Partner Content: Singapore’s family office sector set to soar despite higher barriers to entry

One of the biggest developments in the family office world in the last five years has been the rapid growth of the sector in Singapore, making the city-state one of the most dynamic centres for family offices worldwide. 

According to data from the Monetary Authority of Singapore (MAS), the number of family offices in the country jumped fivefold between 2017 and 2019, and almost doubled from 400 at the end of 2020 to 700 a year later. The growth compares even favourably to long-established centres for family office activity like New York and London. 

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 support their regional investments. Li Li Lim, Head of Global Investors, Family Offices & Financial Intermediaries at the Bank of Singapore, said: “In interactions with our ultra-high net worth (UHNW) clients, many of them indicate their preference to set up their family offices in Singapore. Even those with family offices in Europe are looking to set up satellite offices in Singapore.”

Earlier this year, MAS announced stricter criteria around assets under management, local investments and business spending for family offices to qualify for tax incentives. Family offices set up under the Section 13O scheme would now require a minimum fund size of S$10 million, with a commitment to raise this to S$20 million within two years. There was no minimum requirement before this.

Instead of dampening the setup of family offices in Singapore, the Bank of Singapore believes the growth trend will continue, even with the new guidelines. “The growing number of high-net-worth individuals in Asia, particularly in China, will continue to lead Singapore’s continuing emergence as a jurisdiction of choice for wealth management services and advice,” said Lim. 

“The choice of location can have significant consequences. It is not simply a location for wealth management, but also a jurisdiction where the stability of the operational environment can best serve and safeguard a family’s interests. And Singapore checks plenty of boxes regarding what wealthy families should consider when considering where to set up their family office.”

A robust financial sector and supportive regulators

Singapore’s strong and dynamic financial sector, coupled with its exemplary regulatory environment and the city state’s location amidst the fastest growing economic region in the world, are all reasons for Singapore being a preferred jurisdiction for family offices. 

Singapore has also recently set up a networking group called the Global-Asia Family Office Circle (GFO Circle) to strengthen the sector further. Lim says the GFO Circle helps family office principals, professionals, and advisors better interact to increase community building and collaboration, and share best practices across the board. 

Good tax incentives, a very business-friendly environment, political stability, and a high standard of living all contribute to Singapore’s allure to businesses in general, and family offices in particular. As one of Asia’s most dynamic tech/venture hubs, Singapore provides many investment opportunities for both local and international family offices. 

Keeping abreast of the needs of family offices

Bank of Singapore, which is one of Asia’s largest private banks, has a dedicated Family Office Advisory unit of specialists who are well placed to help wealthy families set up and manage their family offices, as well as provide expertise on succession and governance issues within a family office. 

The team also helps family offices develop and implement investment and asset allocation strategies based on their specific goals and objectives. “For example, in recent years, there has been a clear shift in terms of asset allocation with more investments being allocated to alternative assets such as private equity, venture capital, real estate, direct investments and hedge funds. We’ve kept abreast of these developments by offering our clients – many of whom are family offices – more customised solutions and exclusive investment opportunities,” said Lim.

As a progressive wealth hub, Singapore continues to develop itself as a centre that can address UHNW families’ inter-generational transfer, estate, legacy and succession needs

Although Singapore provides one of the most attractive locations for family offices, Lim reckons the city-state can always look at ways to improve its attractiveness further. “Despite the much-improved levels of trained staff for the sector, there still aren’t enough investment professionals for family offices in Singapore. The competition for talent is intensive, and we need to increase the talent pool further to compete with other global financial centres.”

Lim also reckons further efforts on issues like ESG and sustainable investment opportunities will also increase the appeal of Singapore to potential family offices.

“As a progressive wealth hub, Singapore continues to develop itself as a centre that can address UHNW families’ inter-generational transfer, estate, legacy and succession needs. We foresee Singapore to grow in strength as a global trust centre with progressive laws and in attracting more professionals to practice in the area of estate and trust planning,” said Lim.

To this end, the Bank of Singapore has a well-established trust company, BOS Trustee Limited, which can act as a trustee for the family’s investment fund vehicle. The private bank is part of the Oversea-Chinese Banking Corp (OCBC) Group. Headquartered in Singapore, Bank of Singapore has branches in Hong Kong and Dubai, with a representative office in Manila. In Europe, the bank serves clients through BOS Wealth Management Europe, headquartered in Luxembourg and has a London office. In Malaysia, it serves its clients through BOS Wealth Management Malaysia.