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Hong Kong, 10 September 2024 – Deloitte Private and Raffles Family Office (RFO) are pleased to announce the joint launch of The Family Office Insights Series—Asia Pacific Edition, which highlights this year’s key trends in family office risk management, investments, and succession planning.
The Asia Pacific Edition covers the top 10 family office trends and maps out the family office landscape in the region. The research, which surveyed 89 single family offices, found that despite geopolitical instability and uncertain market conditions, Asia Pacific family offices remain optimistic, with 84% expecting an increase in the family’s wealth this year and 77% expecting to see their AUM rise in 2024. They are also more likely than their global counterparts to scale up their initiatives and gain added expertise, with 48% of Asia Pacific-based family offices looking to increase their reliance on outsourcing services, higher than the global average of 34%.
“The Family Office Insight Series—Asia Pacific Edition aims to help family offices in Asia Pacific better understand how to adapt their short- and long-term strategies to succeed,” says Yali Yin, Asia Pacific Deloitte Private Leader. “We are glad to see that Asia Pacific family offices remain optimistic despite global economic and geopolitical uncertainty. Beyond risk management, diversified and sustainable investing, and operational technology adoption, leaders are focused on creating robust succession planning strategies to properly equip the next generation and produce a resilient future.”
“With the Great Wealth Transfer already underway in Asia Pacific, families must promptly address succession challenges and prepare the next generation to lead with confidence and conviction. As more ultra-high-net-worth (UHNW) families seek professional support for their wealth and legacy planning needs, the growing professionalization of family offices in Asia Pacific revealed by our research is an encouraging sign of the region’s maturing family office ecosystem,” says Chi-man Kwan, Group Chief Executive Officer at Raffles Family Office. “At RFO, our core mission is forging legacies that spans generations for our clients. We are excited to work with Deloitte Private in this shared journey.”
“Our research reveals that family offices remain optimistic, with an expectation that their AUM will rise in 2024, despite global economic and geopolitical uncertainty,” says Anthony Lau, Hong Kong Leader at Deloitte Private. “As an international financial centre which leads in various product offerings, we believe that Hong Kong can successfully navigate the waves given the government’s strong policy stance and various measures on developing a vibrant ecosystem for family offices and asset owners globally. Therefore, we are optimistic about the growth of family offices in Asia Pacific and are confident that Hong Kong is well positioned to serve them.”
Macro-level risks underline the uncertainties Asia Pacific family offices face, with geopolitics (55%) and inflation (44%) being perceived as two key market risks in 2024. Meanwhile, investment risk (72%), geopolitics (44%), and regulatory and tax challenges (28%) are considered to be the top risks to family offices this year, in line with their global peers. These concerns highlight the importance of investment oversight, which is reflected in the strategic priorities for family offices, with investment risk management being a top priority (67%), followed by investment governance and valuation policies (53%), and succession planning (38%).
Despite recent market volatility and uncertainties, family offices in Asia Pacific have shifted towards more growth-oriented investments (34% of respondents). However, this is coupled with an eye on risk management, with many family offices favoring a balanced investment portfolio. The top asset classes family offices invested in were equities (25%), private equity and private debt/lending (21%), real estate (19%), and fixed income (19%) in 2023, accounting for over four-fifths of the average family office portfolio. Notably, allocations to public equities, although identical to the global average at 25%, had a greater bias toward developing markets, revealing the region’s preference for local markets, such as China and India. For 2024, the top asset classes family offices are looking to invest more in 2024 are developed (32%) and developing (24%) market equities, real estate (31%), hedge funds (24%), and cryptocurrency/digital assets (24%).
On average, Asia Pacific-based family offices allocate 32% of their portfolio to investments outside their own region. Currently, North America and Middle East-based investments make up 21% and 1% of Asia Pacific family offices’ average investment portfolio, respectively. However, these proportions are expected to increase in 2024, as 23% plan to allocate more to North America this year and 21% to the Middle East. Meanwhile, investment levels in Asia Pacific and Europe are expected to remain consistent, with 69% and 79%, respectively, citing that they intend to keep allocations towards these regions the same in 2024. Conversely, Asia Pacific has become a popular investment destination for global family offices, with an average of 20% of family offices worldwide and 24% from Europe planning to expand their portfolios in the region this year.
As a large portion of family offices in Asia Pacific serve first- or second-generation wealth holders, planning for succession is rapidly becoming an important topic. Over a third (35%) of Next Gens are expected to assume control of the family wealth over the coming decade. However, a notable 37% of families are currently without plans for succession. As a result, roughly a fifth of family offices (21%) have ranked this lack of preparedness as a core risk to their office this year, while over a third (35%) are now making succession planning a top 2024 priority.
That said, the road to succession will not come without challenges, as 69% of respondents expect a next-generation family member to lead the family office post succession. However, many cite concerns over Next Gens’ maturity (49%), limited qualifications (36%), and lack of interest in the activities of the family office (23%). Due to this, a third of Next Gens (33%) are making receiving mentoring/training a top priority this year, while another 26% are focusing on succession planning. As part of doing this, Next Gens will be undertaking a variety of roles in the family office this year, including serving as a board member (36%), manager/executive (30%), or director (21%).
At present, only 22% of family office heads are non-family professionals, but this number is expected to reach 31% post-succession. Asia Pacific is leading a broader trend towards professionalizing the family office, with four in 10 (43%) family offices looking to shift towards more professional and non-family staff this year, substantially higher than the global average of 29%. Family offices in the region are most likely to recruit their professional staff from financial services firms (62%), accounting firms (33%), and consulting firms (23%). Only 15% would opt for professional staff from the family business.
“There has been a rapid hike in wealth accumulation across Asia Pacific in recent decades and this is spurring the growth of family offices,” says Dr. Rebecca Gooch, Deloitte Private Global Head of Insights, Deloitte Global. “As the creators of this wealth step down and cede control to the next generation, families are at risk of losing their wealth if they do not adequately prepare for succession. As we are amidst a major generational transition worldwide, trillions of dollars are at stake, and families in Asia Pacific are particularly at risk given their relatively limited experience with largescale multi-generational wealth transference. In turn, succession planning is becoming a key topic among the affluent as they ready their next generation to take the reins.”
“As rate cut momentum gains, Asia Pacific family offices are balancing risk awareness with a proactive approach to exploring new investment opportunities and more overseas investments,” adds William Chow, Deputy Group CEO at Raffles Family Office. “As they mark a return to growth-based investing with a renewed focus on equities, they are also shaping market trends with increased allocation to private equity, private debt, hedge funds, and digital assets. Strategic portfolio diversification continues to enable Asia Pacific family offices to mitigate risk, enhance stability, and capture opportunities for growth.”
To produce these insights, 354 single family offices were surveyed globally, including 89 family offices from Asia Pacific, between September to December 2023. Additionally, 15 in-depth interviews were conducted with senior family office executives in Asia Pacific. Globally, these offices have an average AUM of US$2.0 billion, and the associated families have an average wealth of US$3.8 billion. Collectively, this totals US$1.3 trillion in family wealth and US$708 billion in AUM. In Asia Pacific, the average family office AUM stands at US$1.0 billion and average family wealth US$2.1 billion.
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Deloitte Private is the brand under which firms in the Deloitte network provide services to privately owned entities and high-net-worth individuals.
Raffles Family Office (RFO) is a multi-family office that offers a full suite of wealth management services for ultra-high net worth individuals. With an integrated platform that combines independence with advisory expertise across a broad range of asset classes and an expansive global partnership network built for seamless collaboration with the world’s leading financial institutions, the firm is uniquely placed to provide comprehensive, lasting and highly bespoke wealth growth and preservation solutions. RFO is dual-headquartered in Hong Kong and Singapore, and has branch offices in multiple Asian financial centres, including Shanghai, Beijing, Taipei and Bangkok. For additional information, visit https://www.rafflesgroup.co
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