Family offices flourish in Asia
The rapid growth of family offices in Asia is leading to a hiring boom, but also prompting some to outsource services, including investment management.
The number of single-family offices in Singapore and Hong Kong has quadrupled since 2020 to around 4,000, and the two are home to about 15% of the world’s single-family offices, according to a report by McKinsey last September.
McKinsey writes that “competition for financial talent is intense in both Hong Kong and Singapore, and top talent is often drawn to hedge funds and investment banks, where the remuneration is higher than family offices typically offer”.
Both Singapore and Hong Kong have rolled out incentives to encourage family offices to set up shop. In April 2022, Singapore introduced an income tax exemption for family offices that invest at least S$10m (US$7m) or 10% of their assets in local investments and have at least three full-time investment professionals, including one from outside the family.
In May 2023, Hong Kong offered profit tax exemptions for funds controlled by single-family offices provided they meet certain criteria, including employing at least two investment professionals, though these can be family members.
Before the incentives were introduced, many of Singapore's family offices mainly handled administrative functions, according to Paul Westall, co-founder of Agreus Group, a resources and recruitment consultancy focused on family offices, which opened a Singapore branch in 2022. “Prior to that they might have an office in London, and set up representative offices,” he said.
“In the last year we’ve seen them bring on more people. They can’t just hire family members, so that has pushed demand for hiring outside.”
Single-family offices receiving tax incentives in Singapore currently employ around 2,200 locals, up from 1,700 at the end of 2023, according to parliamentary replies given by Gan Kim Yong, deputy prime minister, minister for trade and industry, and chairman of the Monetary Authority of Singapore.
According to Westall, a lot of early-stage family offices are using outsourced advisers but, as their assets grow, they are likely to hire more people and do more in-house.
Westall said that family office staff typically come from jobs in banking, private wealth or investment management, but the “cultural fit” is important, particularly as staff may need to work across several different functions – for instance, a role might focus on investment, but occasionally require helping with licensing or operational elements – and communicate in ways that different members of the family can understand.
“Bankers tend to adapt better to family offices,” said a Singapore-based executive at an asset manager. “We do lose people to family offices, but they struggle with the lack of autonomy and they don’t last.”
Staff who move to family offices from larger organisations may also miss the defined hierarchy and path for career progression.
“It depends on the type of operation and the mentality,” said a Singapore-based banker. “If it’s a family office from the US West Coast, it’s probably a close fit for an investment banker and will have a similar approach to dealmaking.
“If it’s a billionaire who got Singapore citizenship and just wants to invest in ETFs, it’s not going to be very interesting. But the tax incentives probably mean even these kinds of investors need to be more creative and make different kinds of investments in Singapore securities to qualify.”
Cost control
The costs of running a family office in Asia are higher than in the west, partly because of the need to operate across multiple jurisdictions. In 2024 the Singapore Economic Development Board reported that 55% of new family offices established in Singapore are focusing on South-East Asia.
A single-family office in the west typically has annual expenses of 1%–2% of total active assets under management, according to McKinsey. In Asia Pacific these costs range from 1%–3% for family offices with assets under management of US$100m or more, and for those with assets below that level operating cost ratios tend to be 4%–6%.
Outsourcing can cut costs, help manage manpower constraints and provide specialist expertise.
Doni Shamsuddin, head of Asia Pacific for BNY Investments, said that many Asian family offices are interested in things like alternative assets, but do not know where to start.
“There are so many managers out there, and managing research with a small team is difficult, so how do they know they are picking the best managers?” he said. “We are seeing more family offices ask us to come in and help with their entire CIO office. This is not to replace the CIO office, but to supplement what they have, and help with investment management, due diligence, reporting, custody and our whole platform.”
BNY focuses on family offices with assets under management of US$1bn and above and international investment portfolios.
Shamsuddin said external asset managers that work with family offices may have additional considerations when they use things like custodian services.
“If an external asset manager pledges a trade to a private bank, they might worry the family will move to that bank,” he said. “We are unconflicted because we won’t go after the EAM’s clients.”
Family offices in Singapore typically outsource several key functions such as wealth management, tax advisory, legal services, compliance, and investment reporting, as well as accounting, administrative tasks, family governance, and the operational management of investment portfolios, said Sridhar Nagarajan, regional CEO for Asia, the Middle East and Africa, and managing director for Singapore at investor services group IQ-EQ.
“While we notice a trend of family offices preferring in-house expertise, particularly when managing core investment functions, outsourcing is still prevalent for functions like estate planning and HR management, which require specialised knowledge,” said Nagarajan.
“As family offices expand and diversify their investments, managing everything internally becomes increasingly difficult with limited human resources, particularly when specific domain knowledge is required. Typically, family offices outsource specialised tasks such as regulatory compliance, legal advisory, and tax structuring.”
Nagarajan said more family offices in Singapore are using automation, artificial intelligence and blockchain to support their operations, but there are still advantages to outsourcing.
“External advisers can also provide up-to-date, industry-specific knowledge and experience that simple AI/automation tools may lack, particularly in complex regulatory environments or bespoke legal matters,” he said.