle East for exclusive closed-door meetings covering family business, family office and wealth management issues.

Campden also publishes the leading international business titles Campden FB and Campden FO. With unrivalled access to CEOs of the world’s leading family businesses and comment from the most respected experts in the field, Campden FB is aimed at members of family-owned companies in at least their second generation and with annual revenues that exceed €100 million. Campden FO is the international magazine for family offices and private wealth advisors. For more information visit:
www.campdenwealth.com