The preferences of the next generation of ultra-high-net-worth (UHNW) families, as well as the proliferation of global regulations, will be the key drivers shaping the future Asian family office landscape, according to new study from Jersey Finance.
The report, The Evolution of Family Offices in Asia – Views from Asia’s Wealth Management Community, was conducted by Jersey Finance and Asia-focused financial publisher Hubbis. It was launched last week to coincide with the 10th anniversary of the establishment of Jersey Finance’s Hong Kong office.
Based on the views of Asia’s wealth management community, the report uncovers the rationale behind the exponential growth of family offices across the region, and provides insights into the motivations, challenges and solutions to creating and managing a family office in today's environment.
Next generation
Among the key findings are that the next generation of UHNW families will play a crucial role in the expansion of family offices in Asia, which is currently at the crest of a gigantic wave of intergenerational wealth transfer, representing trillions of dollars.
With most of Asia's billionaires still being first-generation, 61% of respondents indicated that the establishment of family offices in Asia is driven by future generations.
As such, the report suggests, it is important for wealth managers to adopt new technologies and best practices, and pay close attention to the rise of new investment strategies such as sustainable and ESG investing.
Full-service support
Meanwhile, over a quarter of respondents (27%) identified full-service support as a priority for their clients when establishing a family office.
This indicates that family offices need to perform not only as professional investment advisers, but also as trusted partners to different generations providing crucial resources for many other administrative or lifestyle tasks, including residence and citizenship, education, healthcare and reporting.
The report also found that the proliferation of global regulations and inter-governmental cooperation is having a fundamental impact on family office structures, prompting families to centralise management and professionalise governance of their worldwide financial affairs.
When it comes to the selection of a location for a family office, for instance, the report found that the market’s legal and political environment (39%), proximity to key family members (26%) and availability of supporting tax, legal and fiduciary services (19%) were the top considerations.
Joe Moynihan, Chief Executive Office, Jersey Finance, commented: “The message is clear – the focus of family offices in Asia is shifting drastically, with the views and preferences of the next generation set to transform the future family office landscape.
"In addition, for those firms and international finance centres looking to seize this growth opportunity, it is absolutely vital to focus on global best practice, governance and talent to address the increasingly diversified and complex demands of Asian clients.”
Pictured (l-r): Jersey Chief Minister Senator John Le Fondre, Jersey Finance Director of Greater China An Kelles and Jersey Finance CEO Joe Moynihan at the Jersey Finance Hong Kong office 10th anniversary event