4 key goals wealthy families are prioritising

Fifty-nine per cent of family offices in Asia are in Singapore, according to KPMG.

Four goals are increasingly front of mind for wealthy families, a report from DBS Private Bank showed.

According to the report, family offices are focusing on ensuring harmony across generations on a global scale, aligning values between the family office and family business enterprise, unlocking new bold investment strategies, and enabling the personal ambitions and passions of their family members.

Achieving these goals, however, means navigating complex risks and may involve managing strategic risk, which several wealthy families (27%) say is not their strong point.

More than two in three (65%) also admit that some of their processes are not as strong as they need to be to ensure a legacy for the family’s wealth.

Ensuring harmony across generations on a global scale

For wealthy families to ensure harmony across generations on a global scale, family offices need to transform how they evaluate, assess and manage the related threats to their long-term goals and objectives.

“To thrive in the face of challenges like climate change, the existing model may need to be completely reimagined. More broadly, family offices should ask what measures they could take to maintain harmony and common purpose among family members residing in multiple countries,” DBS said.

“In our view, two priorities here need to be around improving engagement with the next generation and ensuring safe communication in a digital world,” DBS added.

Engaging the next generation

To further deepen engagement with the next generation, DBS said family offices should ask how they can update their service offerings to accommodate their specific needs.

In Singapore, six in 10 family offices suggest that younger family members expect more extensive support from the family office than the senior generation.

“For many, creative thinking around environmental and social challenges could help them refine the services that they provide to the younger cohort,” DBS said.

“Family offices could focus more on setting sustainability key performance indicators and policies, impact measurement and management, as well as more transparent reporting on ESG performance,” Kelly Teo from the Monetary Authority of Singapore (MAS) said.

“They could also invest more in ESG training,” Teo added.

Aligning values between the family office and the family business enterprise

In an innovation-focused family office, DBS said: “Executives should ask how they can broaden their thinking around sustainability and social responsibility beyond the operation of the family office’s investment portfolio – and in addition to the kind of new ESG policies and criteria"

"For executives serving families that are closely connected to the family business enterprise, this might extend to ensuring that the two organisations are not carrying out their sustainability activity from within silos. As such, family offices can ensure alignment on ESG standards, as well as on environmental and climate risk mitigation, and decarbonisation activity," DBS added.

More importantly, DBS said family offices should seek always to learn cutting-edge business approaches from the commercial enterprise, adopting best practice risk-management and leadership strategies.

Unlocking bold new investment strategies

DBS underscored that family offices must focus their attention on refining the investment governance and due diligence frameworks, and potential exit strategies that are required when deploying funds.

“Some families may not be doing as much due diligence as they should in some of these private equity investments,” said Lee Woon Shiu, Managing Director and Group Head of Wealth Planning, Family Office and Insurance Solutions, at DBS Bank.

“Some may even be taking comfort from the fact that a potential investment vehicle has been founded by one of the principal’s personal friends and therefore should be safe. Sometimes private equity deals come with scant information, so you can’t just rely on what’s given to you by the promoter,” Lee added.

Enabling the personal ambitions and passions of family members

Many of the assets held by wealthy families become more esoteric as their wealth increases, these include caskets of wine, jewellery, art collections, private yachts, and private jets.

 “The ability to apply their minds carefully to how to manage the risk around some of these new asset classes is crucial for family offices. They need to deal with these issues in a systematic yet innovative way, to manage the exposure to an entirely new dimension of risk,” Lee said.

Today, around three in four collectors in Hong Kong and Singapore remain optimistic about the
outlook for the art market, which has rebounded strongly since the pandemic. 

In 2022, investments in other collectable assets, including coloured diamonds, cars and wine, also remained high relative to wider economic uncertainty.