More and more Asian families are turning to family offices
Weiling Chua*, who is CEO of the Chua’s family office in Singapore, sees more and more families in Singapore – especially the second generation – turning to family offices, not just to ensure proper investment processes and accountability, but also to help them with aspects such as philanthropy.
‘Families want to institutionalise their investment processes and take on a more active role in their decision-making.’ She points out that second generations appear to be particularly receptive to using a family office because ‘they’re more exposed and well informed; they’re aware of the importance of having proper investment processes and accountability.’
In this way, the traditional patriarchy of some Asian families is diluted and brought up to date. ‘Families in Asia are going through a transitional phase,’ says Chua. ‘Patriarchs are at the age where they’re ready to hand over their business to the younger generation, so they’re thinking about legacy-preservation and family governance.’
‘Families want to institutionalise their investment processes and take on a more active role in their decision-making.’
In Singapore family office is quite a new concept
In Chua’s native Singapore, the concept of a family office is quite new. Traditionally, families ‘relied on their relationship managers as their portfolio managers’. However, ‘over time, these families are becoming more sophisticated, and they’re able to take on a more active role and work in tandem with an external advisor to help them with their strategic asset allocation.’
It’s a similar story, she suspects, throughout the region as families tentatively explore the new vehicles on offer. ‘In Singapore, families are now exploring the setting up of a family office.’
Chua illustrates how families don’t have to bear the responsibility of investment decisions themselves and can outsource some of these to one – or several – institutional investors. ‘There are some families who allocate their assets to multiple private banks and let them compete in a “horse race”, and there are others who work closely with an outsourced chief investment officer [OCIO] and consolidate their assets with one global custodian.’ Under the OCIO model, a third party is appointed to manage all or a portion of a portfolio. This can be done as part of, or separate from, a global custody service, which provides safekeeping of assets.
‘For us, giving back is a very strong and dear value that we want to preserve, as it was a value that was passed down from my late grandmother.’
Values have to be taken into account in the family office
‘In the process of building the familyoffice, we had many discussions about what we valued as a family. We realised that education, healthcare and giving back are important values to us. The family office will support beneficiaries’ education up to the first degree and take care of their health through comprehensive insurance coverage. We have to make sure that the family office generates enough cashflow to cover all that.’
Doing collective good does not have to stop with the family, however. Chua finds that philanthropy can also be run through the family office.
‘For us, giving back is a very strong and dear value that we want to preserve, as it was a value that was passed down from my late grandmother.’ Chua’s family established a charitable foundation more than three years ago, in memory of Chua’s late grandmother, and they were open to suggestions of where it should be directed. ‘We did extensive research on the charitable landscape to identify the different needs in Singapore. That took over a year, just to figure out what are some of the underfunded causes that the foundation can support and to give the foundation a focus. Giving away money is not as easy as it seems: you have to make sure that it’s an impactful donation.’ Her family identified two areas in which they wanted to make an impact: elderly care and special needs. The idea was to empower organisations operating in these areas by providing them with seed funding for new projects.
An added benefit for Chua is that such philanthropy brings her extended family together: ‘We make sure that the extended family is involved in the Chua Foundation, because it’s a good way to engage and keep the next generation together.’
Weiling Chua is the CEO of One Hill Capital, a single family office affiliated to the Ho Bee Group. She drives the family’s overall strategic investment direction and operational plan.