SINGAPORE – On a sweat-laced evening in June, while much of Hong Kong dug into supper, two dozen students snaked their way past ginseng dispensaries and tailor shops to the third floor of an office tower to be schooled in finance’s hottest trend.
The cohort was a white-collar jumble – some were private bankers with gym bags, others primly dressed accountants. They had come to study the ABCs of family offices – companies dedicated to managing enormous, secretive pools of generational wealth: from the perils of working for politically exposed persons to soft skills covering the vagaries of Swiss watches and fine art.
The night classes are part of a global race taking place from Singapore to Miami and Lausanne as governments fight to attract booming family office businesses, especially from Asia.
With residency, luxe living and low taxes mere table-stakes, the availability of trained staff to help the ultra-rich run their lives and their money has become a key battleground.
Trillions of investment dollars and top jobs that sometimes pay US$1 million (S$1.33 million) or more are up for grabs.
“The talent gap is growing and becoming a problem,” said instructor Dixon Wong, ahead of his lesson at HKU Space, a continuing education school affiliated with Hong Kong University.
“Unlike many of the family offices in the US and Europe, Asian family offices are often managed by family members, but this approach has had some constraints and limitations.”
Wealth transfer
The rise of Asian family offices is tied to the region’s maturing fortunes.
With much of the local money generated after the end of colonialism, many of the entrepreneurs who have become super rich are now seeking to manage and transfer wealth to their descendants – just as old-money families in Europe and the US have done for decades.
By 2025, financial wealth in Asia excluding Japan could outstrip that in the United States, according to a projection by HSBC, which pegged the number at almost US$140 trillion in 2021.
Knight Frank predicts Asia will have more wealthy residents than Europe within three years.
The resulting surge in family office demand is hitting the region like a tsunami – 80 per cent of the companies surveyed for Campden Research’s Asia-Pacific Family Office Report in 2022 were established after 2000.
The global family office industry was already managing nearly US$6 trillion in 2019 – a figure that has only grown since then.
“Asia has tremendous growth potential,” said Ms Rebecca Gooch, global head of insights at Deloitte Private in London.
While the region only accounts for a fifth of all family offices, it is the fastest-growing market in the world, she said.
Financial hubs are ramping up efforts to get in on the action.
Hong Kong has introduced a raft of tax and residency incentives aimed in part at luring clans wanting to invest in China, while Dubai has opened a dedicated centre for wealthy families.
Singapore was early to the game, offering tax breaks and other perks, adding to its reputation for stability.
The city-state had about 1,100 family offices at the end of 2022, up from just 400 in 2020, according to Monetary Authority of Singapore estimates.
In March, the Government said there was a backlog of 200 new applications.
Hong Kong is targeting at least 200 top-tier offices by 2025.
All of these new companies need employees.
Around 40 per cent of the family offices surveyed by KPMG International and Agreus Group are planning to hire in 2023, while almost 60 per cent of staff enjoyed pay rises in 2022.
In theory, they should be able to pluck from the growing pool of unemployed bankers as companies from Credit Suisse to Morgan Stanley shed thousands of jobs.
The reality is that family offices make unique demands of employees, and are notoriously selective.
One reason is secrecy – working at one of these companies gives employees an inside view of a clan’s entire existence, so trust is crucial.
A former family office executive told Bloomberg News they managed their client’s security details, investments, philanthropy and travel across multiple continents.
Being great at a finance job does not always translate well to this line of work.
Three family office principals gave Bloomberg rather unconventional criteria when asked for their ideal hires.
Discretion was a given, but one sought high levels of Mandarin and an appreciation for the work of American artist Jean-Michel Basquiat. Another said the ability to mediate among squabbling siblings was a priority.
“The soft skills are more important than the hard or technical skills because the latter can be imported or outsourced,” said Mr Manish Tibrewal, who helped run the Tolaram Group’s family office before launching Farro Capital, a multi-family office in Singapore.
Asia faces a dearth of professionals with experience in this area, said Mr Paul Westall, co-founder of Agreus, a family office recruitment company.
That makes it vital to convert the deep pool of finance executives into the discrete and flexible workers who are in hot demand.
“If someone needs to pick the mail up or make a cup of coffee for the principal’s friend, then you may be required to do that,” Mr Westall said, noting one finance-trained head of a family office is working on the design of a client’s office. “Some people are just not going to be right for that.”
The hiring challenge is especially acute in places like Singapore, where companies must hire a minimum number of staff to reap tax exemptions and other benefits, even with an unemployment rate of just 1.9 per cent.
Hong Kong’s labour market is also tight, with a jobless rate of 2.9 per cent.
If a country lacks sufficient talent, “then a functional family office cannot be put in place”, said Ms Angel Chia, chair of the Family Office Association Hong Kong.
Open schools
To meet this demand, multiple governments are helping to fund and open schools that convert and train people – consider them equal parts networking hub, continuing education centre and finishing school.
In Singapore, much of the load has been borne by the Wealth Management Institute, an education and research centre founded in 2003 by state investors GIC and Temasek.
One of its signature programmes aims to turn graduates into “Certified Family Office Practitioners”, once they complete courses costing $11,880 over 5½ days.
Fees for permanent residents and Singaporean citizens are heavily subsidised.
By 2025, it aims to have 5,000 enrolments into such programmes.
In Switzerland, the International Institute for Management Development traditionally ran its flagship Leading Your Family Office programme in Lausanne, with Asian family office owners flying in for it – sometimes with their staff.
Since 2022, the course has also been taught in Singapore. Over 3½ days in November, they schmooze with peers and learn the ropes, with fees starting at $17,500.
“While it’s less talked about here at the moment, and it’s super hyped in Asia right now, there’s no less interest in Europe,” said Ms Nathalie Martin, an engagement manager who liaises with family offices.
The school is working on courses just for family office professionals. “Like us, others are just realising this is a huge topic.”
Dubai centre
Singapore’s Asian rivals are starting to catch up.
Hong Kong’s government plans to fund the Hong Kong Academy for Wealth Legacy to help train professionals in the same vein as Singapore’s wealth institute.
Dubai meanwhile launched the DIFC Family Wealth Centre in March, describing it as “the world’s first dedicated centre for family wealth.”
The Middle East hub is trying to lure family offices and businesses with a suite of benefits that include customised training and certification – a push that has been supercharged by a surge in wealth from tycoons driven out of Europe after Russia’s invasion of Ukraine.
While family offices normally prefer to hire staff with experience in similar companies, the explosive growth means there are not enough people to go around, according to Dr Jennifer Pendergast, professor of family enterprises at the Kellogg School of Management at Northwestern University in Chicago.
Nor is the boom limited to Asia – in June, she held a class in the school’s Miami campus for a cohort that included many Latin American family office executives.
“The space is growing so rapidly that you’re pulling people from places that haven’t done the job before – you can’t just keep cycling the same people,” she said.
The classes also end up being bonding sessions for otherwise isolated executives.
“A lot of this stuff is sensitive – you can’t just tell your friends you’re in family offices.”
The success of competing schools and courses may come down to how honest they are about the industry’s harsh truths.
Take the need for flexibility: In Mr Wong’s classroom at HKU Space in Hong Kong, the former head of family office at Invest Hong Kong projects a survey onto a screen that shows professionals spend much of their time performing “administrative tasks”, before sharing that this can cover everything from organising trusts to helping clients get their children into top schools.
One family office executive said their job ranges from screening investments and interacting with heads of state to booking plane tickets and arranging catering.
Another says they often take late-night calls when the patriarch gets trading ideas from his buddies.
They were once told at 11pm to “buy gold”, with no further instructions. The boss was due back at the poker table.
Industry fix
The need for suitable talent has become so dire that some of Asia’s family offices are starting to hire interns.
When Ms Elena Lee, a 19-year-old Stanford University student, was looking for something to do over the summer, she applied for a Hong Kong family office job on LinkedIn despite knowing little about the business.
For two months, Ms Lee worked in the back office learning how the industry ticked, occasionally joining executives on client calls.
The company was preparing to expand into Singapore, so she helped conduct research, while looking into environmental, social, and corporate governance frameworks and trust structures.
Most of her fellow classmates still have no idea what she did for the summer.
“There is very, very limited exposure to family offices in the education system and I feel like the people teaching it don’t really understand it that well either,” she said. “Initially, it just seemed like wealth management. But once you got into the firm and learnt about the operations more, you learn it’s a lot more holistic than that.”
As the clock strikes 10pm at Admiralty Centre, Mr Wong wraps up the class by taking questions – at times shifting from lecturer to pub buddy, reflecting the fact that many in the class will soon be his peers.
In coming weeks, they will study competing incentive schemes as well as the dark arts and structures used by billionaires to handle tricky wealth transfers.
When they descend the tower past now-shuttered stalls towards the sodium-lit taxi line one last time, these students will have become some of the people most certified to join the growing ranks of professionals serving ultra-rich families – whether they are truly ready or not.
“You get a nice summary of views – the dos and don’ts, but you can’t teach everything in a few weeks,” said Farro Capital’s Mr Tibrewal of such courses. “Professionals need to develop comfort with the family, and that comes only with time and experience.” BLOOMBERG
Image by: The Straits Times
