Family Offices are entities that manage the financial affairs of ultra-high-net-worth families. Family Offices have been present in the region for decades and they are growing in sophistication to accommodate the evolving expectations of the families they serve. This has prompted Family Offices in the region to hire more specialised and experienced professionals. This article explores the Family Office space in the Asia-Pacific (APAC) region through the lens of human resources and provides insights into the trends in the space.
The Asia-Pacific Family Office Report 2022 co-written by the Hong Kong-based Raffles Family Office and Campden Wealth covered a broad range of topics including human capital, that concerns Family Offices in the APAC region. Due to the private and discrete nature of Family Offices, they tend to operate on a small scale with only a handful of employees. Our 2023 Global Family Office Compensation Benchmark Report shows that Asian Family Offices tend to have less than 9 employees. And within that, they employ 3 family members on average, as per the Asia-Pacific Family Office Report 2022. It is suggested that this is largely influenced by the inclusion of Indian Family Offices which tend to have higher staff complement and proportion of family members.
As we discuss in our previous article, while sharing similar purposes, Family Offices in Eastern and Western cultures have distinct characteristics. Reportedly, there is a higher preference for keeping investment-related activities in-house in the APAC region compared to their global counterparts. The activities include the selection of investment managers, asset allocation and other traditional investment-related functions. This has contributed to a growing demand for in-house investment specialists in the region. Despite that, the report points out that the increase in outsourcing and in-house services recorded an identical growth of 22% in 2022. Therefore, a similar growth in both practices within the Family Office space in the APAC region is anticipated.
In terms of the demographics of Family Office leaders, our findings were quite intriguing. According to our surveys conducted for the Family Office Compensation Benchmark Report 2023, we found that CEOs in the APAC region are exclusively male. This shows that the gender inequality gap and gender diversity are pressing issues in the region. Impressively, APAC has an average of the youngest CEOs globally, commonly aged between 35 and 44. While it is no surprise that all of the CEOs in APAC Family Offices are university-educated, a further 69% of them have a master’s degree, making them the most educated globally. On a side note, only 31% of CEOs are family members in the APAC region. This indicates a greater willingness for hiring non-family members as Family Office leaders in the region.
The Campden Wealth report also reveals that there is a surging interest in nascent technologies such as NFTs and metaverse among APAC Family Offices. In 2022, roughly 1 in 4 APAC Family Offices invested in the metaverse, 1 in 5 invested in Web 3.0 and 1 in 10 invested in NFTs. Amid the rise of the metaverse, blockchain, and decentralized data storage technologies, more allocation to these areas is anticipated in 2023. In this regard, we believe it is important for Family Offices to engage the younger generation who have a better understanding of new technologies. Investing in new technology as such requires a completely different skill set compared to traditional investment. Family Offices must look out for relevant skill sets in the recruitment process and adequately prepare the next generation for succession.
When it comes to succession planning, we believe there is room for improvement in the region. While over 70% of the families in the region have a succession plan in place, only 25% of them have a formalised and enforceable procedure. This is a rather disappointing number compared to their global counterparts which recorded an average of 42% having a formal succession plan. Besides, the succession challenges and problems faced by Family Offices vary across regions. The report stated that APAC families tend to find discomfort in discussing such sensitive matters, with 34% reporting that this is an issue. Reportedly, many patriarchs or matriarchs in the region are reluctant to engage the next generation, out of an unwillingness to relinquish control. With regards to Family Offices in the other regions, the concern mainly lies with the next generation being too young or unqualified to take over. Contrarily, very few Family Offices in the APAC region report this problem as the next generation tends to assume control and obtain external work experience at an earlier age compared to their global counterparts.
As Family Offices grow in complexity, their human resources management, including hiring, retention and succession planning, will reflect the best practices of the larger corporations. Family Offices will need to invest in the recruitment process to stay competitive in the race for talent. Agreus is an established full-service resources and recruitment consultancy dedicated to working exclusively with Family Offices. Our sole purpose is to find elegant and effective solutions to the people-problems faced by Family Offices globally. For a more tailored conversation about hiring for your Family Office, please do not hesitate to get in touch.