1、Challenges and perspectives across the ecosystemAPAC Family Office Study In association withSingapore has seen an influx of new family offices being set up in the country over the last few years.The number of family offices multiplied fivefold from 2017 to 2019,with around 700 single-family offices(

2、SFOs)establishing a presence in Singapore by the end of 2021.This figure is expected to more than double to 1,500 by the end of 2023.The influx of family offices reflects the perceived stability of Singapore as a wealth hub in the region and the growing interest of the wealthy to manage their assets

3、 better.Yet not all family offices are successful in achieving their investment goals and ambitions.New and existing family offices often face perennial challenges and issues across the entire family office lifecycle,from incorporation to day-to-day operations.Our research aims to dive deeper into t

4、he Singapore family office ecosystem across four key areas:1)Geographical ties of Single-Family Office(SFO)sponsors2)Pain points of setting up an SFO in Singapore3)Challenges in day-to-day operations4)How ecosystem players can better serve family officesMethodology We conducted an in-depth market st

5、udy which included a quantitative survey and qualitative expert interviews between January to September 2023.To incorporate holistic perspectives across the family office ecosystem,we engaged over 70 experts across a diverse range of organizations,such as:Family office sponsors Single Family Offices

6、(SFO)Multi Family Offices(MFO)Private banks External assets managers Law firms Tax advisory firms Government agencies IT solutions service providersOur gratitude goes to the industry experts for their invaluable contributions of deep knowledge and expertise to this publication,as well as for their l

7、ong-standing partnership with Simon-Kucher.We believe their insights will spark meaningful conversations within family offices about planning for long-term success.Our gratitude goes to the industry experts for their invaluable contributions of deep 2|APAC FAMILY OFFICE STUDYIntroductionContentsSing

8、apore family office landscape4Pain points of setting up an SFO in Singapore7Challenges in day-to-day family office operations9Ways to better serve family officesContact12153|APAC FAMILY OFFICE STUDY4|DRIVE GROWTH IN A VOLATILE MARKETSingapore family office landscape5|DRIVE GROWTH IN A VOLATILE MARKE

9、TWe observed diversity in SFO needs,operations,and their interactions with experts12345Ranking of geographical ties of new Singapore-based SFO sponsors Based on%of responses indicating sponsor domiciles in the past 12 months5|APAC FAMILY OFFICE STUDYWhy Singapore?Besides the favorable regulatory and

10、 tax conditions in Singapore,sponsors often have pre-existing personal or business ties to the country.These originate from business relationships with Singaporean businesses,prior local investments,personal ties through graduating from a local university,or social/family networks.As a result,object

11、ives are often multifaceted,focusing not only on wealth preservation and growth,but also on personal goals in a familiar environment.Operations across multiple jurisdictions The family wealth often spreads across different jurisdictions,asset types,entities,custodians,and perhaps not surprisingly,mu

12、lti-generational beneficiaries.The intricate setup gives rise to highly complex accounting and tax reporting obligations necessary for compliance with regulatory and tax requirements across jurisdictions.Multiple ecosystem players involved In order to set up a family office,sponsors need to coordina

13、te activities and services with multiple partners in the ecosystem typically at the same time.The main points of interaction are lawyers,accounting firms,tax advisory firms,immigration agencies,and both local and international private banks.Survey respondent“It is hard to identify a single need or o

14、bjective to set up a Family Office in Singapore.For many of these families,they want to set up a“backup”base to their home country,but at the same time aspire to build a wealth foundation for the long-term in Singapore.Importance of motivation against perceived achievementPerceived achievement of mo

15、tivation2Importance of motivation1Setup of efficient entity and tax structures are top priorities for SFOs In the early stages,new family offices usually prioritize objectives,such as entity formation and tax structuring,which represent tangible,quick wins(e.g.tax benefits)within the first year.The

16、focus on ownership structures underscores the desire for holistic control and protection of family wealth through Singapores tax incentive schemes(e.g.130,13U,etc.).However,an unwavering focus on such topics can be detrimental for other important areas.Achievement of investment goals yet to be reali

17、zed Longer-term objectives such as wealth management and succession planning remain core objectives of family offices but are perceived as difficult to achieve.Through in-depth interviews with the families,we observed common themes that impede success.These included lack of strategic foresight(e.g.,

18、time-delayed decision-making,poor risk management,etc.),operational inefficiencies(e.g.,lack of or manual processes especially pertaining data),and management conflicts within the family or with external advisors.Cited reasons hinted at challenges with operation and governance of a family office.Lim

19、ited focus on operational excellence and governance New SFO sponsors underestimate the complexity of running an SFO and do not fully recognize the importance of operational excellence and governance for long term-success.Invariably,family goals and ambitions are achieved only partially.Strategic dir

20、ection and operational management of the wealth of the family is complex-requiring well defined operating models combined with effective governance.1236|APAC FAMILY OFFICE STUDYFamily governance and efficient operations are critical for success in the long-term yet often overlooked1.Importance is ba

21、sed on the percentage of respondents who rated the motivation to set up a new FO as important or very important;2.Perceived achievement is based on the percentage of respondents who rated the respective goal as achieved or fully achievedHighLowLowHighOperationaland adminfunctionsInvestment opportuni

22、tiesWealth mgmt.Residency benefitsSuccession planningTax structuringEstablishment of family governance1327|DRIVE GROWTH IN A VOLATILE MARKETPain points of setting up an SFO in Singapore123Top pain points related to incorporation Based on%of responses indicating the specific pain point8|APAC FAMILY O

23、FFICE STUDYWhen starting a family office,plan for success on Day 2 and not on Day 1Access to knowledge how to start an SFORecruitment of the right talentInitial infrastructure setup Most new single family offices in Singapore have 3-5 total resources excluding family membersand employAssets under Ma

24、nagement(USD)Up to 250mSponsors lack know-how Often,new family office sponsors lack awareness of the operational scope and complexity of setting up a family office.They are also not familiar with the legal and regulatory requirements which vary across jurisdictions.As such,new sponsors engage and re

25、ly heavily on advisors along the value chain(bankers,lawyers,tax advisors,etc.).These ecosystem participants play a key role in building and professionalizing the industry as they remain the main point of contact and source of knowledge for new family offices.In-house vs.outsourced functions Family

26、offices must balance the initial costs and benefits of hiring staff versus outsourcing certain functions to third-party providers.Recruiting staff can be challenging in the current job market,particularly with the updated regulations for employment of Singaporean tax residents in family offices.Ther

27、efore,outsourcing can be an attractive option,especially for smaller family offices.Scalable and secure infrastructure Family offices often purchase software and systems without considering the full scope of their data and infrastructure needs.For example,they may opt for a low-cost solution that la

28、cks proper security features.Another possibility is that they invest in a system that cannot scale or adjust to their evolving needs.This leads to inefficient setups with effort-intensive manual data management,proliferation of errors,and various vulnerabilities.Consequently,there is a greater risk

29、to the familys assets and reputation.Its hard to find and retain the right talent.We try to outsource as much as we can to reduce our headcount and staff costs.Singapore-based SFO“Challenges in day-to-day family office operationsTop challenges in day-to-day operations Based on%of responses indicatin

30、g the specific challengeOn-going fulfillment of regulatory requirementsStaff management and hiringManual data consolidation(banks,custodians)Data gathering for tax and accounting reportingManagement of multiple vendors and outsourcing partnersHigh effort for regulatory compliance Ongoing compliance

31、with regulations and reporting obligations remains a challenge for family offices,especially for smaller ones as they tend to have no dedicated compliance staff.In recent years,the Monetary Authority of Singapore has tightened Family Office related regulations(Section 13U and 13O).Talent acquisition

32、 and retention As with any organization,staff turnover and the correlating knowledge drain is a challenge for family offices.In addition,rising labor cost in Singapore can make it difficult to attract and retain the right people.Family offices have to compete with larger financial institutions or ot

33、her employers,which often provide attractive financial incentives.Better data governance Family offices handle a significant amount of sensitive financial and personal data.Data is often stored in disparate systems in different formats.Information needs to be aggregated manually for specific purpose

34、s.Additionally,the lack of formalized data governance,policies,and procedures heightens the risk of data breaches and other security incidents.High coordination costs Family offices rely on a variety of services for day-to-day operations.Usually,these are provided and maintained by different vendors

35、 and partners.Coordination and management of these relationships(including procurement,contracts,payments,etc.)consumes more time and incurs higher costs with the number of vendors and partners involved.10|APAC FAMILY OFFICE STUDYDont underestimate what it takes to run an efficient SFO1234511|APAC F

36、AMILY OFFICE STUDY100%of respondents0%Outsourcing remains the norm for majority of family officesTech-savvy solutions for family offices Most of the family offices outsource their IT.We observe an emergence of technology vendors in Singapore offering innovative managed service packages to support th

37、e administration of the family office.These packages typically include support in areas such as cybersecurity,data aggregation,and portfolio analytics.Outsourcing HR and tax functions Smaller family offices especially prefer to outsource HR and tax to niche providers.Most cited reasons were seasonal

38、ity of business activities and cost efficiency of outsourcing.For example,tax reporting is done periodically,and its more practical to outsource payroll and recruitment activities annually instead of hiring dedicated HR staff.Internal vs.external investment management Investment management is the le

39、ast outsourced function which reflects its high priority for family offices,i.e.management and protection of the family wealth.As assets are viewed as jointly owned and managed to express the familys core values,it is not surprising that family offices exhibit a higher degree of trust in hired inves

40、tment managers than third party service providers.Selecting the right individual for this role remains one of the top priorities for family offices.ITTaxHRFamily services Risk management and auditAccounting and cash managementInvestment management77%69%51%49%49%46%23%20%26%29%23%37%31%40%3%20%23%11%

41、23%37%Mostly outsourcedPartially outsourcedMostly in-house/own employeesUnsureDegree of outsourcing across business functions Based on%of responses indicating the degree of outsourcing12|DRIVE GROWTH IN A VOLATILE MARKETWays to better serve family offices13|APAC FAMILY OFFICE STUDYFamily offices nee

42、d better digitalized and interconnected solutionsTop needs of SFOs Based on%of responses indicating that the value driver is importantFamily offices manage a diverse range of assets across various jurisdictions,entity structures,and family members.To facilitate better estate planning and investment

43、decision-making,family offices need a comprehensive view of the total wealth at their fingertips.Family office sponsors often lack a complete overview of their running costs,including bank fees.Aggregating and tracking total costs are essential to allow family offices to manage their expenses and op

44、timize operations.Banks and custodians are often slow to provide automated data feeds,making it difficult for family offices to make timely decisions,manage risks,and capture investment opportunities.Family offices value real-time data that can be quickly integrated and used in their current systems

45、.Spreadsheet-driven manual processes and tasks are error-prone and can result in data leaks.Coupled with increasing cybersecurity threats,family offices need digital solutions which protect their data and minimize the risk of data breaches.A multitude of different service providers increase the oper

46、ational overhead on the family offices side.A thoughtful selection of one or very few service providers avoids unnecessary costs and inefficient operations.While the needs of family offices are different across segments and motivations,foundational needs remain constant.94%93%86%84%82%Automated data

47、 feeds to banks and custodiansOverview of total costs and feesSingle view of all assets across entities Secure infrastructure and IT securityOne service provider for all important functionsThe future is bright for the family office sector in the region.Family offices recognize the prominence of Sing

48、apore as a regional wealth hub and one of the top destinations to invest and establish businesses in.We believe that there are three key takeaways for the family ecosystem from our research.Plan for long-term successBETTER PLANNINGThe power of partnershipsBETTER COLLABORATIONThe future is now,and it

49、 is digitalBETTER GROWTHFamily sponsors(especially new ones)need to look beyond incorporation and initial setup.Day-to-day opera-tional considerations should be part of the evaluation when procuring third party solutions and systems.Collaboration between ecosystem partners is essential to build inte

50、grated and interconnected solutions and services that can deliver real value to family offices.Technology has been a game changer for family offices.Digitizing manual processes and streamlining operational functions helps free up time for what really matters:capitalizing on investment opportunities

51、and family planning.14|APAC FAMILY OFFICE STUDY ConclusionDr.Silvio StruebiPartner,Head Banking APACSingapore Officesilvio.struebisimon-Bryan Henning Senior Vice President,Head of InternationalEton Solutionsbryan.henningeton-15|APAC FAMILY OFFICE STUDY Contact our contributorsSilvio Struebi heads th

52、e Simon-Kucher banking business in APAC.With 15+years of consulting experience,Silvio has advised numerous financial institutions and wealth managers across many jurisdictions on growth strategies,value proposition design,and monetization.He also assists clients in market-specific implementation of

53、growth strategies as well regulatory pricing topics.Prior to joining Simon-Kucher,Silvio worked for an international private bank in Zurich.Silvio is also a regular speaker at conferences,roundtable discussions,and talk shows.He has been featured in multiple publications in leading business magazine

54、s across Asia.Simon-Kucher is a global consultancy with over 2,000 people in 30+countries focused on unlocking better growth that drives measurable revenue and profit growth for our clients.With 37 years of experience in monetization topics of all kinds we are regarded as the worlds leading pricing

55、and growth specialist.Simon-Kucher&PartnersBryan Henning is a wealth management specialist with over 30 years of experience.He represents Eton Solutions as Senior Vice President,Head of International.Bryan is based in Singapore,where he leads sales,business development and marketing throughout Asia

56、Pacific,Middle East and Europe,and supports all company operations in Singapore.Eton Solutions is a software and services company founded to handle the complexities of servicing ultra-high-net-worth families.The company is based in the US,with its International HQ in Singapore.The flagship product A

57、tlasFive manages over US$737 billion on its integrated platform with comprehensive investment and accounting reporting capabilities,incorporating over 270 workflow processes.With one source of truth,Eton Solutions leads family offices into the future,by maximising efficiency and minimising errors and risk,on a fully digitialised platform.ETON SolutionsDiscover more onsimon-Follow us on2024 Simon-Kucher&Partners Strategy&Marketing Consultants LLC.All rights reserved.Singapore office3 Temasek Avenue Centennial Tower#20-02/03 Singapore 039190 singaporesimon-