Family Office in Singapore – Have you ever wondered how Paris Hilton manages to party so often without working?
The reason other than having a huge inheritance from Conrad Hilton (the founder of the Hilton hotel chain) is that there is a professional family office behind the family wealth that manages the investments and wealth of the Hilton Family.
Some interesting statistics for you to note:
- 1/3 of all overseas Chinese investments have failed[1];
- Chinese investors have lost more than A$70 million in Australian property investments through unregulated intermediaries in recent times[2][3]; and
- While most Chinese businesses believe that wealth does not pass 3 generations[4], for many European and American families like for example the Hilton family, such wealth has passed many generations though family office structures.
Thus, when investing overseas you should do it through a professionally managed family office.
What is a family office?
A family office is a setup in Singapore which manages the funds of accredited investors in Singapore. Unlike a private bank, a family office usually provides bespoke services to each family they serve and is usually not commission driven and is therefore aligned with the family on a longer term basis. The minimum assets under management for a family office is S$5 million which assumes that one family member will be employed by the family office and apply for an employment pass. If more than one family wish to be employed by the family office, the assets under management by the family office will have to be increased. They offer a comprehensive solution to managing the wealth of the rich, including investments, charitable giving, taxation and wealth transfer[5].
A quick comparison between the different options that you can use to manage your money as set out below:
| Private Bank | Single Family Office | Multi-Family Office | External Asset Management |
| Net worth: Above USD 10 million | Net worth: Above USD 500 million | Net worth: Between USD 100 million to 500 million | Net worth: Between USD 10 million to 50 million |
| Usually minimum assets under management will be USD 5 million (liquid/investible assets) | As the name suggests, manages funds for one family. USD 100 million assets under management (on average) | USD 15-25 million assets under management (on average) | USD 5 million assets under management (on average) |
| Limited to the investment products/services of the bank | Open to all banks products/services | Open to all banks products/services | Open to all banks products/services |
| Fees usually minimum custodial fee of 0.3% of assets under management | Costs usually 1%-2% of active assets under management. Citibank research indicates typically 2 full time professional staff and 4 full time support staff costs between USD1.6 million to USD 2.2 million | Fees shared by many families | Subject to negotiation. |
What are the benefits of setting up a family office in Singapore
- Singapore has a stable legal system;
- Singapore has a stable political system;
- Singapore has professionally runs organisations that can help you with all your backend functions.
What is the structure for a family office
Some options available for you:
| Item | Private Bank | Single Family Office | Multi-Family Office |
| Brief description of the structure | Set up a structure with a private bank | Assuming that you intend to set up a professionally run family office, we would suggest that you set up a family office with an existing capital markets services licence entity. This approach helps you: (i) professional investment management (if required); (ii) cheaper rates from banks then if you go direct; (iii) one stop-shop that manages all the account opening with the banks. But the funds under management should be at least USD 50 million otherwise not worth the set up cost. | Setting up a family office with a capital markets services licence provider is an easy way to get started. All the benefits of the single family office set up plus you share the compliance and operational costs with other families. |
The proposed solution for you
Raffles CPA has partnered with a capital markets services licenced firm in Singapore to structure a family office solution that has the following benefits:
- Tax Savings – depending on the tax residency of the family that is investing into the family office, we are able to apply for tax breaks for the investment vehicle that the family office manages;
- We are an independent open architecture platform so can offer financial products to clients from various private banks and are not bound by any one private bank;
- Not commission driven so is more aligned with the family for the long term;
- Family office enjoys wholesale banking rates;
- Family able to access more banks without having to deal with the admin of bank account opening and filling up multiple forms; and
- We have existing product collaboration with Credit Swiss, JP Morgan and OCBC.
Click here to contact us to find out more about setting up a family office in Singapore.
[1] https://qz.com/265577/why-almost-a-third-of-overseas-chinese-investments-fail/
[2] https://www.scmp.com/economy/china-economy/article/2167731/desperate-chinese-middle-class-take-big-risks-move-money-and-themselves
[3] https://www.caixinglobal.com/2018-11-05/chinese-investors-lose-millions-in-australian-property-deals-101343051.html
[4] https://www.forbes.com/sites/dennisjaffe/2019/01/28/the-shirtsleeves-to-shirtsleeves-curse-how-family-wealth-can-survive-it/#2b99ab7d6c8d
[5] https://www.scmp.com/news/asia/southeast-asia/article/2171867/how-asias-new-money-driving-boom-family-offices-hong-kong
About Raffles CPA
Raffles CPA is a niche professional firm headquartered in Singapore with a relentless dedication to help global and local clients in solving their complex business problems in areas of corporate services, accounting, capital market, legal and compliance.
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