Despite an application backlog, Singapore remains a favored destination for family offices, the Cambridge Associates expert told finews.asia recently.  

In an interview, Mary Pang, the global head of the private client and family office business at global investment firm Cambridge Associates, looks at why the city-state remains so attractive to family offices worldwide for family offices, particularly as its major industry competitor, Hong Kong, continues to confront concerns related to continued Covid-19 restrictions.

Mary Pang, what is the benefit of creating a family office in Singapore?  

It's well known why Singapore is an attractive place to be not just for Southeast Asian, or Asian families more broadly, but certainly global ones, too: It’s safe, it has access to high-quality education, healthcare, a transparent judicial system, and so on. 

How will Singapore’s backlog in handling family office applications affect the sector?

I think the backlog is related to how attractive it is to come here, and the Monetary Authority of Singapore (MAS) increasing the benefits. I think Singapore's professional services firms are struggling to keep up with demand. The applications are coming from China and beyond; it’s going to take a little time to work itself through the system. The families that I'm connected to have already applied or are in the process of applying and it is taking a little longer than they anticipated. But they also understand that there's an enormous amount of demand here.

The families that Singapore wants to attract have to be here for a sustained period of time because without that, you're not going to have that capital flow into the local economy, which defeats the purpose. I think the MAS may want to figure out what types of families, what pockets of industry are missing here, or expertise that's missing here, and really use that as an opportunity to develop further.  

What are the trends in what clients are asking about?

The high-level trends that I'm seeing are really two-fold. Wealth creation is certainly not new in Southeast Asia or across Asia more broadly, but there is a shifting desire for the professionalization of family offices and what families are looking for and the way that capital is being stewarded. We're seeing even those that have been established wealthy families for a long time, their children or grandchildren, sometimes gen three, gen four, coming back to Asia after having spent time in the West, having worked in investment companies or Wall Street banks.

The second trend that we're seeing is the focus on ESG. There’s an enormous amount of appetite for it, particularly from the next-gen folks that are now taking over the reins. In Southeast Asia, in particular, a lot of the established wealthy here have typically made their wealth through industries that may have had a much larger carbon footprint than some other industries, like tech, for example, in the US. I think there's really a lot of interest in mitigating some of that carbon footprint over time.

Are there trends in succession planning?

The next generation that we are talking to is realizing the importance of diversification and not just hugging the industry the wealth came from. With our US families, it’s much more comfortable for them to outsource and give us full discretion and be the outsourced CIOs. But we're not there yet in Asia because the wealth is typically newer. The need to stay very close to that wealth and that capital that these principles have worked so hard to create makes it harder for them to relinquish control.

What types of assets are your clients asking about now? You’ve said people don’t want to just stock pick any longer.

The families that we tend to talk to are very long-term focused. They’re not mass selling out of anything or picking the bottom of the market. The clients that we work with are far more opportunistic and take a longer-term view. I certainly see family offices are pausing putting money into lock-up investments like private equity and venture. But some have also been trying to be a bit savvy and using this as an opportunity to see how they can be compensated better by way of returns and taking on additional risk during challenging times.

Some of the hot topics that have come up over the last few years have been crypto and China, and technology, even though growth stocks and technology stocks have really had a tough time these past few months. It’s about finding the right types of organizations that have sound, solid revenue models, and aren't just burning through cash. If it’s the right type of technology -- particularly life sciences, healthcare, and firms that are going to be part of the growth economy for countries around the world -- those types of sectors are going to be very interesting.

But this is why diversification is so important. When you think about families that typically historically like to stick to what they know, during times like this, it can really be quite painful.  

Has there been a lot of interest in crypto?

We certainly get a lot of questions about it. The posture that we tend to take is to avoid the NFTs, avoid direct ownership of the coins and things of that nature and really look at venture funds that are taking a much more full, diversified approach to crypto. The allocations to that asset class for my clients typically come through funds where there's a bit of diversification and then we feel okay with that.  

Mary Pang has been a partner, managing director, and global head of private client/family office practice at Cambridge Associates since 2018. Before that, she was a senior banker at J.P. Morgan. Cambridge Associates had $600 billion in assets under management as of the end of 2021.