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SINGAPORE : Family wealth management or family office is emerging as a new area of focus in the financial sector.
The Dubai International Financial Centre (DIFC) is setting the pace with a new incentive to define a family office in a legal capacity.
It said Singapore-based financial institutions can tap into the framework and leverage on the rising number of high net worth families in this region.
A family office is a private office which engages in the specialised management of wealth and assets of a family.
It is used by high net worth families to safeguard their current wealth as well as plan for their next generation.
The DIFC is creating history by being the first to provide a legal and regulatory framework for such an office.
It said challenges facing Asian families and their businesses are fast becoming more complex, often requiring a more personal touch.
"Many service providers offer them products, wanting to sell them banking deposits and investment products. But basically, families have other needs. And our view is that families have non-financial needs. Education, welfare, matrimonial, buying assets such as special works of art, boats and aircrafts - all of these needs are not met holistically," said Sandy Shipton, Executive Director of Wealth Management at Dubai International Financial Centre.
In the Middle East there are about 250,000 families with wealth greater than US$500 million.
DIFC estimates that there is a similar number in Southeast Asia, including Hong Kong.
80 percent of wealth in Asia is expected to be handed down to the next generation in the next 10 years.
DIFC believes Singapore companies such as DBS, which already has a presence in the financial centre in Dubai, can tap into its framework to cater to wealthy families.
According to DIFC, Singapore is well poised to become a centre for the region when it comes to family wealth management.
"Many wealthy families don't want to buy other people's products. They want to set up their own hedge funds for example, and that's really where Singapore will truly take advantage of this type of initiative. Singapore is a major emerging centre for hedge funds and families will take that as an opportunity," said Shipton.
Recently, Swiss-based private bank Julius Baer expressed interest in tapping into the market for family offices in Singapore. - CNA /ls
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