Wealthy Chinese Are Setting Up Family Offices in Singapore. Here’s Why

In recent years, Singapore has seen a significant increase in the number of family offices and private entities used to manage a family’s wealth.

According to Citi Private Bank, the number of family offices in Singapore jumped fivefold between 2017 and 2019, nearly doubling from 400 at the end of 2020 to 700 in 2021.

This trend is partly driven by wealthy Chinese individuals seeking to move their capital and families out of China.

These individuals are not just seeking to protect their wealth but also to take advantage of the rising economic strength of the ASEAN region.

The Importance of Family Offices

A family office is an important tool for wealthy individuals and families looking to manage their wealth professionally and efficiently. 

It can provide a range of services, including:

• Asset management
• Tax planning
• Estate planning
• Philanthropy
• Financial planning

By establishing a family office, individuals and families can centralise the management of their wealth and ensure that it is being handled responsibly and strategically.

There are 2 main types of family offices:

1. Single-family office: Helps 1 individual and their family only
2. Multi-family office: Assists more than 1 family and has more cost-savings due to economies of scale

The Growing Popularity of Family Offices in Singapore

Singapore has long been a popular destination for wealthy individuals and families, particularly those from China.

The city-state’s stable and well-regulated financial system, absence of wealth tax, and range of professional services make it an appealing choice for those seeking to manage and grow their wealth. 

In recent years, Singapore’s attractiveness as a destination has been further enhanced by the country’s expanding economy and favourable business climate.

They have attracted a growing number of ultra-high-net-worth individuals (UHNWIs) worldwide.

According to Citywire Asia, the Monetary Authority of Singapore (MAS) approved over 100 family office applications in the first 4 months of 2022. This figure includes single-family offices and multi-family offices.

Related Read: 10 Steps to Setting Up Single Family Office in Singapore »

Why Are Wealthy Chinese Choosing Singapore for Family Offices?

So, of all the other choices available, why are affluent Chinese opting to set up family offices in Singapore? 

One reason is that Singapore offers a range of professional services and expertise for those seeking to establish a family office. 

It also has relevant support available for interested parties, such as that from the Singapore Economic Development Board (EDB).

We explore more possible reasons:

• A Better Alternative

  One of the main reasons why wealthy Chinese individuals are establishing family offices in Singapore is to move their capital and families out of the mainland.

  Since the Hong Kong protests back in 2019, they have been looking for alternative locations to keep their funds. In 2021, the trend also picked up after Beijing’s unannounced crackdown on the education industry and focus on moderate wealth for all.

• Backed by Talent

  The city-state understands the importance of nurturing industry talent to seize opportunities and meet the ever-changing needs of the family office ecosystem.

  It has a strong pool of talent across a comprehensive range of professional services. From wealth and asset management to legal and tax advisory and more, the country is well-supported by its people.

  Local training provider Wealth Management Institute (WMI), for example, has established the WMI Family Office Programme to support this rapid growth in the family offices sector by bolstering the talent pool.

• A Robust Community

  Several family office communities in Singapore promote and support the growth of these FOs. 

  For example, WMI established the Global-Asia Family Office Circle (GFO Circle) to encourage the sharing of knowledge and networking among investment advisors, professionals, and family office principals.

  Other communities include the Business Families Institute @ Singapore Management University (BFI@SMU), Family Business Network (FBN) Asia, and the Milken Institute.

• A Strategically Positioned Wealth Management Hub

  The country’s geographic location at the crossroads of East and West also makes it an ideal base for managing and growing wealth within the region.

  Singapore’s proximity to the rest of Southeast Asia and its well-developed transportation and telecommunications infrastructure make it an attractive location for businesses looking to tap into the region’s expanding economy.

• A Coveted Destination

  In early 2022, MAS raised the barriers to entry by implementing a minimum fund size of S$10 million and a plan to increase it to S$20 million in 2 years for family offices under Section 13O.

  It also requires those under Section 13U to invest a minimum of 10% of S$10 million of their funds, whichever is lower, in Singapore’s market.

Despite this, raising the bar has made setting up a family office in Singapore more sought-after as it distinguishes those with a higher net worth.

Related Read: Why The Tightening Criteria for Family Offices is Good for Singapore »

The Trend of Wealthy Chinese Establishing Family Offices in Singapore is Expected to Continue

As concerns about the future of China’s economy and political stability persist, the trend of wealthy Chinese individuals establishing family offices in Singapore is expected to continue. 

These individuals, along with UHNWIs from other countries, are increasingly looking to take advantage of the rising ASEAN economy and the opportunities it offers for investment and business growth.

The growing number of family offices in Singapore reflects the country’s attractiveness as a destination for wealth management.

Its stable financial system, favourable tax environment, and range of professional services make it an appealing choice for those seeking to manage and grow their wealth.

For wealthy Chinese individuals, establishing a family office in Singapore can provide many benefits beyond just the financial. 

In addition to the stability and expertise that Singapore offers as a wealth management destination, many wealthy Chinese are also attracted to the country for its high standard of living and strong education system.

The latter can be attractive for families seeking to provide a better quality of life for their children.

Finally, Singapore has a diverse and multicultural society, which can be attractive for those seeking a more open and inclusive environment.

If you are considering setting up a family office in Singapore, our team of experts can help you navigate the process and ensure that your family office is structured to serve your client’s or your family’s needs. 

We offer a range of services, from providing advice on the most suitable structure for your family office to helping you find the right professionals in Singapore and ensuring compliance with relevant laws and regulations.

Contact us today to learn more about how we can help you.

About the Author

Eric Chin

Eric comes from banking background. He provides consultancy to local and foreign entities on the ideal market-entry strategies for setting up or expanding operations in Southeast Asia. Eric also provides advisory to fund managers and family offices on structuring as well as applicable tax incentives. He has also set up many VCC structures for licenced fund managers.

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