More high-net-worth families in the region are choosing family offices to manage their wealth professionally.
Family offices have been key players in managing the assets of wealthy families for generations. These private companies take care of the financial needs of these families, to ensure that their wealth stays safe, grows and passes smoothly down to the next generation. As global financial markets become more complex and the needs of high-net-worth individuals (HNWIs) change, family offices have become increasingly important in tackling the challenges of wealth management, whether in formulating investment strategies or estate planning.
For many HNWIs, the decision to set up a family office is driven by the desire for greater control over their wealth management and the ability to customize their investment strategies and estate planning. However, setting up a family office is not without its challenges. One potential pitfall is the significant cost and complexity involved in establishing and maintaining a family office, which can include legal, regulatory and operational challenges.
In recent years, Singapore has become a global hub for family offices due to its stable political climate, favorable tax environment and sophisticated financial infrastructure. Its robust legal framework and strategic location in Asia make Singapore even more appealing for affluent families seeking an ideal base to manage their assets.
In the first eight months in 2024, Singapore was home to around 1,650 single-family offices, up from 400 at the end-of 2020, according to government data. This rapid growth reflects not only the city’s attractiveness to global HNWIs, but also the rising demand for solutions that address increasingly complex challenges related to managing generational wealth.
Keeping It In The Family
One of the most significant challenges in managing family wealth is maintaining harmony among family members. The distribution of family fortunes can be a delicate matter, as differing expectations, values and interests can lead to conflicts that strain relationships. These tensions are often exacerbated when family members have conflicting views on financial management or investment strategies.
Family offices can address these issues by crafting and executing a well-structured and legally sound succession plan that provides a clear framework for the asset allocation that is agreed upon by all parties involved.
Leah Ng, Chief Bancassurance Officer of Manulife Singapore, says, “As family wealth often goes beyond financial assets to also encompass businesses that have grown over multiple generations, business continuity is another major worry for families that own and run businesses.”
As such, succession planning also needs to address how to sustain these businesses over the long term, which includes finding and training the next generation of leaders. The challenge here is not just picking the right person to take over, but also making sure they are well prepared and have the support they need to lead. Without a solid plan, a lack of leadership can disrupt business operations and hurt the company’s success in the long run.
A Comprehensive Strategy
Wealthy families often own complex portfolios with a wide range of assets, from real estate and stocks to private investments. To manage these assets well, families will need a comprehensive approach that aligns with the family’s financial goals and how much risk they are prepared to take. They will also have to adapt to changing market conditions and family dynamics, which adds more complexity.
Family offices are uniquely positioned to implement a holistic wealth management approach that addresses the complexities of managing substantial family wealth. For instance, family offices are able to integrate various asset classes into one unified strategy. This allows families to better manage risk and achieve greater diversification, to grow and preserve their wealth across generations.
Empowering Family Offices
Manulife Singapore offers a suite of solutions designed to help families manage their wealth and plan for the long term. These include comprehensive solutions for family offices in areas such as legacy management, estate planning and diversifying assets. These solutions are made to fit the unique needs of the family, whether it’s managing a complex portfolio of assets or planning for future generations.
Manulife’s financial consultants and distribution partners work closely with family offices to recommend insurance solutions that are suitable for their strategy. Manulife also collaborates with leading global banks and financial institutions to give clients access to a wide range of sophisticated financial solutions to ensure their assets are managed effectively.
“Manulife Singapore’s solutions for our HNW customers are designed to address their complex needs. Family offices can tap on these solutions as part of a wider strategy to manage their clients’ wealth and assets for the long term,” says Ng.
The long-term prosperity of Asia’s affluent families hinges on their ability to adapt, plan and manage their wealth. By leveraging a family office structure, these families can develop a well-crafted wealth management and succession plan that acts as both a safeguard and a roadmap to help them to grow their fortunes while staying united for generations to come.
This material is intended to provide a general overview of Manulife Singapore’s insurance products. This material is for distribution in Singapore only and shall not be construed as an offer to sell or solicitation to buy or provision of any insurance product outside Singapore.
Read the full article here
