You're listening to Asia Centric from Bloomberg Intelligence, the podcast that pulls back the curtain non global business so you can invest better across the Pacific rim. I'm Tom Corbett in Hong Kong and I'm John Lee.
Family Officers. They're the personal investment firms of uber rich, and along with mansions, yachts and private jets, they symbolize the trappings of wealth, power and privilege here in Asia. Singapore is becoming the new family office hotspot, wooing the rich with low taxes, business friendly policies, favorable regulations and an unbeatable location. Singapore's family office scene is booming, with more than one one hundred firms setting up shop there,
up from just four hundred in twenty twenty. Make it home to more than four trillion dollars in assets.
Google's Sergey Brinn and hedge fund billionaire Ray Dahlia are among those setting up shop. But why is Singapore such a draw for the world's billionaires?
He's the growth sustainable and what are the risks?
I hit Let's talk Singapore family offices with Sharon sim Family Office CEO. She's also a venture capitalist, a TV host and soon to be author of the coming book Why Women Don't Talk Money. Sharon, it's great to have you, Hi.
Tom, Hi John. It's really great to be here with you, Sharon.
Why is Singapore so attractive to set up a family office.
I think Singapore has been very proactive in promoting Singapore as a wealth hub, and I think we have been cariting this process since twenty twelve. There's a lot more infrastructure and the government has been very supportive in terms of taxation text policies have been very favorable for new capital coming into Singapore. But I think the pivotal point for a family officers started about you mentioned three years ago, from twenty twenty onwards. Firstly, I think it's driven by
what we have gone through during the pandemic. So during pandemic, Singapore went through similar lockdowns as most Asian countries. What is different, I think is how Singapore's policies have helped to mitigate a lot of the downside from COVID example, in terms of how we manage the whole quarantine system, how we have you know, make sure that the vaccination has been done very systematically in terms of many phases
we've gone through. So that's given the ultra rich a sense that Singapore is a great place to be, not only for safety, but also I think the general sense that the government is really in control about how they manage various policies, which include helping a lot of the families settle into Singapore. The second point I think is maybe less well spoken about is actually the establishment of
the VCC structure in Singapore. That's a variable capital company which was introduced us an early part of twenty twenty. It's actually a fund management structure, is a fund structure very similar to what we've seen in cabans, whereby we have umbrella structures, we have individual sub funds. And I think that really helps to propelsing and port forward as a really attractive place for ultra high network because, as
we know, the fund structure is actually much simplified. Unlike trust you don't need to have a trustee for a VCC. You can issue and also redeem shares very efficiently without shareholder approval. And I think lastly as well, there is less financial reporting for all of the VCC funds.
Sharon, who are the people setting up these family officers? Are they Chinese billionaires wishing to diversify out of China or they you know, people that made it in crypto. Is there a particular trend.
I think all of the above, John is really really China money. As we know right a lot of billionaires, and also I think newly created well from China has been coming into Singapore and the Hong Kong And also I would say during the peak of crypto Domania, we did see a lot of crypto driven ventures setting up in Singapore. So we do have a very thriving Web three community in Singapore. But I think what's also important to understand is that it's not just China money. That's
really the fleshy part of things. You would like to talk about all the billionaires from China, but what we have seen is also from the rest of Southeast Asia, particularly Indonesia, which is one of our neighboring countries and have always been very familiar with Singapore. Overall, part of it is new wealth driven by new technology IPOs, also old wealth really deciding that Singapore is the place to
be for your future generations. And also thirdly we've seen a boom in commodities back in Indonesia.
Sharon sim we've heard anecdotal media reports of ambitious finance majors and people in the industry rushing to try to fill these jobs in family offices. Are the jobs really that coveted, and if they are, what's the draw What do family offices look for in a workforce.
I think there's always been a challenge in Singapore finding the right talent with the right jobs, particularly in family offices where things are still evolving very quickly. So I would say that there are jobs available. In fact, we've seen a lot more hiring from single family offices and also multi family offices. However, I think the profile of the candidates are different. I would say it's very specific.
Back to your point about younger or what junior bankers thinking about making the switch, I think I've seen less of that. I've seen a lot more senior positions being filled, meaning CEO levels or CIO levels, especially for multi family offices. Is really targeting the very established private bankers right with strong client relationships the ability to actually bring asset under
management up for the multi family offices. Another point to note, of course, is family offices by definition are very different. Each one is different from the other. Definitely, there's a lot of chemistry that need to happen with the principles. It's really not so straightforward as filling in a candidate with the right technical skills or the right financial background.
It has to be combination of factors where you know, it's actually the personality fit, also the understanding of the family dynamics, and also the role that's required to be played. For instance, back in twenty nineteen, I started my own multi family office. The challenge is really finding the right personality for the role. Why do I say that, because I think it's really as startup. If you think about it, we're actually building a business from ground up. You have
to be ready to roll up your sleeves. You make sure you know where to find the right rentals for the offices, how to establish technology, how do we implement compliance policies. So everything has been created.
From ground up, and because the skill set is so precise and the talent pool perhaps relatively narrow, I would imagine that compensation packages are probably commensurate with that.
That's a great question in theory. You're right, Tom, I think what we have seen in reality is that there has been a bit of a discount to join a family office. And this is something that is also very puzzling to all of us in the industry because, as you mentioned, it's a lot more work to join a
newer setup in a family office. And also, I think the other point which is probably less appreciated, so the risk that we are taking to leave your institution, to leave a very comfortable role within a bank, for example, to join a startup. So unfortunately we have not seen the gap narrowing in Singapore. But if we reference what's going on in the US and Europe with the family office space is a lot more mature, a lot more professionalized.
I think that describe and see or that premium is actually much clearer.
Sharon, you alluded to the fact that overseas, family offices are a lot more mature. I know that in Europe, maybe in Switzerland, family offices have been around for two hundred years. It seems like in Singapore that the industry's grown in the last fifteen years. What are the big differences between working in a family office in Singapore versus, say, in Switzerland or elsewhere.
I would say the difference is really the maturity of the wealth In Asia. I think we're looking at maybe first or second generation wealth and a lot of the families in Asia still run the business right, so they're still very much involved in operations and expansion of the
family business. So they have not really had the opportunity to dispose of the family business and so therefore the liquidity situations very different from Switzerland, from Europe where the families have been multi generational, so the wealth has been changed over the years. The probably sold most of their original businesses and they're really just managing the wealth for families and future generations. So I think the fact that
Asian wealth is still very young, very nascent. We have not even seen the transferred wealth to the next gen. The principles, for example, in most of the Asian family offices are still very hands on, so they like to understand where they're doing the investment. A lot of them do sit in the investment committee, so all the meetings the strategy of how the wealth is being deployed, so they do have that control, which is very typical of Asian families.
Sharon sim if I read between the lines, it suggests that perhaps the greatest portion of the coming wealth boom, it still lies ahead of us. Am I right, I.
Believe, So, I think there's a lot more that would happen with the transfer of wealth. We have seen reports where wealth acts is inciting two trillion of wealth in Asia that's going to be transferred to the next generation, and I think with this passing on the torch, you definitely would have the next generation looking at well preservation
a lot differently. I think this is a good lead in to see how the nixttion viewing family offices and investment, which is very different from their parents, from their grandparents. A lot of them are very focused on doing good right, so it's not just about making investment returns. It's about
creating the right impact. We have seen the rise of family officers looking at ESG investments, climate change philanthropy to a certain extent, I think next generation do want to make sure that they understand how their money is being deployed and the impact is creating for the causes that they believe in.
How big a concern is legacy For the ultra high networth individual.
It's important. I think they all feel very strongly that they want to give back. They have been very successful in life. They want to make sure that their success continues. So we have seen traditionally pure philanthropy, meaning just donating money to various causes. As I mentioned, I think the complexion of that has been changing. A lot of this money for philanthropy is kind of mixed together with so called impact investing, where they're bringing together purpose with profit.
So I think with the right point, right time, where there are a lot more options for family officers to deploy that capital very thoughtfully, either through venture capital funds, very specific climate type funds. Were also seeing a lot esg funds getting funding from family offices, and to a certain extent, even pure venture capital, because I think the next generation is very conscious about how they want to change the world.
So Sharon, is the next generation more admenable to investing in private assets. You sort of mentioned venture capital, but private equity, private debt, infrastructure versus say a traditional sixty to forty equity fixing COMPORTFOLI.
We have really seen that happening, I think in terms of how the asset allocation within the family office space has been evolving. So sixty forty clearly is very traditional, and most of the banks have been kind of advising the portfolios to be diversified that way. But I think with recent times what we've seen is with the volatility, with inflation, with how the markets are being more dislocated, there's a lot more attention being paid to private equity,
and now I think it's really private debt. So private debt is having this day in the sun where there's a lot more interest from family offices given where interest rates are going, and also the fact that there is going to be a bit of a distress in many many areas of the economy, so you know, having debt as a way to diversify that risk is great. So I think we've seen the progression of asset allocation over the.
Years, Sharon, As investors, when we make an investment decision, we like to look both up and down when assessing the risk and the opportunity. From a family office standpoint, do you see any risks to the explosive growth in family offices and private wealth?
I think the questions whether it's sustainable, right, I mean, the corrects are signing to show a little bit in Singapore, So I think this is quite clear from the recent announcement by MAS. Right, So what's going on right now is that MAS has announced late October that they're going to repeel the RFMC regime. That's actually the registered fund management companies and there are about two hundred eighty of
them currently in Singapore. What that means is that MAS is trying to slow down firstly new applications for fund mentionment companies and secondly it's a bit of a consolidation move where the intention is to see up the fund mentionment companies that are driving and those that maybe are a little bit suboptimal, and to incentivize them to really rethink the business strategy. We have heard stories about how applications for family offices and also for fund menationement companies
are being delayed. The wait time for applications have stretched from the usual four to six months to what we're hearing now on the grounds between even nine to twelve months.
SAR was the MIAs rules in response to the big money laundering scandal in Singapore where the authority is uncovered. I think two billion dollars in cash, crypto properties, fast cars was all over the press, but was that the case.
There's no official confirmation or denial of that. The big case that we've all talked about. You know, the two billion dollars is a huge number, and also I think there has much longer implication on how bank accounts are being set up, how the process of approval for ultra high network from all over the world coming to Singapore. It's going to be a lot more scrutiny going forward. So I think it's a trigger to kind of slow things down. But inherently I think the capacit of Singapore
to bring in or to accept more capital. It's also the other factor that's alstually been a bit more ongoing, right, so MAS is also aware that you know, it's harder and harder to monitor and also to supervise given the huge quantity that's coming.
In Sharon, there's over one one hundred family offices in Singapore. Is this leading to any consolidation, John, I.
Think there's going to be a lot more consolidation happening in this space. This tremendous number of family offices and multi family offices being set up over the last three years, there has been ongoing discussions in the market around m and a happening. I think one of the big trigger
is definitely the cost structures. It is actually quite expensive to maintain an office, to hire full staff of CIO, senior people, investment analysts, and I think we're seeing some challenge in the fact that you know they're not able to grow your asset under management as quickly as they think. The other factor is clearly the talent pool. Even though there's been a lot of turnaround in the market, I think finding the right person for the right job is
very difficult. So that's actually constraining the growth of a lot of this external asset managers or multi family offices.
Share and rising interest rates have really changed the equation for a lot of investors. Many have realigned their priorities. What are you hearing from your clients and from elsewhere in the family office business about where rates are headed and the impact of higher rates.
I think the general consensus within my space is that industries are going to stay higher for longer. This is going to be a very structural high inflation cycle that many of us have not really experienced.
Right in the generation or more right.
Yeah, exactly so. I think in the last twenty over years we've been blessed with very low rates, and I think we have struggled to then naturally generate enough return given the higher rates. Now it's completely different, is a reverse where rates are going to stay a lot higher for longer, and I think as many impacts very clearly on financial markets and the way we invest. So families have been very very cautious this year in terms of
the way to invest. So a lot of them have actually been just putting money in fixed deposit where you're getting a risk free rate of five plus percent for US dollars. They've actually been also investing in US treasuries money market instruments. So clearly, you know, the sense is that rates are attractive enough to just keep it in cash. So cash is king again for now.
Well, definitely more so on a risk adjusted basis versus equities. If you can get five percent risk free, why would you invest in equities?
Exactly right, So that's where the challenge comes in terms of how do we invest. If I look at a private equity fund, if I look at a private debt deal, this has to give me a double digit return to kind of justify the investment the time that we take to make those investment decisions. So this is a challenge I think with the way family offices are looking at investment. Because we're not bounded by investment mandates, we know we
can be totally flexible. There's nothing wrong being one hundred percent in cash well Doe.
Wealth preservation is a big priority for the high net worth investor.
Exactly.
You're listening to Asia Centric from Bloomberg Intelligence. By the way, if you like what you hear, and we hope you do, please rate us on Apple Podcasts, Spotify, Google podcasts, or wherever you may be listening to us. Of course, more stars are better. Your feedback matters, and we love hearing from our listeners. Sharon sim in your forthcoming book, Why Women Don't Talk Money, just the title hits on a subject that hits close to home for many women. It's
true they don't talk money. Can you talk a little bit about why that has always been the case and how that is changing and reshaping the wealth management business.
It's a subject that's very close to my heart. I think women in general avoid having those conversations around money. Having said that, if you look at research reports from Fidelity, women are actually better investors over the longer periods. The studies have shown that we upperform men by zero point four percent over a ten year period. Definitely, the capabilities are there. I think it's really the lack of opportunity and confidence from women to really get involved in making
those investment decisions. I think the book is really about sharing those stories how women go through the various seasons of their lives, how they deal with challenges with money and investing. And we see that also throughout the family office space and wealth management, where more and more senior women are stepping up to take on leadership roles and making investment decisions on behalf of families. And I think that's really a positive sign that things are changing around
the fringe. And the book is a series of interviews with twenty women in all walks of life, sharing the personal relationship with money, the emotions that women feel, as I mentioned, the lack of confidence and the sense of not understanding enough, those are actually very self crippling thoughts for women. In reality, I think women invest differently from men. The statistics have been shown that we think longer term in terms of our investment horizon. Women tend to actually
do a lot more research. We tend to want to understand the investment that we're making because we actually committed to the investment for the long run.
Sharon, I know your role model for a lot of women, especially in Singapore, and you must get this question all the time, what advice do you give them in their careers when they're starting off.
I think the advice is really to keep learning, to really put yourself for positions that you think you're not ready for. That's something that I wish I have taken that advice when I was younger, So that's actually one thing that has actually served me well in later part of my career, where I decided to put myself out there right when you're given opportunity to try a new role.
I think women in general worry too much, is a bit of overthinking about what they should do it, whereas I think men has less inhibition that way, so I think the confidence level is very different. So I would advise younger women to really do things they feel most uncomfortable in their careers. Make those choices early. You can learn from those mistakes earlier on, and I think it really helps you to broaden out your experience. The other
advice is to start investing on a personal level. A lot of us feel uncomfortable making the very first investment. I think it's all a part of the learning process to make smaller bets, to maybe invest in financial instruments that you feel most comfortable in that you know a bit better and to kind of just continue this process. So for me as an investor, I started when I first joined the industry, when I was twenty two year old,
straight up from college. I was actually right at a time where it was a dot com bubble, and you know, I lost a lot of money during the time. But I think it's important to go through that experience to understand that it's okay to make those mistakes and to pick yourself up and continue the investment journey.
Your words remind me of two of my favorite sayings. One is time in the markets is more important than timing the markets, and you miss one hundred percent of the shots you never take.
I love that, So just take those shots, just stay in the market d In the long run, everything should work out.
Our guest has been Sharon sim Family Office CEO based in Singapore and author of the forthcoming book Why Women Don't Talk Money, coming from Penguin Random House in twenty twenty four. Sharon has been a fantastic conversation. We've talked about women and money and family offices and high net worth investing. It's been a very enlightening conversation. And we look forward to staying in touch.
Thank you Tom, and thank you John. It's been a great experience speaking with you guys.
I'm Tom Corbett in Hong Kong and I'm John Lee.
And this podcast was edited by and you've been listening to the Asia Centric podcast