The transferal of wealth from one generation to the next is, by far, the top purpose for the ultra-rich to set up family offices, according to a UBS report.

More than three-fourths (76 percent) of family offices in the Asia Pacific region were set up for the generational transfer of wealth, according to a UBS report, making it the top purpose for establishing such entities. This marks a 20 percent year-on-year increase and is also reflected at the global level (72 percent). 

Other major purposes in Asia include providing income to family members (49 percent), investing excess cash (41 percent), diversification away from the operating business (39 percent), philanthropy (36 percent) and managing administrative tasks (24 percent).

Governance Controls and Processes

Family offices are also becoming increasingly professionalized over time with more and more governance controls and processes being put in place.

In Asia, the top functions being implemented include financial performance measurement processes (60 percent), regular reviews of transactions and processes (58 percent) as well as annual performance reviews of staff (49 percent).

Fixed Income: New High

Within investments, rising interest rates have played a significant role in influencing the allocation of assets with fixed income reaching a new high globally. Within Asia, fixed income represents 25 percent of allocations with 22 percent in developed markets and 3 percent in emerging markets. 

Equities account for 26 percent of allocations with 21 percent in developed markets and 5 percent in emerging markets. 14 percent was allocated towards cash or cash equivalents. The remaining 35 percent was allocated to alternatives, led by 19 percent in private equity.

Over the next five years, family offices in the region said they will look to add allocations in developed market fixed income and equities alongside private equity and hedge funds.

Enlarged Dataset

Following the takeover of Credit Suisse, UBS’ report now includes a larger set of data. Compared to the 230 family offices in the 2023 report, the Swiss bank’s «Global Family Office Report 2024» features 320 single family offices across seven regions, including 33 percent in APAC. Collectively, they represent families with an average net worth of $2.6 billion and total wealth of over $600 billion.

«The enlarged and globally comprehensive dataset allowed us to deepen our analysis and gain insights on how family offices’ operating businesses impacted their asset allocation. This enables us to provide them with tailored findings and advice,» said Benjamin Cavalli, head of global wealth management strategic clients at UBS.