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 Sylvene Fong and Jackey Tse of KPMG China
Interview with Sylvene Fong, Partner & Head of Private Enterprise Hong Kong and Jackey Tse, Director of Family Consulting & Family Enterprise at KPMG China
We interview Sylvene Fong who is Partner & Head of Private Enterprise Hong Kong at KPMG China, and Jackey Tse, Director of Family Consulting & Family Enterprise at KPMG China, sharing their valuable insights on family office, key considerations on setting up a family office and the fascinating world of family office.
Highlights from interview:
- “A good family office should help to prevent disputes or issues from happening”
- When to setup family office: “Set up family office earlier rather than later, especially when top decision maker in the family is still physically fit and able to”
- Family office: “Tend to rely more on outsourced services in the early stage”
- On multi-family offices: “Services offered will be less tailored than a single family office”
- ” An investment holding company is not an alternative for a family office, and vice versa”
- Sylvene’s Advice: ” Running a family office is a lifelong journey and there will be ups and downs. Always plan ahead “
- Jackey’s Advice: ” Try to fix things when in good times – you will find it much easier to do so than in bad times “
” A good family office should help to prevent disputes or issues from happening “
Who are you and what do you do?
Sylvene: I am currently a Partner and Head of Private Enterprise Hong Kong at KPMG China. Private Enterprise is our private business and family office service line. I joined KPMG over 20 years ago. I specialise in consumer and industrial markets and have been involved in annual audits of listed & private companies, and participated in major IPOs and transactions.
- Partner and Head of Private Enterprise (private business and family office service line) in Hong Kong
- Specialise in consumer and industrial markets
- Involved in annual audits of listed & private companies and participated in major IPOs and transactions
Jackey: I am the Director of Family Consulting and Family Enterprise at KPMG China. I have more than 17 years of advisory and client side (as family office’s CFO) experience, with solid experience in family office setup, M&A, family assets holding structure and tax planning. I am committed to promote Hong Kong as an asset management and family office hub in Asia, focusing on providing tailored professional services to entrepreneurs and HNWIs.
- Director of Family Consulting and Family Enterprise
- Solid experience in family office setup, M&A, family assets holding structure and tax planning
- Committed to promote Hong Kong as an asset management and family office hub in Asia
1. What are the top 1 – 3 concerns / topics for family offices in Asia today?
Sylvene: The key concerns of family offices in Asia today are mainly around how family wealth can be passed on to the next generation and ensure they can successfully take over and maintain the family business, and also on how best to deal with constantly evolving regulations and increasing compliance cost.
Top 1 – 3 concerns / topics for family offices in Asia:
- How family wealth can be passed onto next generation
- Ensure they can successfully take over and maintain the family business
- Deal with evolving regulations and increasing compliance cost
” Ensure they can Successfully Take over and maintain the family business “
2. Is there any interesting story about family office you can share?
Sylvene: We often see early-stage family offices having difficulties removing non-executive family members from the executive decision-making process.
It could be because some members of the family do not fully understand the importance of family governance and therefore underestimate the potential risks associated with it, or it could be a result of a failure to enforce the appropriate measures already put in place to ensure sound governance.
” Difficulties Removing non-executive family members “
On Setting up Family Office
1. What is the amount of assets required to setup a family office?
Jackey: There is not a fixed minimum amount of assets required for setting up a family office. Generally speaking, it will make sense to set up a family office if the passive income earned and managed by the family office can offset the cost of running it, and additional values can be created for the family.
There are a number of things we will look into for potential clients, including the market return (the Beta) of the market in which the family’s business focuses, the expected return by the family; the required functions of the family office, and amount of outsourced services (including multi-family office and corporate family office) which may be required.
Considerations in setting up the family office:
- Income earned can offset cost of family office
- Additional values can be created for the family
- Market return of the family’s business
- Expected return by the family
- Required functions of the family office
- Required outsourced services
” Income earned can offset cost of running it (Family Office)”
2. How does a Billionaire or UHNW setup a family office?
Jackey: UHNW clients often start the process by engaging a professional adviser they trust and know well, such as their long-time banker, lawyer or accountant, and tend to rely more on outsourced services in the early stage, before gradually growing the family office organically to address the needs of their family.
3. Who initiates setting up a family office? When is a good time to setup?
Jackey: The setting up of a family office is usually initiated by family members with executive roles in the family’s business, and triggered by a number of possible events, such as liquidity events, an expansion of the family, increasing needs to separate the family’s wealth from its business risks, dissatisfactory family governance, and succession planning.
We would advise clients to set up the family office earlier rather than later, especially when the top decision maker in the family is still physically fit and able to.
” Especially when the top decision maker in the family is still physically fit and able to “
4. Why not an investment holding company? Why a family office?
Jackey: An investment holding company is not an alternative for a family office, and vice versa. A family office is not necessary in a holding structure, rather it is a unit, or a collection of units, that takes care of a wide range of matters for a family, spanning from investments, education, logistics, to lifestyle-related and other unique family needs.
” An investment holding company is not an alternative for a family office, and vice versa “
5. How about a multi-family office? Why a multi-family office?
Sylvene: Multi-family office is commonly used by High net worth families for investment purpose, as it is typically more cost-efficient than running their own single family office. However, the services offered by a multi-family office will be less tailored than a single family office.
” MFO: Services Offered will be less tailored than a single 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?
Sylvene: Single family offices have been performing well and are looking for opportunities to grow more rapidly and to gain additional revenue leveraging on their strengths. They are therefore exploring business opportunities in terms of offering family office services which are more focused on investments.
In a Family Office
1. What happens in a family office if the family have disputes, face legal, business or financial problems?
Sylvene: When a family finds themselves in disputes or legal, business or financial problems, this is when their family office should step in and take an active role to help identify the risks and respond to them. A good family office should help to prevent such disputes or issues from happening in the first place.
” A good family office should help to prevent disputes or issues from happening “
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?
Jackey: Regardless of the size of the asset under management of a family office, wealth preservation and growth will be one of its key functions, and family investments managed by it should align with the family’s investment objective.
Each family will have their unique investment interests and specific needs, but in general, diversification, investment philosophy, unique needs, returns expectation and risk appetite of the specific family should always be considered on every investment decision. Different asset classes present different risks and return characteristics and will need to be considered accordingly. The investment objective should also be reviewed periodically and updated as necessary when circumstance changes.
3. What is / are the most extravagant or exotic asset family offices buy?
Sylvene: Family offices assist clients on all sorts of asset acquisitions that are relevant to the family’s business or their specific interests or needs. These assets can include fine wine, rare jewellery and artwork, among others. The characteristics of these assets are less liquid and hard-to-value. However, these assets have a low correlation on returns compared to other more common investments like stocks and bonds, which may give them a place in a diversified portfolio of a family.
Regardless of the nature of the investment, ultimately, the objective is to preserve the wealth of the family over generations.
” Fine wine, rare jewellery and artwork “
1. How is the journey for you so far Sylvene and Jackey, advising clients, billionaires, UHNWs?
Sylvene: Gaining trust from your clients is the first priority for the family office business. I find that this trust can be achieved through proving our professionalism and providing independent and unbiased advice in the best interests of the client.
Jackey: We are usually dealing with the top decision-makers in the family and sometimes with tricky family dynamics too, guiding the family through some difficult situations such as succession planning. It is always satisfying when the client indicates their appreciation for our help.
2. Any other things you want to share to billionaires, UHNWs, family offices or family office professionals?
Sylvene: Running a family office is a lifelong journey and there will be ups and downs. Always plan ahead.
” Running a family office is a lifelong journey. There will be ups and downs, always plan ahead “
Jackey: Try to fix things when in good times – you will find it much easier to do so than in bad times.
” try to fix things when in good times – you will find it much easier to do so than in bad times “
3. Best or favourite city for family office meetings or gatherings in the world?
Sylvene: Hong Kong is an ideal place for family office meetings, given its great pool of professional advisory talent that can help facilitate these meetings.
Jackey: Our family office clients often enjoy gathering in Hong Kong, as a visit to the city is convenient with the advantage of its visa-free policies and direct flights from the world’s major cities.
Thank you Sylvene and Jackey 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.
Sylvene Fong, Partner & Head of Private Enterprise Hong Kong at KPMG China
Sylvene Fong is a Partner and Head of Private Enterprise Hong Kong at KPMG China. She joined KPMG over 20 years ago and has been involved in annual audits of listed and private companies in toys, pharmaceutical, freight forwarding and electronics businesses for over 10 years.
She has also participated in initial public offering/major transactions assignments of companies in China and Hong Kong.
Jackey Tse, Director of Family Consulting & Family Enterprise at KPMG China
Jackey Tse is the Director of Family Consulting and Family Enterprise at KPMG China. He has more than 17 years of advisory and client side (as family office’s CFO) experience. He has worked with Big4 firms, including KPMG, for over 12 years, with solid experience in family office setup, M&A, family assets holding structure and tax planning.
Before re-joining KPMG, he was the CFO of a single family office managing the family asset, including overseas and local direct investments, as well as the operations of the family office and an education business in Hong Kong.
Jackey is committed to promote Hong Kong as an asset management and family office hub in Asia, focusing on providing tailored professional services to entrepreneurs and HNWIs, including establishing/enhancing family office, assistance in asset preservation and growth, succession, family governance and professionalization of family office operations.
KPMG member firms and its affiliates operating in mainland China, Hong Kong and Macau are collectively referred to as “KPMG China”. KPMG China is based in 27 offices across 25 cities with around 12,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Hefei, Jinan, Nanjing, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Tianjin, Wuhan, Xiamen, Xi’an, Zhengzhou, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.
KPMG is a global organisation of independent professional services firms providing Audit, Tax and Advisory services. We operate in 146 countries and territories and in FY2020, had close to 227,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.
In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG’s appointment for multidisciplinary services (including audit, tax and advisory) by some of China’s most prestigious companies.
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