Monday, 6 December 2021

Singapore’s tax-efficient policies are drawing in single-family offices

5 min read

By Alice Quek

With the global average assets under management higher than ever before, wealthy families are looking for greater sophistication and personalisation for their wealth management needs in regions beyond their immediate jurisdiction.

  • Singapore is increasingly becoming a popular destination among European wealthy families
  • Tax-efficient policies are drawing foreign investors to Singapore 
  • Wealth management strategies are being influenced by geographically mobile next generation

With rising affluence and increasing wealth transfer, ultra-high net worth individuals (ultra-HNWIs) and ultra-HNW families are increasingly seeking professional help to manage and protect their wealth. Globalisation of wealth creates countless opportunities for ultra-HNW families to access tailormade investment options from around the world that aligns with their wealth ambitions. 

European families are setting up family offices in Singapore

Singapore is well established as one of the leading private banking and wealth management centres globally and holds a lot of gravitas within Asia.

Traditionally speaking, Singapore was a destination of choice for Asian HNW families, but over the past five to ten years this has changed considerably. The origin of wealth owners setting up a single-family office (SFO) in Singapore is now more diverse, with a growing number of European families choosing the jurisdiction for their SFOs and family trusts. 

It has a strong track record as a robust and politically stable jurisdiction with a transparent legal system, along with a supportive and responsive government encouraging growth of the private wealth market. All these factors have helped provide confidence among investors. 

Last year, Singapore’s senior minister Tharman Shanmugaratnam commented that the total assets under management for SFOs in the republic was estimated at $20 billion. With more families entering the market, this value will continue to grow.  

Singapore is a destination for tax-efficient strategies

Singapore boasts one of the most competitive tax regimes in the world with no capital gains or estate tax, along with a roster of efficient wealth transfer incentives and consolidation of investments of its SFOs. The republic’s strong financial licensing frameworks with shared reporting standards to that of the EU and US, and multilingual professionals provide a familiarity, appealing to many international families and investors.  

Moreover, plenty of recognition has been given to Singapore in the wake of the COVID-19 pandemic, owing to the government’s rapid and efficient response to the virus. The low infection rate and number of deaths have been praised internationally, and the country has been hailed a global leader for its approach in containing the outbreak.  

This decisiveness has certainly built confidence in the government and in the stability of the country’s business and financial sectors, which has largely been able to carry on with business as usual. 

Next generation is looking for greater transparency and accountability

As most of Asia’s family-owned businesses are in their first or second generation, most SFOs are now planning their first transfer of wealth and looking at how they can maintain harmony in the process. Historically, wealth owners have found it difficult to start a conversation with an external party in fear of creating conflict within the family. However, this mindset is shifting, and there is now more confidence in seeking expertise and guidance to resolve concerns around transferring wealth to the next generation. 

The needs of younger entrepreneurs and the second-generation wealth holders have encouraged a healthy shift in attitude into the market and are actively creating a precedent for best practice. These individuals are already more geographically mobile, many holding more than one passport or multiple tax residencies, truly embracing the benefits of globalisation and what it can offer their wealth. 

These young wealth holders are bolder in their investment philosophies and increasingly seek sustainable investments and emerging entrepreneurial opportunities in the digital and alternative investment classes. 

They recognise that wealth management is more sophisticated than before, and in the era of social media and public scrutiny, there is less room for mistakes. Investments need to be right the first time around. Likewise, transparency around the governance of one’s family wealth is becoming equally important, ensuring the right legal structures and experts are in place to support the family office. The notion of what success looks like is clearly changing as the younger generation of wealth owners step up their role and impact in the family wealth. 

SFOs, like other businesses in finance, are becoming more conscious and are seeking benefits beyond immediate or long-term financial gain. They realise the importance of reputation and the social and environmental impact of their wealth.  Their strategic impact and sophisticated approach to wealth is creating modern and forward-thinking SFOs, who are attracted by the lure of Singapore’s equally ambitious and forward-thinking financial market. The pandemic has accentuated Singapore’s appeal in a world where wealth owners value transparency, agility and stability, moving beyond the realms of a traditional SFO.  

Alice Quek is the head of private and client services in Asia for Hawksford Group, which supports ultra-HNWIs, families, and intermediaries across the region for management of private wealth. 

Views and opinions expressed in this opinion editorial belong strictly to the authors/contributors and do not reflect that of Wealth and Society.



Keywords: Assets Under Management, Single-family Office, Wealth Management, Sustainable Investing, Nextgen, Impact, Tax Efficient, Covid-19
Institution: Hawksford Group
Country: Singapore, EU, US
Region: Europe
Guest: Alice Quek, Tharman Shanmugaratnam
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