New Asian family office targets trillion dollar market

Wealthy families in Asia have not been getting the same quality of service that those in the US and Europe can expect, says the CEO of a newly launched Asian multi-family office.
New Asian family office targets trillion dollar market

Asian family office professionals have joined forces to launch a new business that aims to fill a gap in the market by combining European and US standards of service with Asian know-how to provide bespoke wealth management advice.

The Fusang family office, launched on Wednesday, is a privately owned and family-run organisation that will operate out of Singapore and Hong Kong with an initial staff of 10.

Chief executive officer Henry Chong told AsianInvestor that the firm is “uniquely Asian, and staffed by people who understand the region and who have run family offices in Asia.”

Chong is a director of Portcullis, Asia's biggest independent group of trust companies. It is this association with Portcullis that forms the basis of the new operation, combining experts from other single-family offices to provide a breadth of expertise in a multi-family office framework that Chong suggests is lacking in the region.

"On the investment side, there are a lot of benefits of scale," said Chong. "And some of the families that we know have assets that approach institutional funds in size and yet they don't have anywhere near the same kind of capacity.

"That’s why people who run their own families’ family office, have joined us. They know that they couldn't tell their families that they are doing the best job all alone. They need to be part of a team."

He did not divulge the amount of assets that the firm will manage from the outset but said the reason Fusang is launching “in such a big fashion is because we see the demand amongst our extensive family contacts."

"We are very confident we can get the clients onboard and we will need substantive assets to sustain the business,” he said.

He added that the service will appeal to families who don’t have the scale to manage their financial affairs themselves: “If they tried to do it themselves, they could never afford it.”

Within the Fusang set-up, each family will have their own trust arrangements and segregated investment accounts. Chong explained, "We don't see any reason why substantive families should ever invest in co-mingled assets. Partly because of their uniqueness, but partly because we think the most honest way of going about business is to tell families, look, we set up the structure for you, it is yours for generations to come. If you decide you don't like us, all you have to do is to fire us, and find a different fund manager, there is no need to redeem things from funds, or break apart structure to create a new one."

Chong estimates that a trillion dollars are expected to pass down through the generations over the next few decades. But according to the Asia family enterprise study produced by JP Morgan Private Bank in April last year, 88% of Asian families are unprepared for this wealth transition.

Wealth preservation is too often overlooked in Asia, said Chong, who expects Fusang to offer a full suite of services, including structuring, asset management, reporting, and governance.

“As a first step we need to put families in control by allowing them to see their net worth. Families in Asia will never trust just one bank and in reality they might have 10 to 15 banking relationships, so often they don’t have a clear picture of their actual worth,” he said.

Chong does not consider himself an investment specialist, being more of a technology and cyber-security expert. But through the management of his own family’s affairs, he has brought together “experts and colleagues who we know and trust with our own money." 

"We eat our own cooking and think that is the strongest testament to the service we can bring to the table,” he told AsianInvestor.

The Fusang team consists of experienced family office principals and managers. Lee Pang Tye and Samir Rajpal bring experience from large Southeast Asian family conglomerates, where they have advised on portfolio construction, risk management, and investment structures. Pooja Gurbani oversees a portfolio of investments for her family and serves as an advisor to Crossbridge Capital LLP and Mesitis Pte Ltd. All are managing directors at Fusang.  

Chairman David Chong, Henry Chong's father, is the founder and president of Portcullis Group and managing partner of two law firms named after him and established in Singapore and Labuan, Malaysia. He is also the current president of the Singapore Trustees Association.

More than lip service

When they first considered setting up a family office in Asia, they looked at “the kind of things you have in the US and Europe but which you don’t see in Asia, Henry Chong said. "That deep level of understanding and professionalism that I felt wasn’t available in Asia.”

For him, more work needs to be done with Asian families in identifying their risk and liquidity profiles: “This is truly fundamental but often only gets lip service in Asia.”

Of the non-Asian firms operating in the region, he observes that “some of them are part of a big group, but the business head is not here in Asia and in some cases is not willing to travel to Asia. You can understand it; there is plenty of business to be had in their home country.”

But the inference is their offering can sometimes lack a personal touch or be insufficiently tailor-made. 

There is an ethical aspect to the new service too, which Chong says is part and parcel of dealing with the intimate details of a family’s affairs. “A family needs to trust you implicitly and in turn you need to have a thorough understanding of their internal dynamics. But a family that has independent and unconflicted advice is rare.”

For its part, Chong says Fusang will not receive any commissions or retrocessions from third parties. It charges a flat fee of 1% of bankable assets, in a market where fees range between 1% and 2%.

China and India are the two core markets Fusang will be looking to serve but Fusang expects family clients to come from across the region. The firm is a registered fund management company in Singapore and Chong observes that “families from China and Indonesia are coming to us for advice on common reporting standards. They are preparing for a world where there’s no more secrecy.”

¬ Haymarket Media Limited. All rights reserved.