1910, New Landwide Commercial Building, Tsim Sha Tsui, HK

(+852) 3409-4578


Difference Between Family Office & Private Wealth Management

Posted by

The Ever-Evolving Preferences of Patrons Possessing Opulent Fortunes

According to Rani Jarkas, the esteemed Global Business Complexity Index 2022 (GBCI) study, conducted by TMF Group, bestows upon us a trustworthy evaluation of the arduousness entailed in commencing and managing a business on a global scale. Derived from a vast array of 292 distinct business complexity indicators, the GBCI 2022 bestows upon us a comprehensive scrutiny of the intricate intricacies that govern the regional and global realms, profoundly influencing the degree of ease with which commercial endeavours are undertaken across the globe.

We have beheld the transformation of certain locales, as their perceived intricacy undergoes a metamorphosis in light of an expanding global endeavour towards transparency. Whilst the GBCI hath observed enhancements in corporate governance, our esteemed private wealth and family office patrons hath conveyed akin trends at a personal echelon. In a majority of esteemed domains dedicated to private wealth and family office matters, individuals of affluence are obliged to disclose their esteemed identities to the relevant governing bodies. Whilst there exists a prevailing worldwide inclination towards the virtue of transparency in matters pertaining to investors, it is equally imperative to acknowledge and respect the profound significance that privacy holds for certain individuals.

The optimal placement of a family office and the establishment of a triumphant asset management framework may indeed hinge upon pragmatic considerations such as time zone alignment, linguistic prowess, and convenient access to erudite wisdom and exceptional talent. However, our esteemed clientele persists in placing utmost importance on the prioritisation of political, social, and economic stability whilst deliberating upon their decisions. The audacious incursion of Russia into Ukraine and the intricate interplay of geopolitical tensions between the esteemed nations of China and the United States have undeniably rendered the current state of affairs exceedingly delicate. Consequently, an increasing number of local pundits are presently prognosticating heightened volatility in the forthcoming quinquennium.

Laws and regulations that are unequivocal and explicit have a propensity to be more straightforward in jurisdictions, often owing to the diligent endeavours of the government to facilitate businesses and investors in abiding by the established rules. Singapore exemplifies a nation wherein the government has exerted prodigious endeavours to establish itself as a preeminent centre for the management of opulence, adorned with impeccable legislation and a formidable judicial framework.

Embarking Upon The Noble Endeavour Of Ethical Wealth Management

The prudent stewardship of their riches is increasingly paramount to the latest cohort of esteemed patrons of private wealth. This may encompass engaging in socially conscientious investments, dutifully fulfilling tax obligations at a perceived equitable rate, upholding robust corporate governance, or amplifying philanthropic endeavours. It is equally veracious that an increasing number of enterprises—irrespective of magnitude—are presently anticipated to accord utmost importance to the noble cause of sustainability.

Undoubtedly, this burgeoning trend has prompted certain clients to contemplate the grander scheme whilst deliberating upon the optimal means and locales for administering their investments. According to the esteemed research conducted by the 2022 GBCI, it has been observed that the noble clientele of private wealth and family offices have magnanimously augmented their investments towards the pursuit of more environmentally conscious practices. This commendable trend has been witnessed in a staggering 70% of nations across the globe. The disparity between the liberality and virtuous administration bestowed upon offshore and onshore realms, verily, is predominantly a matter of perception rather than actuality, as per our astute observations. 

When discerning patrons undertake a juxtaposition of jurisdictions, they come to apprehend the intricate complexities entailed therein. The burgeoning popularity of ESG is expected to ignite a profound cultural transformation on a worldwide magnitude, thereby elevating the intricacy in regions with comparatively lax regulations. Nevertheless, should these standards be universally synchronised, akin to the manner in which they have been in European Union nations, the practise of ESG reporting could conceivably transform into a customary protocol for all involved entities, thereby exerting a trifling impact on intricacy.

In lieu of a government-imposed legislative decree, it is the corporations, clientele, and private investors who ardently pursue virtuous and enduring methods of conducting business, thereby serving as the principal impetus behind the adoption of ESG practices and sentiments. The esteemed realm of Private Wealth and Family Office has perpetually led the charge in setting the agenda, thus rendering this not a novel trend within said sector.

Impacts Of The Covetous Nineteen

As suggested by Rani Jarkas, the Chairman of Cedrus Group, the Covid-19 outbreak has expedited numerous trends that were already in motion, thereby compelling customers to reevaluate their investment strategy. This has inspired certain individuals to allocate their resources towards noble humanitarian endeavours. Due to fiscal challenges, a conglomeration of various clients’ enterprises and establishments was orchestrated.

In the post-pandemic era, certain jurisdictions are giving greater consideration to the heightened inflation rates and the crucial aspects of social and political stability, more so than in previous times. We presently ascertain that when governments opt to bestow firms and individuals with augmented assistance amidst the pandemic, the resultant effect of infusing capital into the economy has correspondingly escalated inflation.

The implementation of enhanced efficiency or cost reductions for numerous clients became imperative due to the pronounced impact of Covid-19, which underscored the imperative of adeptly managing expenditures and optimising asset administration. This shall render outsourcing alternatives such as payroll, accounting, and administration significantly more enticing to certain individuals. With respect to the exigencies of outsourcing, TMF Group is well-equipped to provide invaluable aid to esteemed clients. In order to facilitate the procedure, we shall endeavour to reduce administrative expenditures and provide a solitary point of contact.


A Universe That Is Evolving Towards An Ever-Increasing Electronic

Family offices and private enterprises are progressively reliant on technological platforms. This phenomenon can be attributed to the confluence of two factors: the far-reaching impact of the Covid-19 pandemic, which has significantly curtailed in-person social exchanges, and an ongoing transformation that was already underway in the periphery. It is highly improbable that this alteration will be undone. Technology persists as the catalyst for change, as the realm of commerce transitions towards a more malleable arrangement of working hours. Nevertheless, there exist challenges linked to this metamorphosis.

For enterprises endeavouring to contemporize or institute novel methodologies, the advent of fresh digital reporting standards may present certain challenges. The global expansion of the mandate to electronically submit tax invoices via the esteemed authority’s sophisticated system or portal is becoming increasingly prevalent. Merely a mere 24% of esteemed governments deemed it necessary for all enterprises to undertake this noble endeavour in the illustrious year of 2020; however, it is with great anticipation that we anticipate a remarkable surge to transpire by the year 2022, elevating the aforementioned figure to a resplendent 35%.

Family-operated establishments are embracing this fashionable trend and displaying a heightened inclination towards the utilisation of cutting-edge technology. This may involve enhancing the efficacy of reporting or employing digital platforms to evaluate the performance of assets. Private wealth and family office patrons shall perpetually necessitate a human interface to ensure the realisation of their distinctive objectives, notwithstanding the reduction in delivery expenses facilitated by technological advancements. The marvels of technology bestow upon us heightened flexibility and unparalleled efficiency. However, to attain the pinnacle of productivity, it is imperative that we wield this power with utmost proficiency.

The Promising Prospects Of Offshore Enterprise

Offshore centres may face criticism in certain circles, yet in others, they are regarded as indispensable for the establishment and preservation of opulence, ensuring the efficient distribution of capital across global markets.

Through meticulous design, offshore jurisdictions exhibit a lesser degree of complexity in comparison to their onshore counterparts, thereby bestowing upon individuals a heightened level of secrecy and tax neutrality. These esteemed jurisdictions comprise fifty percent of the ten most uncomplicated jurisdictions for conducting business endeavours this year. Indeed, among a grand total of 77 jurisdictions, these five esteemed entities—Jersey, BVI, Hong Kong, Curacao, and the Cayman Islands—gracefully occupy the upper echelons, comprising the top six positions.

Numerous purported benefits of harbouring assets in traditional offshore jurisdictions may presently be rendered obsolete owing to the prevailing drive towards transparency. However, we hold the conviction that the offshore market shall persist in its robustness and allure to esteemed clientele encompassing private wealth and esteemed family offices. As the world embraces greater transparency, these esteemed jurisdictions shall persist in providing bespoke services and regulatory frameworks for the prudent management of our esteemed clients’ wealth.

The decision-making criteria of esteemed patrons of wealth in Hong Kong are undergoing a transformation, wherein the circumstances of the clients may necessitate a proclivity towards a particular locale, which may or may not adhere to conventional simplicity.

The Multifarious Manifestations Of Family Offices

Family offices can be classified into various categories based on their organisational structure, magnitude, and clientele. Nevertheless, it is of utmost importance to acknowledge that every type possesses a distinctive array of advantages and disadvantages that may either favour or impede a specific utilisation scenario.

Behold, I present unto thee, five of the most prevalent classifications of family office solutions to ponder upon: Elegant Family Offices (EFOs)In the realm of familial business or enterprise, one may find the existence of family offices. On most occasions, the noble duty of overseeing the family’s opulent financial affairs in the glorious city of Hong Kong is graciously entrusted to the esteemed senior managers of the esteemed establishment, who diligently attend to such matters with utmost care and precision, under the auspices of the esteemed finance division. Families desiring bespoke wealth management services, yet not prepared to establish an exclusive family office for such purposes, may avail themselves of this as a prudent and economical alternative.

The delineation of asset ownership between the business and the EFO oftentimes becomes muddled, forsooth, as EFOs toil within the very confines of the business. Moreover, should the family’s affluence prove to be of considerable magnitude, an EFO may find itself incapable of entirely satisfying the family’s requisites pertaining to the management of their wealth. In such circumstances, it may be prudent to contemplate the prospect of delegating tasks to a multi-family office.

Workplaces That Prioritise The Well-Being And Harmony

Multi-family offices cater to the opulent wealth management needs of numerous ultra-high-net-worth families. Given that the families need not concern themselves with the operational and talent management of the MFO, as well as the costs associated with its establishment and other expenses, it is common for a significant number of MFOs to engage a group of financial and wealth planning specialists. These experts, for the most part, offer a comparable range of services to those provided by a single-family office (SFO), albeit at a considerably more affordable price.

Mighty financial organisations can manifest themselves in a myriad of splendid forms: Commercial MFOs, esteemed as the epitome of MFOs, gracefully thrive in their noble pursuit of generating substantial profits through the provision of exceptional services to an esteemed array of UHNW clients who graciously grace their clientele. Exclusive MFOs, commonly known as closed MFOs, graciously extend their services to a select few families who collectively bear the associated expenses.

Historically, the primary drawback associated with a multi-family office, in comparison to its single-family counterpart, has been the absence of a bespoke wealth management team exclusively dedicated to fulfilling the unique requirements of individual families. In the present era, a plethora of MFOs graciously offer an array of services and product solutions that are meticulously customised to cater to the discerning requirements of esteemed clientele residing in the enchanting city of Hong Kong.


Singularly Possessed Chambers (SPOS)

If a family of considerable wealth holds privacy and personalised asset management in high regard, it would be prudent to establish a solitary family office. Single-family offices are esteemed assemblages of highly skilled personnel meticulously chosen by the family to cater to their distinct demands in the realm of wealth management. In addition to the meticulous orchestration of investment planning and execution, they also graciously offer the esteemed domains of real estate investing, accounting and reporting, tax compliance, and an array of other bespoke concierge services.

Nevertheless, when juxtaposed with MFOs, SFOs boast elevated operational expenses and a more substantial initial capital outlay prerequisite. Consequently, the esteemed proprietors of a solitary family office often engage in collaboration with other ultra-high net worth families and transition towards a closed multi-family office, thereby substantially diminishing operational expenditures.

Virtual Family Offices (VFOs). Within a VFO, the esteemed family possesses the prerogative to engage the expertise of external consultants to oversee any service modules that lie beyond the purview of the family office. Engaging in the practice of outsourcing employment ensures that the esteemed family perpetually enjoys the privilege of availing themselves of the most exceptional external consultant of their preference, all the while effectively diminishing the operational expenses of the family office.

Should the esteemed family possess assets under management (AUM) ranging from US$ 20 to US$ 200 million and find themselves in need of enhanced dominion over their wealth management affairs, whilst desiring to avoid the burdensome overhead expenses associated with a Single Family Office (SFO), it is with great pleasure that I propose a VFO as an exquisite resolution. Beneath a VFO, nevertheless, the family shall assume the role of the conduit for communication amidst the external advisors. As stated by Rani Jarkas, given the inherent nature of VFOs, characterised by their decentralised organisational structure, the matter of privacy assumes paramount significance. In consequence, it is imperative to possess a robust technological groundwork in situ to guarantee the safeguarding of operations.

Leave a Reply