Agreus and Mishcon de Reya LLP have recently conducted a virtual event titled “Why set up your Family Office in Singapore now and how to do it?” on the 25th May 2023. The agenda of the event included Family Office structure and organisational considerations, the cost of running a Family Office in Singapore, legal requirements, recruitment considerations, retention and compensation of talent and best governance practices for Family Offices.
The event was moderated by Jeremy Green, the Team Head of Agreus UK, and featured an incredible discussion by panellists from both Agreus Group and Mishcon de Reya LLP. Tayyab Mohamed, the Co-Founder of Agreus Group and Pierre Pineau, the Team Head of Agreus Singapore were joined by Stephanie Lim Pierce and Vincent Sim, the Managing Associates at Mishcon de Reya LLP. Each panellist brought their specialism and expertise to the discussion, offering insights into Singapore's Single-Family Office industry.
Singapore is known for its vibrant Family Office eco-system and favourable tax incentives, making it an attractive jurisdiction for Single-Family Offices. Stephanie noted that, whilst introducing many favourable schemes for Family Offices, the country has been tightening the tax exemption requirements and immigration pathways for Family Offices. She believes that it could be a great time for families to set up their Family Offices now before further restrictions are introduced.
Vincent advised families to consider the purpose of the entity, structure, and staffing before setting up a Family Office in Singapore. He added that Family Offices are regulated as fund managers and there are regulatory requirements in Singapore that families should be mindful of, for instance, Single-Family Offices in Singapore are required to have a certain amount of in-house investment professionals to be qualified for some tax exemption schemes.
Drawing on the data Agreus collected for the Global Family Office Compensation Report 2023 created in collaboration with KPMG, Tayyab highlighted that one of the positives of setting up a Single-Family Office is to allow the family to retain control in-house. He also noted that factors such as the cost, scale of Asset Under Management (AUM), expertise and investment appetite of the family can shape the structure of the respective Family Office.
Vincent pointed out that Family Offices in Singapore are required to have some level of investment capabilities in-house to perform one of the three functions – research, trading and portfolio management. He added, as Family Offices become more sophisticated and professionalised over the years, they tend to take on more functions internally and increase their in-house employees. Tayyab stated that proper governance structures are imperative for Family Offices. Families should treat their Family Offices like a business and adopt governance practices from standardised industries. Once there is a clear governance structure, it will be easier to dictate which function should be outsourced or remain in-house.
Pierre drew on his experience of recruiting in Singapore and highlighted the importance of professionalising the recruitment processes for Family Offices. He pointed out that families sometimes hire from known circles such as family members or friends over professionals. This is not a sustainable practice and has resulted in unpleasant experiences. In the past, this had led to a second wave of hiring, or rehiring in the Single-Family Office space in Singapore. Pierre believes that while there is an abundance of great talent in Singapore, they are not necessarily always a great fit for Family Offices. He recommended Family Offices to search for talent that has previous Family Office experience. He also highlighted the importance of cultural fit in Family Office recruitment, which is often overlooked by the Principals.
Tayyab shared his insights on retaining key employees. As Family Offices often draw candidates from very benchmarked industries such as financial and professional services, it is important to compensate employees according to or above the market standard. Moreover, to effectively retain C-level and critical staff, Family Offices should consider offering Long Term Incentive Plan (LTIP) as part of their compensation structure. Though there are various strategies that could be adopted to employ LTIPs, this could vary depending on the legal and regulatory requirements of the region where the Family Office is based.
All panellists emphasised the importance of seeking professional advice in the early stages of setting up a Family Office in Singapore.
The panel discussion was followed by a Q&A session. One of the key takeaways is that the timeframe for setting up a Single-Family Office in Singapore is much shorter. Vincent noted that while many factors can affect the timeframe, most application processing times have been sped up in the post-Covid time. This is evident in the approval time of the Employment Passes, in which the processing time has been shortened to 7-10 days.
Overall, this was an informative session that offered comprehensive insights into setting up a Family Office in Singapore. For a more tailored conversation about the services we offer in Singapore, please do not hesitate to contact us.
If you wish to watch the full panel discussion and Q&A session, this can be accessed via the link with the 8-character passcode below:
Passcode: yy8bjLn.