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As a global financial hub with an ease of doing business, setting up a family office in Singapore has been a popular option for ultra-high net worth individuals (HNWI). Be it the high living standards, international connectivity and the pool of talent, Singapore has much to offer. There is little surprise to know that assets under management (AUM) by Singapore-based managers grew in tandem with global trends, rising over 15 per cent in 2019 to reach S$4 trillion.

What are Family Offices?

A family office is a private wealth management advisory firm for one or a small number of HNWI.

Family offices generally provide the full spectrum of financial services such as financial planning and investment management. Aside from these services, family offices offer a variety of other services as well, from wealth transfer planning to private schooling and travel arrangements.

Given that the services provided are flexible, one can find easily find a clientele to serve. For example, some families may require a dedicated team of financial specialists for high-calibre advice, while others may need a family office to organise their lifestyle needs.

Differences Between Single Family Offices (SFO) and Multi-Family Offices (MFO)

What’s the difference between a SFO and MFO? The difference lies in the number of clients served. An SFO only serves a HNWI or affluent family, while MFO take on multiple clients—similar to traditional wealth management shops. In setting up a family office, deciding whether to opt for an SFO or MFO depends on your objective.

An SFO is often limited to just one ultra-affluent family, and while high paying, does not enable much in the way of expansion. On the other hand, a family office structured as an MFO allows you to build the business by taking on more clients, with the added bonus of economies of scale (cost sharing among the families).

Benefits of Setting Up a Singapore Family Office

According to Channel NewsAsia, Singapore currently has about 700 family offices, up from 400 in end-2020 and up sevenfold from 2017.

This comes about as more affluent families are setting up offices in Singapore to manage their wealth. In particular, demand from Asia is soaring as private wealth in the region accelerates faster than anywhere else in the world; India tops the list for fastest rate of growth of millionaires.

Family offices located in Singapore can also benefit from Singapore’s wide network of 25 free trade agreements and more than 80 Double Taxation Agreements (DTAs), lowering withholding taxes from overseas investments, for example.

Furthermore, there is increased interest in the Asia Pacific—54% of global family offices plan to increase asset allocation in Asia Pacific over the next five years. Being situated at the heart of Asia provides unparalleled connectivity to capture this growth.

How to Set-Up Family Office in Singapore?

With the influx of international demand for family offices, how do you leverage this business opportunity? In order to set up a family office, these are the conditions required:

Minimum AUM Minimum Staffing Business Spending
S$10 million at the point of application; must increase to S$20 million within 2 years At least 2 investment professionals (‘IPs’). There would be a 1-year grace period to do so. For AUM

  • < S$50 million: S$200,000
  • > S$50 million and < S$100 million: S$500,000
  • >= S$100 million: S$1 million

An SFO is not required to be registered or licensed by the Monetary Authority of Singapore (MAS) as they do not manage third-party funds. On the other hand, an MFO must be licensed or registered with the MAS.

Investment Approach

With the new mandate by the MAS, the family office must make local investments constituting at least 10% of the fund’s AUM or S$10 million at any point in time. A grace period of 1 year is given to reach this level. Local investments include:

  • Equities listed on Singapore-licensed exchanges

  • Qualifying debt securities

  • Funds distributed by Singapore-licensed/ registered fund managers

  • Private equity investments into non-listed Singapore-incorporated companies (e.g. start-ups) with operating business(es) in Singapore

Alternative to setting up a family office in Singapore

If family office is not for you, you can consider setting up a company in Singapore instead. The process is straightforward for locals, and for foreigners, it can be challenging if you are looking to move to the country as well.

You can read more about how to register a company here: https://www.paulhypepage.com/singapore-company-registration/

Residency for Foreigners

Besides the business opportunity, setting up a family office also affords another perk for foreigners. Under the Global Investors Programme, family office principals with at least 5 years of entrepreneurial, investment or management track record and net investible assets of at least S$200 million are eligible for permanent residency (PR).

Outsourcing to External Agencies

While most companies require full-time employees and specialists, some jobs can be outsourced to third parties. For example, bookkeeping and corporate secretarial roles can be outsourced to corporate services. This option is often recommended, as there are cost savings, access to greater expertise. More effort can then be focused on the family office’s core competencies and highly customised service.

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