The Asian family office sector in Singapore has flourished over the past few years as the city-state is increasingly seen as a safe haven for wealth and for developing regional investment opportunities, while having appealing tax incentives. It also offers wealthy families with a safe and predictable environment in which to raise its next generation.
However, as the number of family offices in Singapore increases, building a family office in the Southeast Asian wealth hub is becoming a competitive sport. Challenges in recruiting the best talent and rising costs are among the challenges families face in professionalizing their operations.
The Asset (TA) spoke with Valerie Mantot-Groene (VMG), regional managing director for Asia-Pacific at Apex Group, a global financial services provider, to get an overview of the current topics and themes affecting family offices.
TA: Are rising costs on the horizon in 2023 for Asian family offices?
VMG: 2023 will bring a renewed focus on costs for family offices building experienced teams, implementing the latest technology and scaling operational infrastructure in-house. For some, these costs may become prohibitive, especially for single family offices. While rising costs will have a lesser impact among the larger family offices, or multi-family offices, we expect to see clients re-evaluating what can be outsourced to drive greater efficiency in their operations.
TA: So, will this put a dampener on family office hiring this year?
VMG: Top of mind for our family office clients at present is the perennial challenge of staying up to date with the ever-increasing compliance, human resource and other regulatory obligations. To do this, requires the right team, with the qualifications, experience and crucial soft skills to thrive in a family office environment.
Amid the “great resignation” of 2022, the talent market has become increasingly competitive and shows no signs of shifting to benefit employers in the year ahead.
Increasingly, family offices in Asia are not only struggling to find the personnel with the required skill sets, but the size and cost of a fixed internal team for complex investment management operations may prove to be disproportionate when weighed up against the returns generated. Even when the right investment professionals are in place, there are other functions that require staffing, such as administration and reporting.
In 2022, we saw high-profile examples of families falling into the trap of operating with an underpowered skeleton staff, increasing the burden on valuable employees and, in the long run, leaving the family underprepared – and potentially exposed – in essential areas, such as compliance and reporting.
For all but the wealthiest of families and multi-family offices, the cost of hiring in both operational and investment functions can be prohibitively expensive; and, it is for this reason that in 2023, we expect that many will turn to increased outsourcing as a much more viable option than building an entire team under one roof.