Singapore, Hong Kong banks tap APAC family office boom

They can help manage costs, which could balloon to 3% of assets.

Banks and insurers in Singapore and Hong Kong are sitting on a billion-dollar potential from the growing family office sector in the region.

Banks can help single family offices in APAC pursue diverse investment opportunities and manage their costs, which could balloon to 1% to 3% for those with assets under management of $100m or more, said McKinsey & Co. in its article “Asia’s family office boom: opportunity knocks.” 

Singapore and Hong Kong are expected to benefit from increased wealth flows from global investors, who are shifting their eyes to Asia in search of a safe haven for portfolio diversification.

As of 2024, Singapore and Hong Kong manage about $1.3t in offshore assets from single family offices. The two cities are also home to 15% of the world’s single-family offices. 

“The growth trend presents a substantial opportunity for banks, insurers, multi-family offices (MFOs), asset managers, and WealthTechs, all of which can offer differentiated services to new and established family offices,” said McKinsey senior partners Bernhard Kotanko and Joydeep Sengupta.

However, high costs and weak governance continue to plague family offices. This is where banks can step in.

Advisory, Collaboration
Banks can provide advisory services on governance structures, such as offering fiduciary specialists to support governance in multiple jurisdictions.

“Many family offices have relatively weak governance structures, lacking formal decision-making processes and clear guidelines for information sharing,” Kotanko and Sengupta said.

Lombard Odier’s head of family offices, Lee Wong, said that governance, communication, and conflict resolutions are gaining importance within families.

“As family offices scale, they will need comprehensive support in these crucial areas to ensure effective management, unity, and long-term
Success,” Wong said.

On costs, banks can help family offices on recruiting the right talent and whether to outsource work.

Banks and other financial service providers may also help family offices source top deals in alternative investments. These deals will be tailored to the family offices’ needs.

“Family offices in Asia interviewed by McKinsey say they have limited access to tailored alternative investment solutions such as access to early-stage start-ups, pre-IPOs, and institutional-grade infrastructure solutions, despite strong interest,” Sengupta and Kotanko said.

Banks should also consider using partnership to offer “a diverse range of investment products.” 

This includes an open architecture system and partnerships with asset managers in order to capture more investment opportunities, McKinsey said.

Wealth Technology (Wealthtech) firms, meanwhile, can offer solutions such as portfolio performance and analytics, data aggregation on investment, and automated financial reporting.

“Family offices are looking for trusted partners that can complement their capabilities,” Kotanko and Senguopta said.

“Financial firms with the right know-how and approach can help these families achieve their financial goals by offering bespoke investment solutions, value-added services, and more, setting each family up for success for generations to come,” they added.