The creation of wealth in Asian markets is expanding at a tremendous rate. Specifically, the region’s high-net-worth population has grown in recent years and shows no signs of slowing, making it fertile ground for new family offices.
The family office model is firmly entrenched in the U.S. and Europe and is quickly gaining traction in other parts of the world for a number of reasons. Second- and third-generation wealth holders are frequently educated outside of their home country or region, and prestigious Western universities are a big draw for Asian, Indian and Middle-Eastern families that want to raise children equipped with every advantage. Also, an international education can help engender a more global perspective within the family, especially around subjects like legacy planning and wealth management, where there is much to be gained from a broader mindset.
Another reason for the heightened appeal of family offices among Asian families is directly related to adverse experiences with traditional financial institutions and banks. An independent family office is better positioned to commit to the welfare of the ultra-wealthy family and prioritize the interests of the client above even those of the organization or its executives. This often allows the family office to identify and procure ideal solutions for clients wherever in the world they can be found.
Angelo Robles, founder and CEO of the Family Office Association and author of "Effective Family Office," said, “Many Asian wealth creators and their scions are actively looking to the United States and Europe for best practices in establishing and running their own family offices. The family office sector in the United States continues to draw interest from international families that want to learn recent success stories. Even so, fewer than 20 percent of family offices regularly meet all defined operating criteria.”
The allure of single-family offices among Asian ultra-wealthy families is strong and growing, with more such families deploying assets in the nation, which they admire for its stability and business opportunities. If private wealth creation in the region continues unabated, there’s little doubt that family offices and all the attendant opportunities will increase proportionately.
To address family and investment matters, some Asian single-family offices are establishing satellite operations in the United States. However, the more common approach is to create a strategic alliance with established professionals in the U.S. These professionals, working with Asian single-family offices, are referred to as outpost family offices.
The responsibility of an outpost family office is to deal with the family and financial matters in the U.S. At the same time, senior management of the Asian single-family office provides oversight.
While relatively small in number, opportunities for U.S.-based wealth managers and multifamily offices to be outpost family offices are multiplying quickly. Furthermore, the business benefits to the outpost family office are considerable. While Asian single-family offices are looking for value, they will pay premium pricing for value.
Russ Alan Prince, president of R.A. Prince & Associates, is a consultant to family offices, the ultra-wealthy and select professionals.