“The Billionaire Effect” refers to the undeniable trend of the billionaire’s aggregate wealth growing with each year. In fact, in 2020 alone, a new billionaire was minted every 30 hours. Among this population, a significant portion of them are entrepreneurs from Asia. Given this fact, it’s no surprise that Asian families with the means are looking to establish the management of their funds.
Whatever the case, it all comes down to one thing – family offices aren’t just talk anymore.
Reasons to set up a family office
In the past, families used to have their investments entangled in holding companies. Occasionally, they’d use a special purpose vehicle (SPV). This was often because of a desire to uphold anonymity, create ring-fencing effects, or simply because it seemed easier to set them up in offshore territories. However, it became apparent that these complicated arrangements made management difficult and cumbersome. There were also negative implications in the eyes of the public and tax authorities.
There are many external factors that contribute to why one would want to set up a family office. However, one pattern that emerges more often than not is the family’s wanting to manage their wealth internally, or at least be more active in this aspect of asset management.
In a family office set-up, the investment team tends to involve family members from the newer generation who are keen on overseeing their own finances and are interested in gaining experience and knowledge in wealth management for separate entities in the future.
By and large, family offices are often set up alongside a family fund; this tends to be because setting up the family fund also sets up the foundation for the family asset holding structure. It also allows for better succession planning and a more effective and clear structure.
Today, people generally prefer a simplistic structure. Families with the funds find it more convenient to set up a “super” holding company, also known as a family fund, which would hold all their assets and SPVs. However, it is also possible that the SPVs would be absorbed by the family fund.
What makes Singapore special?
Singapore has slowly been becoming the most sought-after family office destination. This might be because of how well the country fits within the confines of what these families are looking for. Some of the criteria include:
- a robust regulatory framework
- advanced infrastructure and renowned financial services
- government policies that are lenient toward businesses
- clear and transparent communication
- access to a skilled workforce and pool of talent available
Conclusion
Family offices are only projected to grow in popularity over the next few years, with Singapore being set to become the default home base for them. However, a home office’s benefits don’t have to be reaped purely by billionaires. If you are looking to invest in a simple, effective, and clear succession plan and straightforward family wealth management, why not contact us at Express Corporate Services? We are your one-stop-shop for all your corporate service needs – including our impeccable family office services in Singapore. Talk to us to get a free quote today!