The number of family offices in Asia and the Middle East will more than double to about 400 over the next eight years, as the ranks of wealthy individuals swell, Michael Prahl of Insead business school said.
Driven by the region’s economic expansion, the number of wealthy individuals is expected to rise by 40 percent by 2023, Prahl, executive director at Insead in Singapore, said in an interview on April 24.
Asia is lagging behind the US and Europe in family-office services. Seventy-six percent of Asia’s family offices were started since 2000, according to UBS Group AG, whereas they took off in Europe and the US in the second half of the last century. Insead estimates that there might be as many as 200 family offices in Asia currently, compared to about 1,000 in Europe and 3,000 in the US.
“Given the youth of the family-office industry in Asia, there is a big desire and need to catch up to professionalize,” said Prahl, who does research and regularly hosts conferences on family offices.
Family offices manage assets, as well as provide tax, legal, accounting and philanthropy services to the wealthy.
In Europe and the US they typically have one or two family members involved in asset-allocation decisions, generally engaging through the investment committee, according to Prahl. Activities such as managing trading positions and manager selection are left to that body or the investment professionals themselves. In Asia, the family is much more in control of investment decision-making, Prahl said.
Bloomberg News