2020 Family Office Series
The 2020 Family Office Series is a 6 weeks special coverage on family office and multi-family office in Asia. Hear from leading family office experts, institutes, private banks, family offices and many more. Learn about family office, changes family office are facing, how to setup a family office or join a multi-family office. Find out how the biggest wealth transfer is taking shape, how managing traditional wealth and new wealth is different and many more.
About Family Office: Family offices manage assets of the wealthiest people in the world. There are about 2,800+ billionaires, 290,000 UHNWs and 15,000+ family offices worldwide. Billionaires and UHNWs setup family offices, with assets ranging from $300 million to $3 billion, and some with more than $10 billion assets. Newer family offices are also setting up family offices with $20 million to $100 million.
- 2020 Top 10 Largest Family Office in the World
- 2020 Top 10 Largest Multi-Family Offices in the World
- 2020 List of International Private Banks in Hong Kong
- 2020 List of International Private Banks in Singapore
- UBS Global Family Report 2020
- KPMG Report – Global Family Business Tax Monitor 2020
- Top Family Office Reports in 2020
- Top Global Wealth Reports in 2020
- Top Research Reports in 2020
Interview with Richard Grasby, Founder of RDG Fiduciary
Interview with Richard Grasby, Founder of RDG Fiduciary
We interview Richard Grasby, an accomplished lawyer and founder of RDG Fiduciary Services in Hong Kong, sharing his valuable insights on family office, key considerations on setting up a family office and the fascinating world of family office.
Highlights from interview:
- “The setting up of family office is often a process of evolution”
- In family office – “Disputes will happen”
- “Do a family office properly, or don’t”
- Most extravagant purchase by family offices: Sporting teams, world record art
- Favourite place for family office meetings: Hong Kong, Singapore, Shanghai, Shenzhen and Switzerland
” Do a family office properly, or don’t “
Who are you and what do you do?
Richard: I currently have two roles. I am a lawyer in a boutique Hong Kong law firm and also the founder of a fiduciary services, training and consulting business.
- Lawyer in Boutique Hong Kong Law Firm
- Founder of RDG Fiduciary
I have been working in the private wealth business since 1997 and in Hong Kong since 2009. I have previously worked in Jersey, London and the Cayman Islands, and I am admitted as a lawyer in England, Cayman and BVI (British Virgin Islands).
1. What are the top 1 – 3 concerns / topics for family offices in Asia today?
Richard: As a starting point and coming at this from an advisory perspective, it is worth discussing the concept of a family office as it covers a wide range of potential services.
Quoting from my July 2020 article: “to speak about “setting-up” a family office and “regulation” of a family office, it is necessary to know what this means. Along with many in the family office space, I believe that a family office is not, in most cases, a single, identifiable entity and it may be somewhat misleading to describe a family office as being “located” in a single jurisdiction. Article: Family Office: Hong Kong or Singapore or?
” misleading to describe a family office as being located in a single jurisdiction “
That said, there will most likely be a “main centre” of the family office attaching to a particular jurisdiction or, in many cases, to specific decision makers (who themselves may be located in multiple jurisdictions throughout a year). In addition, the control and ownership of the “family office” is as important as the family office itself – and could be the true family office.”
Top 1 – 3 concerns / topics for family offices in Asia:
- Service lines of the family office
- Regulatory and tax certainty (and simplicity)
- Ownership and governance of the family offices
2. Is there any interesting story about family office you can share?
Richard: I had a detailed debate with one family about how to own a particular entity without having probate* and without using a trust*. We had to look at passing ownership rights after death. We looked at different share classes and novel structures such as foundation companies.
* Probate refers to the administration of a deceased person estate with or without a will. Trust is a fiduciary arrangement to allow a 3rd party or trustee, to hold assets on behalf of the beneficiaries.
On Setting up Family Office
1. What is the amount of assets required to setup a family office?
Richard: It depends on the sophistication and intended operation of the family office. For a virtual family office, the amounts could be several 10s of millions. For a full family office, I would say 100 million plus. But of course there’s nothing to stop at a lower amount (to set up a family office).
Assets required to setup a family office:
- Virtual family office: 10s of millions
- Full family office: 100 million +
- A lower amount is possible too
2. How does a Billionaire or UHNW setup a family office?
Richard: It depends on the service lines, ownership and governance. As a minimum, there will need to be some form of entity, and that will need owners and directors.
We then need to consider the functions. We also need to look at what will be outsourced and what will be done internally. Accounting? Legal? Fund admin? Trusteeship? Are these done by the family office or outsourced?
- Investment management
- Entity for the manager
- What assets to manage
- One or more entities for the assets
- Philanthropic entity
- Planes / Yachts
- Captive insurance company
Quoting from my July 2020 article:
“Such services could include some or all of the following: investment management, a number of the investment holding entities, philanthropy, succession planning, trustee services, fiduciary services, captive insurance, concierge, legal, tax, accounting, reputation management and data privacy. It is highly unlikely that these would be carried out by the same entities or persons and therefore would not automatically be carried out from the same jurisdiction.”
3. Who initiates setting up a family office? When is a good time to setup?
Richard: It can be triggered by a major liquidity event – IPO of business for example.
When to Setup Family Office:
- Triggered by major liquidity event such as IPO
- Taking family into next level of wealth
- Family business controlled by one heir, and other wealth to be controlled by another
- Desire for bespoke structure. This can evolve over time and be driven by specific needs, perceived fee/expense efficiencies, desire for privacy/ confidentiality
The setting up of family office is often a process of evolution, to formalise the “embedded” family office. It also depends on the “gatekeeper”.
” The setting up of family office is often a process of evolution “
4. Why not an investment holding company? Why a family office?
Richard: Many family offices are centred around an investment holding company. An investment company alone doesn’t deal with the issues highlighted above. (Above: philanthropy, succession planning, trustee services, fiduciary services, captive insurance, concierge, legal, tax, accounting, reputation management and data privacy)
” Many family offices are centred around an investment holding company “
5. How about a multi-family office? Why a multi-family office?
Richard: Many multi-family offices are specialised service providers, offering expertise and independence. But it is hard to compare these to single family offices. A multi-family office where multiple branches of the same family use the same family office for independent structures, that is more literally a multi-family office. Or perhaps founders of the same business wish to share certain services form a multi-family office – such as Blue Pool.
(Blue Pool Capital is a multi-family office based in Hong Kong founded in 2015 by founders & executives of Alibaba Group. The founders of Blue Pool Capital includes Joseph Tsai and Jack Ma)
” Multiple branches of same family use the same family office “
6. Some single family offices are also evolving to become multi-family office or offering family office setup advisory. Why is this trend emerging?
Richard: Single families over time evolve into separate branches, and then regard themselves as separate families with common lineage. They have different aspirations, investments, tax residences etc. so their family office is a multi-family office.
With a multi-family office, families can share fees, recoup expenses (by charging other families) and monetize know-how. They can also access external capital for private label funds or club deals, without needing a true third party manager.
” Different aspirations, investments & tax residences “
In a Family Office
1. What happens in a family office if the family have disputes, face legal, business or financial problems?
Richard: This is a key risk to consider. Disputes will happen. The following questions need to be looked at:
- How to minimise risk?
- Who are the Directors? Who can remove them?
- Who are the Shareholders?
- Can there be economic beneficiaries without a vote?
- Who are the parties to the dispute?
- Who is the client of the lawyer?
- Consider “internal” problems versus “external” problems
” Disputes will happen “
2. What really happens in a family office managing $200 million or $2 billion?
Asians love real estate. They buy buildings? Take-over listed companies? Buy private jets or islands? Invest in stocks, bonds, private equity or hedge funds?
Richard: It will be good to look through the UBS Global Family Office Report amongst others to learn more about what family office invest into. Report: UBS Global Family Report 2020
Family offices can shift into direct investments, co-investments and club deals. They can also go into bespoke products or new investment instruments such as crypto.
Joe Tsai, co-founder and Executive Chairman of Alibaba, for example, bought NBA team Brooklyn Nets.
- Shift to direct investment, co-investment and club deals.
- Bespoke products
- New instruments such as Crypto
- Joe Tsai (Alibaba co-founder) bought NBA team Brooklyn Nets
3. What is / are the most extravagant or exotic asset family offices buy?
Richard: Sporting teams. World record art. Are Middle East sovereign wealth funds the ultimate family office?!
” Sporting Teams “
1. How is the journey for you so far as a lawyer and founder of RDG Fiduciary, advising clients, billionaires, UHNWs?
Richard: I am usually part of a team of advisers. It is apparent that there is room for increased expertise, both for clients and just as crucially, other advisers.
2. Any other things you want to share to billionaires, UHNWs, family offices or family office professionals?
Richard: Think of structuring as risk management. Family wealth insurance. Do a family office properly, or don’t.
” Do a family office properly, or don’t “
3. Best or favourite city for family office meetings or gatherings in the world?
Richard: Aside from Hong Kong, Singapore and Shanghai dominate. Shenzhen has changed considerably. I also love trips to Switzerland, but that’s more for conferences.
Thank you Richard for sharing your valuable insights in The 2020 Family Office Series to family offices, family office professionals, billionaires and UHNWs in Asia and around the world.
Richard Grasby is a lawyer and the founder of RDG Fiduciary Services. He is an experienced trusts, funds and private wealth lawyer, in multiple jurisdictions and has been admitted as a lawyer in England & Wales, the Cayman Islands and the BVI.
Richard is also the immediate past chair of the STEP Hong Kong branch, a committee member of the STEP Business Families Global Special Interest Group and a committee member of the STEP International Client Global Special Interest Group. He is a member of the Hong Kong Trustees Association and a lecturer on their Trust Training Certificate course. He is an elected member of the International Academy of Estate and Trust Law.
TEP – Trust and Estate Practitioner