Inaugural family office insights report finds Asia Pacific family offices optimistic and planning for growth despite concerns over economic uncertainty, geopolitics, and succession

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.

As part of Deloitte’s new Family Office Insights Series, 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 assets under management (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%.

“Deloitte Private’s Family Office Insight Series—Asia Pacific Edition identifies the top trends shaping the field today 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.”

“We are excited to collaborate with Deloitte Private, a leader in tax advisory and planning services that shares our vision of supporting Asian families in forging a legacy that spans generations,” says Chi-man Kwan, Group CEO and Co-Founder at Raffles Family Office. “Since our inception, we have been at the forefront of Asia Pacific’s dynamic and rapidly evolving family office ecosystem. As Asian family offices continue to scale up, we look forward to supporting the evolving needs of the region’s ultra-high-net-worth (UHNW) individuals together with Deloitte Private and setting the benchmark for family office services in Asia Pacific.”

Eyes on risk management amidst drive for growth

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.

Urgency needed to chart confident succession path

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.”

“The findings and insights from our collaboration with Deloitte Private sheds light on the maturing family office landscape in Asia,” adds William Chow, Deputy Group CEO at Raffles Family Office. “Rooted in our Asian heritage, we take pride in the holistic support we deliver to UHNW families in Asia through our professional team with specialized knowledge in finance, investments, and success planning. This dedication is now further strengthened through our work with Deloitte Private, and we are committed to cultivating enduring partnerships with our clients to help them embrace their role in preserving and growing the family’s legacy.”

Methodology

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.

About Raffles Family Office

dedicated to providing a comprehensive suite of wealth management services tailored for ultra-high net worth individuals and families. Leveraging an integrated platform that pairs independence with expert advisory across a wide spectrum of asset classes, RFO is uniquely positioned to offer bespoke, sustainable, and robust solutions for wealth growth and preservation. Further strengthening our offering is an extensive global partnership network, engineered for seamless collaboration with top-tier financial institutions worldwide. With dual headquarters in Hong Kong and Singapore, RFO’s presence spans across Asia’s gateway cities, including Shanghai, Beijing, Taipei and Bangkok. For additional information, visit http://www.rafflesgroup.co.