Singapore. More ultra-high net worth families are opening offices in the country. Today, the number of family offices has nearly doubled from two years ago.
Family offices are private organisations that aim to manage the wealth of a family.
According to government estimates, the current number of family offices in Singapore sits at 700. This is up from 400 at the end of 2020, and up sevenfold from 2017.
These families are not just from Asia, but also from America and Europe. Despite this, demand from Asia remains prominent given that private wealth in the area has grown quicker than anywhere else in the world.
“The pandemic has prompted numerous affluent families to reconsider their wealth management and succession plans to better prepare against future uncertainty,” stated the Bank of Singapore’s head of family office advisory Carrie Ng.
“Besides Asian family offices, an increasing number of non-Asian families are coming to Singapore to either set up family offices or satellite offices to capture and support their investments in the region,” she added.
Deloitte’s private leader for Southeast Asia Richard Los stated that the increase in family offices came as a result of the pandemic, as rich families reassessed how to safeguard and grow their wealth even further.
According to some experts, families are drawn to Singapore’s status as a financial and wealth management hub.
When compared to other financial hubs like the United Kingdom, Switzerland, and Hong Kong, Singapore stands out due to its stable political and regulatory environment. Not only that, but that country also boasts an incredible financial services sector, trained workforce, and good living standards with established education and healthcare infrastructures.
The country has been giving support to family offices through targeted tax incentives. The launch of the Global-Asia Family Office Circle network in 2021 allows a “trusted ecosystem” for these industry giants to share best practices and collaborate.
“Singapore is a jurisdiction where the ultra-rich will often choose to live in and establishing a local family office can be part of a migration strategy,” stated Stephen Banfield, partner of family office and private clients at KPMG.
“Often, the ultra-rich are driven by commercial considerations in deciding where to live so it is usually a more complicated decision matrix, rather than a comparison of tax rates and lifestyle factors,” he added.
MAS’ tougher tax rules are unlikely to stop families from opening offices in the country. The new rules include local investments, minimum requirements for capital, and the hiring of talent for such offices to qualify for tax incentives.
But how will the growth of family offices benefit Singapore?
According to experts, it can solidify the country’s status as a wealth management hub. It can also make way to widen the local financial services ecosystem. Additionally, new family offices in the country can create more jobs.
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This also presents new opportunities in philanthropy.
“Philanthropy is now becoming more deliberate, strategic and impactful,” said Ng, adding that the younger generations of ultra-rich families love active engagements with social enterprises. They are also patrons of supporting social entrepreneurship, instead of simply writing a check.
Currently, the Government is assessing its tax incentive schemes to motivate more family offices to support local charities and non-profit entities, stated Deputy Prime Minister Lawrence Wong.
“These are all multi-year plans, but our basic message is this: If you are a family office interested to give back to the local community in Asia, there is no better place to do it than here in Singapore,” Wong stated during the inaugural Global-Asia Family Office Summit’s owners’ symposium held last September.
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