The Family Office Insights Series – Asia Pacific Edition

Family offices in Asia Pacific are optimistic despite uncertain times, with 77% expecting to see their AUM grow in 2024, and 84% expecting to see a rise in the family’s wealth. With these gains in sight, roughly four in 10 family offices are looking to hire additional staff this year (43%), to increase the number of services they offer (38%), and to rely further on third-party outsourcing services (48%).

The top three perceived market risks in 2024 are a potential global recession (noted by 73% of Asia Pacific-based respondents), geopolitics (55%), and inflation (44%). In turn, 67% of respondents rank investment risk management as a top strategic priority for 2024, followed by investment governance and valuation policies (53%).

The top asset classes family offices in Asia Pacific invested in were equities (25%), private equity and direct lending (21%), real estate (19%), and fixed income (19%) in 2023, accounting for more than four-fifths (84%) of the average family office portfolio. The top asset classes they plan to increase their allocations to this year are developed market equities (32%) and real estate (31%).

Asia Pacific-based family offices allocate 32% of their average portfolio to investments outside their own region, and more than one in five plans on increasing their allocations to North America (23%) and Middle East-based (21%) investments this year.

Over half of family offices in Asia Pacific (52%) now engage in sustainable investing, and their portfolio share dedicated to sustainability is expected to nearly double over the next five years from 13% to 24%. The top themes family offices are allocating to are good health and well-being, clean energy and climate action.

Family offices in Asia Pacific are increasingly turning to outside talent for their recruitment needs, particularly within the C-suite. While 43% of family offices aim to shift toward more professional (non-family) staff in 2024, 31% say that an outside professional will lead the family office post succession, a notable increase from 22% today.

While 35% of family offices in Asia Pacific expect to undergo generational transition over the next decade, a notable 37% of families are currently without a succession plan. In turn, over a third (38%) of family offices have ranked succession planning as a top priority this year.

A notable portion of Next Gens will be undertaking leadership roles in the family office this year, such as that of a CEO (38%), board member (36%), manager/executive (30%), or director (21%). This comes as 69% of respondents claim that they expect a Next Gen to lead the family office post succession. That said, a notable proportion of family offices lack confidence in Next Gens’ ability to take over, raising concerns over their lack of qualifications (36%) and insufficient interest in the activities of the family office (23%). As a result, 33% say Next Gens’ core priority for 2024 is to receive mentoring/training, while 26% say it is to plan for succession.

Over half (53%) of family offices in Asia Pacific are developing or rolling out a technology strategy this year. This comes as nearly one in four (23%) identify inadequate investment in technology as a core family office risk, while nearly three-quarters (73%) admit they are either underinvested (33%) or only moderately invested (40%) in the operational technology needed to run a modern business.

Nearly a quarter (24%) of family offices in Asia Pacific have experienced a cyberattack over the last 12-24 months. However, more than a third (37%) of offices do not have a cybersecurity strategy in place, and 38% say they have a strategy, but it could be better. With roughly one in five family offices (18%) heralding cyberattacks as a core risk this year, now is the time for pre-emptive action, with 20% building out their cybersecurity strategy this year.