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Uncovering Trends and Opportunities to Increase the Ability of Adapting to the Shifting Demands of Modern Family Offices

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Speaker Presentation by Eva Law, Founder & Chairman, Association of Private Bankers in Greater China Region & Association of Family Offices in Asia at the PWM Greater China Summit 2015 in Hong Kong

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Uncovering Trends and Opportunities to Increase the Ability of Adapting to the Shifting Demands of Modern Family Offices

  1. 1. Uncovering Trends and Opportunities to Increase the Ability of Adapting to the Shifting Demands of Modern Family Offices Eva Law 3rd Sep 2015
  2. 2. Agenda • Asia and Great China Market Recap • Macroeconomic Environment in Greater China FO Landscape • Global Growth Opportunities • Exploring the success and sustainability factors of running the family office and managing the wealth
  3. 3. Asia and Great China Market Recap
  4. 4. Asia and Great China Market Recap • By 2018, USD 17.7 trillion net new wealth in Asia • China is expected to contribute over 50% of the growth I HNW personal financial assets in Asia • Still a significant room for growth
  5. 5. Macroeconomic Environment in Greater China FO Landscape
  6. 6. Macroeconomic Environment in Greater China FO Landscape • New Flood of MFOs and consolidation comes to play • Two poles : Mega ones go for make model, Petite ones go for out-sourcing • Concerns over Tax, beneficial ownership disclosure & AML Rules • High demand in managing circumstances change • Investment Horizon Shrinks
  7. 7. New Flood of MFOs and consolidation comes to play • Fragmented market • Wide gap on profitability among players • Large onshore players leverage M&A to grow • Quick growth of onshore market • Still largely product drivers, chasing returns • Large banks dominate, but increasing competition • Offshore asset continue to flow to foreign players • Small local players seek partnership • Consolidation comes to play, but at slow pace
  8. 8. Two poles : Mega ones go for ‘build’ model, Petite ones go for out-sourcing • Outsourcing helps family office to stay cost efficient • While building own infrastructure and maintain house services can preserve the confidentiality and independence of family office • Family needs to determine the expectations prior to creating business plan for the family office. These include setting priorities and defining services scope
  9. 9. Concerns over Tax, beneficial ownership disclosure & AML Rules • FATCA and Tax Reporting • Disclosure on beneficial ownership • Strategies to comply with AML & KYC • Protection of Privacy
  10. 10. High demand in managing circumstances change • Flexibility is paramount • External circumstances change : tax, law shift • Internal circumstances change : death, divorce • Nationality, Live/Work abroad, purchase/dispose offshore asset have different tax implications • Family constitution – dictate the arrangement • Wealthy couples plan proactively
  11. 11. Investment Horizon Shrinks • Families of significant wealth have multi-generational investment horizons • In time of market stress, investment horizons shrink • Horizon changes when liquidity event is anticipated, target date investment become popular • Investing to generate wealth is always carry long term structure • Being disciplined is key
  12. 12. Global Growth Opportunities
  13. 13. Global Growth Opportunities
  14. 14. Global Growth Opportunities
  15. 15. Global Growth Opportunities
  16. 16. Global Growth Opportunities
  17. 17. Exploring the success and sustainability factors of running the family office and managing the wealth
  18. 18. Success and Sustainability – What to do? Take charge Align Interests Accountability Capitalize Resources Delegate Empower Independence Diversify but Focus Simplicity Develop Future Leader
  19. 19. Success and Sustainability – What to do? 1 • Take charge and do it early • Articulate a set of value being the foundation of future wealth management planning • Familiar with the family finance and plans • Structure long term goals • Tax, fee, inflation erode wealth • FOs exercise disciplined wealth building process
  20. 20. Success and Sustainability – What to do? 2 • Align family and business interest around wealth building goals and strategies • Help define a family’s identity, reinforce common purposes and create economies of scale • Establish legitimate rationale to motivate people work together, mediate conflicts, drive consensus and ensure regular review of goals and results attainment
  21. 21. Success and Sustainability – What to do? 3 • Create a culture of accountability • Accountability systems & performance metrics • Reinforce objective business goals and performance expectation • Help drive implementation of wealth strategies and provide benchmark to judge the performance of all family office executives • Avoid personalized criticism
  22. 22. Success and Sustainability – What to do? 4 • Capitalize on family’s financial scale and combined strength of family members’ personalities, experience, skills, affiliations and network • Passionate but disciplined family leadership is key to mobilize resources
  23. 23. Success and Sustainability – What to do? 5 • Delegate, Empower, Respect Independence • Support Family Members • Support Investment Team in Family Office • Different involvement by different family members • The right way : keep family members informed, respond promptly and participate constructively in family discussions & meetings
  24. 24. Success and Sustainability – What to do? 6 • Diversify but focus • Diversification is a risk control measure • Focus helps make good judgement • Go ahead to pursue the family’s own focused interest
  25. 25. Success and Sustainability – What to do? 7 • Be simple • Low cost, financial indices, proven wealth management products • Choose those offer a higher degree of certainty, easier implementation, greater flexibility • Complex solutions offer high remuneration for advisors but subject clients to long term risks. • The more complex the strategy, the more variables in the management process, the more difficult to reverse the course
  26. 26. Success and Sustainability – What to do? 8 • Develop future leaders who have talent, energy, contact and business experience • Nurture them, give them specific roles and missions • Engage them in decision making discussion • Outside Experience, making them resourceful
  27. 27. Contact Eva Law 罗孟君 Founder & Chairman Association of Private Bankers In Greater China Region Association of Family Offices In Asia Founding member of Women In Leadership – Hong Kong & Pearl River Delta Chapter Honorary Chairman of Hong Kong Family Offices Association Executive Chairman of Association of China Independent Wealth Advisory Institutions - Family Office Council Researcher of Xi'an Jiaotong University, Board Advisor of Singapore Private Wealth Association Special Advisor to Asian Co-Investors Club Appointed writer for Family Office Elite Magazine evalaw@private-bankers.net evalaw@familyoffices-asia.org + 852 5646 4066 + 86 147 1433 4066 WeChat : APB-AFO
  28. 28. For more information about the marcus evans investments summit series: investmentseries@marcusevanscy.com

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