Corporate Press Release
Credit Suisse holds inaugural Asia Pacific Family Forum in Hong Kong, Launches White Paper on Best Practices for Family Offices
A family office traditionally refers to an SFO that is an organization dedicated to the needs of the family that it serves. The Credit Suisse Asia Pacific Family Office Forum is the first event of this scale dedicated to the topic of family offices that the bank has organized in the region. It is a response to the demand from a growing number of emerging Asian single family offices for peer-to-peer sharing of best practices, addressing common challenges and provides a unique network and exchange platform between both the emerging and more established SFOs.
SJ Hwang, Credit Suisse’s Head of Solution Partners Asia Pacific, said, “The Family Office Forum and the White Paper is part of Credit Suisse’s on-going efforts to offer our clients practical guidance in building their own private SFOs. We set up a Family Office Services and Philanthropy Advisory team in Asia Pacific in 2011, and it is part of our dedicated Solution Partners unit within our Private Banking & Wealth Management business. Solution Partners works closely with our Investment Banking division to originate, structure and market customized solutions for our ultra-high-net-worth (UHNW) clients, which include both emerging as well as the larger established family offices. It covers their financing, investment and platform needs through the different stages in their wealth lifecycle, from starting up their business, to building their wealth and corporate assets, to liquidity events, wealth preservation needs and expansion, leading eventually to generational wealth transfer.”
Family offices gathering pace in Asia
Based on published data, there are an estimated 3,000 SFOs globally, of which only around 100 or 3% are in Asia Pacific, managing US$ 1.2 trillion of assets. At least half of them were set up only in the last 15 years, suggesting that the concept of a family office is still a relatively new phenomenon globally.
Bernard Fung, Credit Suisse’s Head of Family Office Services and Philanthropy Advisory Asia Pacific, said, “To set up a single family office, the amount of family wealth under management is generally at least US$100 to150 million. The Credit Suisse Global Wealth Report 2013 estimates that there are close to 34,000 ultra-high-net-worth individuals globally with more than US$100 million in wealth, with 25% of these or more than 8,400 in Asia; yet only 3% of existing global SFOs are in the region.”
While the penetration of family offices in the region is still low and disproportionate to the rapidly growing size of the wealth pool, both the number and level of sophistication of SFOs are growing rapidly. “As more of our ultra-high-net-worth clients are entering the mature phase of their wealth lifecycle in the coming years, they will start thinking about long term wealth management and succession planning, and increasingly need advice on structuring their wealth and management of liquidity for the next generation. Setting up an SFO can be an important part of this process,” Mr. Fung added.
Forum highlights infrastructure needs of SFOs
At the Forum, 17 speakers comprising experts from Credit Suisse, independent professional advisors, chief investment officers and key representatives from SFOs shared their best practices and experience, focusing on three key topics including what early stage SFOs need to consider, drawing on experience of professional advisors and established family offices; investment priorities based on expertise from chief investment officers at SFOs; and the do’s and don’ts of investing in privately held assets.
Discussions at the Forum also shed light on the topic of infrastructure requirements of SFOs. As SFOs grow in size and sophistication, they are increasingly defining their own specific investment strategies, becoming more self-directed and looking for institutional sales and trading capabilities, with some of the most advanced effectively operating like a hedge fund. Credit Suisse specifically caters to this group through its Prime Services for Private Banking (PS4PB) offering, providing the larger SFOs access to its Investment Banking Prime Services platform which traditionally serves hedge fund institutional clients through a globally integrated, multi-asset platform across traditional prime brokerage, prime financing, listed derivatives and managed lending. Credit Suisse was named the second largest prime broker servicing Asia’s hedge fund industry for two consecutive years based on assets under management, and the top prime broker in the largest markets of Hong Kong/China, according to AsiaHedge’s prime brokerage survey released in May 2014.
Raza Jafree, Credit Suisse’s Head of Prime Services for Private Banking Asia Pacific, said, “We aim to work with SFOs over the long term and partner with them to provide scalable solutions to meet their specific needs. Through PS4PB, for example, we have been able to provide sophisticated SFOs of a certain scale in Asia with institutional trading and portfolio financing solutions. Typically these SFOs have liquid portfolios of above US$50 million diversified across equity or fixed income assets, leverage requirements and an active trading strategy.”
Best practices guide for families in setting up or restructuring family offices
At the Forum, Credit Suisse also launched a two-part white paper titled “Family Office Dynamic: Pathway to Successful Family and Wealth Management Parts I and II”, produced in conjunction with Ernst & Young and the University of St Gallen of Switzerland. Mr. Fung said, “Credit Suisse has had the privilege of serving the world’s wealthiest families since 1856. This publication illustrates our considerable experience in advising and supporting our clients in all phases of the family office process, from inception to maturity. As family offices continue to gain in popularity, this paper is an invaluable guide for families considering setting up a family office. “
The white paper explores what a family office does and the most effective structures and processes, providing insights and answers to the following key questions:
• Why should a family set up a family office, and what are the different types of family offices?
• What services are generally best performed in-house, and which outsourced?
• How are family office professionals most effectively recruited and managed?
• What needs to be included in a family office business plan – and what are the different stages involved in setting up a family office?
• What are the major risk areas and how can these be managed?