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Family offices play catch up in Asia

The Asia-Pacific region has 100 family offices with the Hong Kong, Singapore and Australia the most well established bases. However, this accounts for just 4% of the 2,500 family offices located around the world, the research found.

Furthermore, around 75% of the family offices included in the study have only been in business since the 1990s, reflecting the recent boom in wealth.

David Bain, head of research at Campden Wealth, said: “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. 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.”

The study by UBS and the research arm of Campden Media, which focuses on the private wealth management industry, surveyed more than 35 family offices in Asia with assets of at least $50m but often rising to more than $1bn.

Family offices are typically small operations that manage the wealth of an ultra high net worth family. There are various types of family offices run either by the family itself in consultation with outside groups, a bank or other outside company on a fee basis, or by an independent firm.

Those currently operating in Asia had an average of six staff members, relatively conservative investment portfolios and posted an average investment return of 9.1%.

They also put a premium on confidentiality, ahead of even risk management and investment performance, according to the report.

However, it is external asset managers who are the best positioned to reap the benefits of the growing Asian market with 60% of the family offices in the study using more than six third-party asset management firms because of their specialist knowledge of certain asset classes and greater access to market information.

Today the offices rely most heavily on private banks followed by law firms and asset managers to provide additional support. In the coming years, they anticipate making not only in-house hires to deal with regulatory changes, but also to increasingly rely on outside advisers.

In Asia, many of the family offices are still linked to the company that initially generated their wealth. In contrast, older wealthy families in Europe tend to be generations removed from the original source of their money.

Asian economies are among the fastest growing in the world. China reported a 10.4% growth in gross domestic product in 2010, 9.3% in 2011 and is projected to see another 8.5% boost this year. India’s GDP grew 7.5% last year, while Hong Kong and Singapore both saw 5% GDP growth in 2011.

Since 1997, Campden has operated at the forefront of innovation and best practice in the global private wealth community. Its family business and family office conferences held in key cities around the world, its flagship publications, FB (Family Business) and FO (Family Office) together with its proprietary research, have all informed and facilitated dialogues between financial families and those owning family businesses.