1、Landscape of Family Offices in Greater China家家家家家家家Landscape of Family Offices in Greater China20241CONTENTSCONTENTS1.PREFACE2.EXECUTIVE SUMMARY3.OVERVIEW OF FAMILY OFFICE3.1 Introduction3.2 Methodology4.SINGLE FAMILY OFFICE(SFO)-SURVEY RESULTS4.1 Location of SFOs4.2 Total Asset Under Management(“Au

2、M”)and Total Family Wealth4.3 Source and Industry of the Family Wealth4.4 Background of SFO Respondents4.5 Characteristics of SFOs4.6 Functions of SFOs4.7 The Financial Role of SFOs 4.8 The Non-Financial Roles of SFOs 4.9 Managing the FO 4.10 Setting up the FO 5.MULTI-FAMILY OFFICE(MFO)SURVEY RESULT

3、S 5.1 Geographical Distribution of MFO Respondents5.2 Background of MFO Respondents 5.3 Types of MFOs 5.4 Number of Families Served in MFOs 5.5 Proportion of Families Total Wealth in MFOs 5.6 Products and Services Provided by MFOs 5.7 MFOs Future Asset Allocation Strategy 5.8 Interest in Setting up

4、SFO 5.9 Professional Services Needed by MFOs and Potential SFO Users 6.POTENTIAL SINGLE FAMILY OFFICE(SFO)SURVEY RESULTS 6.1 Geographic Distribution of Potential SFO Users 6.2 Background of Potential SFO Users 6.3 Preferred Setup Locations 6.4 Drivers for Establishing SFO 6.5 Challenges in Establish

5、ing SFO 7.LOOKING AHEAD 3489 9202428338394040 4345464749Research and Editorial:Prof Winnie Qian Peng,Director of Roger King Center for Asian Family Business and Family Office,HKUST Business SchoolProf Roger King,Senior Advisor and Founding Director of Roger King Center for Asia

6、n Family Business and Family Office,HKUST Business SchoolMs Vivian Yue Sui,Manager(Project Management and Communication)of Roger King Center for Asian Family Business and Family Office,HKUST Business SchoolMr.Danny Yufei Wen,Research Assistant of Roger King Center for Asian Family Business and Famil

7、y Office,HKUST Business SchoolMr.Kam Fai Lo,Assistant Manager of Roger King Center for Asian Family Business and Family Office,HKUST Business SchoolMiss Tiffany Fanling Liu,Assistant Manager(Communication)of Roger King Center for Asian Family Business and Family Office,HKUST Business SchoolMs.Rame L

8、iu,Editor and Co-writerMs.Jasmine Lee,Managing Partner,Ernst&Young Hong Kong Ms.Karina Wong,Greater China Business Tax Services Leader Greater China Private Tax Co-leader Greater China Family Enterprise LeaderErnst&Young Tax Services LimitedMr.Harvey Coe,Senior Advisor,Ernst&Young Hong KongEnquiries

9、:afbfoust.hk231.PREFACEThe“Landscape of Family Offices in Greater China Report”(the“Report”)is a collaborative effort between the HKUST Roger King Center for Asian Family Business and Family Office(“the Center”)and EY Family Enterprise.It combines academic research and industry expertise to provide

10、a comprehensive and insightful analysis of the family office landscape in Greater China.The region has witnessed a significant rise in wealth accumulation,resulting in a growing number of family offices.These offices often maintain a discreet profile to safeguard their privacy,which contributes to t

11、heir relative obscurity in the public eye.This report aims to shed light on the enigmatic world of family offices while considering the influence of Chinese culture.The survey focuses on several key areas,encompassing an exploration of the current landscape of family offices in Greater China and a c

12、omprehensive understanding of the development of different groups of family offices-Single Family Offices(“SFOs”),Multi-Family Offices(“MFOs”),and potential SFO users.Furthermore,it delves into a comparative analysis of family offices located in Mainland China and those in Hong Kong.The online surve

13、y was distributed to the collaborating families and institutions of the Center,clients of EY Family Enterprise,collaborating institutions of InvestHK of the Hong Kong SAR government,members and collaborating institutions of Family Office Association Hong Kong(“FOAHK”),and clients and collaborating i

14、nstitutions of China CITIC Bank,representing a broad perspective of family offices in the region.The questionnaire was thoughtfully designed to encompass various aspects of family offices,organized into three distinct sets of questions tailored for respondents identified as SFOs,MFOs,or potential SF

15、O users.From August 2022 to August 2023,we collected data from 160 respondents,including founders/leaders,senior management,and family members associated with family offices.The findings presented in this report carry significant implications for the development of family offices in the Greater Chin

16、a region,impacting various stakeholder groups.For families that have recently accumulated wealth,this report offers a valuable roadmap for establishing prospective family offices,especially within the Greater China region.From a policy perspective,the insights provided here can assist the Hong Kong

17、SAR government in gaining a more comprehensive understanding of family offices and aid in formulating policies to establish a robust“family office hub”.Additionally,for the consulting and wealth management industry,this report offers valuable insights to a diverse range of service providers seeking

18、to bolster their engagement in family office-related businesses.We extend our heartfelt gratitude to InvestHK,FOAHK,and China CITIC Bank for their invaluable support in preparing this survey report.We are also deeply appreciative of all the participating family offices and individuals who generously

19、 contributed their time and insights to the survey.The collective effort invested in this report has the potential to significantly inform the strategic decision-making of various stakeholders within the ecosystem of family offices.We hope that this report will serve as a valuable and reliable resou

20、rce for families,policymakers,and service providers alike.Prof Winnie Qian Peng,Director of Roger King Center for Asian Family Business and Family Office,HKUST Business SchoolJasmine Lee,Managing Partner,Hong Kong&Macau,Ernst&Young Tax Services Ltd.PREFACEEXECUTIVE SUMMARY42.EXECUTIVE SUMMARY1.MAINL

21、AND CHINESE-ORIGIN FAMILIES ARE THE PRIMARY DRIVERS OF SFOS IN GREATER CHINA.According to the survey results of SFO founders,Mainland Chinese founders represent a higher proportion(42%)compared to their Hong Kong counterparts(29%).However,Mainland China accounts for only 24%of SFO office locations,w

22、hile Hong Kong accounts for 51%of SFO office locations.Our survey results also shows that considerable number of SFOs(29%)have multiple office locations.This growing trend of establishing multi-location SFOs reflects the demand for families to access specialized services and expertise across various

23、 markets and jurisdictions.Hong Kong,as an international financial hub,provides benefits that attract Mainland Chinese families to establish multi-location family offices beyond their borders.Mainland Chinese-origin families play important roles in shaping SFO landscape in Greater China.2.CO-EXISTEN

24、CE OF NEW WEALTH AND OLD WEALTH IN HONG KONG Our analysis found that SFO founders or leaders in Hong Kong are from the 1st,2nd,3rd,or even 4th generations.In contrast,Mainland China predominantly sees SFO leaders from the 1st and 2nd generations.This suggests the co-existence of both new wealth(weal

25、th accumulated within one generation)and old wealth(wealth accumulated over multiple generations)in Hong Kong,whereas new wealth dominates Mainland China.3.SFOS IN HONG KONG ARE MORE MATURE THAN SFOS IN MAINLAND CHINAOur survey reveals that 37%of SFOs in Hong Kong have been operating for over a deca

26、de.Contrastingly,all SFOs in Mainland China have been established for less than ten years.This disparity in SFO maturity levels reflects the different stages of economic development and wealth accumulation between the two regions.Hong Kong,with its longer history of wealth creation and preservation,

27、exhibits a higher proportion of SFOs with a decade-long presence.4.NON-FAMILY PROFESSIONALS ARE INCREASINGLY INVOLVED IN SFOS In Greater China,SFO teams typically consist of a blend of family and non-family professionals,offering a range of financial and non-financial services.Around 58%of the SFOs

28、have a team size of over 10 individuals,underscoring the prevalent practice of hiring non-family professionals to augment their internal expertise and capabilities.Notably,nearly half(47%)of SFOs in the region have an investment committee consisting of both family and non-family members,indicating t

29、he importance of collaboration and expertise-sharing in investment decision-making.55.SFOS TEND TO DIVERSIFY THEIR INVESTMENTS BY DIFFERENT GEOGRAPHIC REGIONS AND BY DIFFERENT ASSET CLASSES Approximately half of the SFO respondents adopt a balanced investment strategy.Over the past three years,the m

30、ajority of SFOs reported returns ranging between 5%to 20%.In addition to investing in their domestic regions,SFOs prioritize diversifying their investment risks by investing in different geographic locations.Mainland China and Hong Kong emerged as the most favored locations for SFOs asset allocation

31、,each accounting for 21%of investments,followed by North America and Europe.SFOs actively diversify their portfolios by investing in various asset classes.In addition to popular choices such as equity,fixed income,and PEVC(Private Equity and Venture Capital),SFOs have ventured into a diverse range o

32、f alternative investments and digital assets.6.IMPACT INVESTMENT ACCOUNTS FOR A SMALL PROPORTION OF THE OVERALL INVESTMENT OF SFOSDespite an overwhelming majority(93%)of SFOs in Greater China had engaged in impact investment to some extent,the majority of SFOs(60%)have allocated less than 10%of thei

33、r total investments to impact investment,while approximately 22%have allocated over 20%.These results suggest that while impact investment is acknowledged and embraced by SFOs,its integration into their portfolios is still at a nascent stage.Nevertheless,the increasing interest and active engagement

34、 in impact investing demonstrate the growing awareness and dedication of families toward addressing social and environmental challenges through their investment.7.THE GROWING IMPORTANCE OF FAMILY GOVERNANCE AND OTHER NON-FINANCIAL ROLES OF SFOS Our findings reveal that SFOs offer a comprehensive ran

35、ge of products and services that cater to address both financial investments and family-related matters for their client families.Family governance is among the top three services provided by SFOs.Notably,SFOs often have dedicated internal teams to handle family-related issues,including family gover

36、nance and family philanthropy.Simultaneously,they frequently outsource services such as legal,tax,regulatory advisory,and compliance.This approach enables SFOs to leverage external expertise and resources while upholding their internal values.1.Impact investment is the investment made with the inten

37、tion to generate positive,measurable,social and environmental impact alongside a financial return.EXECUTIVE SUMMARY62.Strategic philanthropy has a clearly defined philanthropic focus,and a professional process including due diligence,measurable outcome,and involvement of multiple generations.Regardi

38、ng family governance,an overwhelming majority(91%)of SFOs in Greater China already have a formal structure in place,varying from simple to more detailed arrangements.The remaining 9%are considering the establishment of family governance in the near future.Through the establishment of formal structur

39、es and processes for family governance,SFOs can effectively facilitate decision-making,communication,and conflict resolution among family members,while preserving their legacy and values.8.FAMILY MEMBERS ARE ENGAGED IN PHILANTHROPYA significant percentage(84%)of SFOs in Greater China have engaged in

40、 philanthropic activities.Within this group,approximately half have established private foundations,charitable trusts,or donor-advised funds(DAFs),This is followed by 25%engaging in strategic philanthropy,and 22%making direct monetary donations.Interestingly,the majority of SFOs(69%)have family memb

41、ers actively involved in philanthropy,extending beyond the involvement of just the founder of the family office.This observation indicates that family philanthropy is perceived not only as a means to give back to society but also as a valuable way to foster stronger bonds among family members.9.AROU

42、ND 40%OF MFO FAMILIES EXPRESS INTEREST TO SET UP THEIR OWN SFOSThe results found around 40%of MFO family respondents in Greater China are interested in setting up their own SFO.This suggests that MFOs could be testing grounds for families who just began their family office,and that despite already h

43、aving MFOs,these families continue to have interest in setting up their own SFOs.OVERVIEW OF FAMILY OFFICEOVERVIEW OF FAMILY OFFICE83.1 INTRODUCTIONThe concept of a“family office”gained traction in Mainland China in the early 2010s.Since then,the rapid growth of wealth in the region has fostered the

44、 flourishing of family offices in Greater China.As of 2021,the number of billionaires in Greater China,encompassing Mainland China,Hong Kong,Macau and Taiwan,has reached 745,surpassing the United States at 724 for the first time and outpacing Europe at 628 4.The number of family offices in Mainland

45、China has also surged in recent years,with 1,461 family offices registered in Mainland China as of April 20215.Notably,around 503 family offices were newly registered in less than one year between 2020 and 2021,according to company registration statistics6.Across the border,Hong Kong is home to a ma

46、jority of the mature family offices founded in the 20th century,primarily stemming from old wealth.These family offices serve as a representation of family wealth that has accumulated over two or more generations,with the main source of wealth originating from the family business.Additionally,due to

47、 its proximity to Mainland China,Hong Kong has garnered new wealth from the Mainland,attracting the establishment of family offices from these new wealth creators as well.Thus,Hong Kong distinguishes itself by being home to both established family offices with historical roots and newly emerging fam

48、ily offices fueled by contemporary wealth sources.To provide a comprehensive picture of family offices in Greater China,this report distinguishes itself by designing three sets of specific questionnaires tailored to the three distinct groups of family offices:Single Family Offices(“SFOs”),Multi-Fami

49、ly Offices(“MFOs”),and potential SFO users.Moreover,this report is the first in the region to conduct a comparative analysis of the characteristics of family offices in Hong Kong and Mainland China,while also making comparisons across the three family office segments.Sections 4,5,and 6 of this repor

50、t present the survey results of SFOs,MFOs,and potential SFO users,respectively.Finally,in Section 7,we present our recommendations and outlook for family offices.3.Giacomo Tognini,“The Countries with The Most Billionaires 2021,”6 April 2021,https:/ 4.David Dawkins,“The Richest People in Europe 2022,

51、”5 April 2022,https:/ Chao,“30 天内海南完成注册27家2021中国本土家办动态调研数据曝光(Within 30 days,Hainan registered 27 domestic family-run businesses.The 2021 research data on domestic family-run businesses in Mainland China has been revealed),”Family Office Times,22 April 2021,https:/www.fott.top/archives/17366/6.Ibid.9

52、3.2 METHODOLOGYThe research methodology and results of this survey predominantly adopt a quantitative approach.The online survey was distributed to key stakeholders of Single Family Offices(SFOs)and Multi-Family Offices(MFOs),as well as ultra-high-net-worth individuals or families who have yet to es

53、tablish a family office,thereby providing a broad reflection of the situation in Greater China.There are three sets of questionnaires in the survey.The first two sets of questionnaires were primarily designed based on the characteristics of these two common types of family offices:SFOs,which are fam

54、ily-owned organizations managing private wealth and other family affairs for a single family,and MFOs,which offer similar services to multiple families.Considering the significant rise in the number of family offices in Greater China,we deemed it essential to comprehend the perspectives of potential

55、 SFO users,leading us to design tailored questionnaires for this specific group.It is pertinent to mention that the region also houses embedded family offices(EFOs).However,given the inherent complexities in distinguishing them from other family office types,we opted to exclude them from this study.

56、Section 4 of the report presents the survey result of the questionnaires designed for SFO respondents and focuses on the following areas:Background information The financial role of the family office for wealth preservation and growth The non-financial roles of the family office,including family gov

57、ernance,philanthropy,nurturing the next generation,risk management,digital transformation,tax planning,and compliance.Management and operation of the family officeSection 5 of this report shows the survey result of the questionnaires designed for MFO respondents.The survey focuses on the following a

58、spects:Background information The nature of the MFO,including the number of families,wealth allocation proportion,products and services provided by the MFO,and asset allocation strategy Interest in setting up their own SFOFor respondents interested in setting up their own SFO,further questions were

59、asked to explore their preferences in location,motivations,and challenges associated with establishing their own SFO.Section 6 of this report shows the survey results of the questionnaires designed for potential SFO users.The survey focused on the following areas:Background information Their prefere

60、nce in location,motivations,and challenges to set up their own SFO.The survey questions were designed to elicit insights into various aspects of family offices,including their structure,governance,investment strategies,and family inheritance.The total number of responses received amounted to 160,wit

61、h the distribution as follows:Table 1Responses PercentageSection 4:SFO 30%Section 5:MFO 33%Section 6:Potential SFO users 37%SINGLE FAMILY OFFICE(SFO)SURVEY RESULTS114.1 LOCATION OF SFOsIn our survey,respondents were asked regarding the locations of their SFOs,and were given the option to select one

62、or more locations.This approach sets our survey apart from other reports on family offices,which usually provides only one location as an option.Approximately 29%of our respondents reported having multiple SFO locations.Among all the SFO respondents in this question,around 51%had offices in Hong Kon

63、g,while approximately 24%had offices in Mainland China.Some respondents reported having offices in Singapore(14%)or other regions(11%).SFOs often diversify their assets across different parts of the world,necessitating the establishment of subsidiaries or branch offices to manage these assets locall

64、y.Mainland Chinese SFOs often take advantage of Hong Kongs unique position as an international financial hub,free flow of capital and low tax rates.The proximity to Mainland China is a significant factor that influences many Mainland Chinese SFOs to choose Hong Kong over Singapore.Additionally,facto

65、rs such as cross-border banking systems and non-double tax agreements further contribute to the preference for Hong Kong as a strategic location.Multi-location percentage of SFOsLocation of SFOsMulti-locationsHong KongSingaporeMainland ChinaSingle-locationOthers29%71%14%11%24%51%Figure 2Figure 1SING

66、LE FAMILY OFFICE IN GREATER CHINA-SURVEY RESULTS124.2 TOTAL ASSET UNDER MANAGEMENT (“AUM”)AND TOTAL FAMILY WEALTHAround half(50%)of the SFO respondents in our survey reported having AuM over USD 250M,and also half of them had a total wealth of over USD 500M.Since SFOs typically manage assets exclusi

67、vely for the family,this group of SFO respondents manages a substantial portion of their familys total family wealth.AuM of the SFO(in USD)Total wealth of the family(in USD)USD in millionsUSD in millions0%10%20%30%40%50%60%0%10%20%30%40%50%60%$250M50%$500M53%$20M13%$100M-$250M18%$50M-$100M13%$250M-$

68、500M11%$20M-$50M13%$50M-$100M16%$100M-$250M11%7011%18-302%Figure 6Figure 7SINGLE FAMILY OFFICE IN GREATER CHINA-SURVEY RESULTS16 Age distribution of SFO respondents in Hong Kong Gender distribution of SFO respondentsAge distribution of SFO respondents in Mainland ChinaFemaleMaleAs for the respondent

69、s from Hong Kong,we found that 62%of them are aged between 31 to 50,while 30%were over 50.Around 83%of Mainland Chinese SFO respondents were aged between 31 to 50,with none over 50.These findings show that the SFO respondents from Mainland China are generally younger than those from Hong Kong.4.4.4.

70、GENDER OF SFO RESPONDENTSOur survey results indicate that the majority of our respondents are male,accounting for 76%of the total.However,when examining the gender split specifically among potential Single SFO users,we observed a near equal representation of both male and female respondents.This obs

71、ervation indicates a growing presence of females in leadership roles within emerging SFOs.24%76%0%5%10%15%20%25%30%35%40%31-40 35%41-5027%51-6015%15%708%18-3061-700%41-50 50%51-60 61-70 7031-4033%18-3017%10%20%30%40%50%60%Figure 8Figure 10Figure 9174.5 CHARACTERISTICS OF SFOs4.5.1.YEARS IN ESTABLISH

72、MENTApproximately 54%of the SFO respondents in our survey have been established for over 5 years,with 25%having been established for more than 10 years.In Hong Kong,around 25%of the respondents have/are employed by SFOs that have been established between 10 to 20 years,while 12%have/are employed by

73、SFOs that have been well-established for more than 20 years.How long the SFO has been established for(Greater China)0%0%10%10%20%20%30%30%40%40%50%How long the SFO has been established for(Hong Kong)5 years46%20 years12%11-20 years17%20 years8%11-20 years25%6-10 years25%Figure 11Figure 12SINGLE FAMI

74、LY OFFICE IN GREATER CHINA-SURVEY RESULTS18 40 members6-10 years 20 years10-20 years10-39 members4.5.2.TEAM SIZEDespite 42%of family office teams having fewer than 10 members,there are still many family office teams with more than 10 members,with 26%of family office teams having over 40 members.A la

75、rger team size may suggest larger scale operations within SFOs and a higher level of professionalization.In contrast,all of the Mainland Chinese SFOs in our survey have been established for under 10 years,with 63%having been established for less than 5 years.This suggests that Hong Kong has a much l

76、onger history of developing and operating SFOs compared to Mainland China.How long the SFO has been established for(Mainland China)Team size of the SFO63%42%38%32%26%Figure 13Figure 1419Top 5 Services of the SFO4.6 FUNCTIONS OF SFOsDuring our survey,respondents were asked to specify the types of ser

77、vices provided by their SFOs,and the allocation of these services between in-house and outsourced teams.The results indicate that the most frequently provided services by SFOs include Equity and Fixed Income Investment,Private Equity and Venture Capital(PEVC)Investment,Family Governance,Family Phila

78、nthropy,and Succession Planning and Risk Management.The table below ranks the top services provided by SFOs.Respondents were asked to indicate whether these services are provided in-house,outsourced,or by both in-house and outsourced teams,or if they were unsure.SFOs tend to provide non-financial se

79、rvices in-house,such as family governance,risk management,family philanthropy,as well as succession planning.These services are closely tied to the family and require a high level of discretion.On the other hand,SFOs often outsource or employ both in-house and outsourced teams for highly skilled pro

80、fessional services,such as PEVC investment,family trust,and legal,tax planning,regulatory advisory and compliance.Specific services offered by the SFO and how these services are allocated between in-house or outsourced teams.ServicesIn-houseOutsourcedNot sureBothEquity and fixed income investment45%

81、16%5%34%PEVC investment 32%30%6%32%Impact investment 23%10%27%40%Family trust25%30%12%33%Risk management54%11%6%29%Family governance56%8%14%22%Legal,tax planning,regulatory advisory and compliance23%29%6%42%Succession planning51%7%11%31%Family philanthropy51%8%14%27%Others9%27%55%9%1.Equity and Fixe

82、d Income Investmenrt2.PEVC Investment88%90%92%94%96%98%100%4.Family Philanthropy3.Family Governance5.Succession Planning and Risk Management100%95%97%95%92%Table 4Figure 15SINGLE FAMILY OFFICE IN GREATER CHINA-SURVEY RESULTS204.7 THE FINANCIAL ROLE OF SFOs 4.7.1.WEALTH MANAGEMENT STRATEGY52%of the r

83、espondents in our survey reported adhering to a balanced investment strategy,while 25%opted for a conservative approach,and 23%elected for a growth approach.4.7.2.ASSET ALLOCATION BY GEOGRAPHYBased on our survey,highly favored locations for investment assets among our respondents are Mainland China

84、and Hong Kong,with each accounting for 21%of the responses.North America follows closely at 20%,while Europe stands at 15%.These results suggest that SFOs not only invest in domestic regions but also actively diversify their investment risks by allocating assets to different geographical locations.T

85、he overall wealth management strategy of the SFOAsset allocation by geographyConservativeBalancedGrowthEuropeMainlandHong KongNorth AmericaAPACOthers21%21%20%15%13%10%52%25%23%Figure 17Figure 16214.7.3.ALTERNATIVE INVESTMENTSAfter asking SFOs about PEVC investments in“4.6.Functions of the SFO”,we in

86、vestigated whether they have invested in or are considering investing in any of the following alternative investments in the near future.Our survey found that the top three alternative investments that SFOs have already invested in are Real Estate,Hedge Funds,and Derivative Contracts,followed by Art

87、 and Antiques.The incorporation of Art and Antiques as an alternative investment highlights the distinctive interests of family offices,which may diverge from those of traditional financial institutions.RankingAlternate investmentPercentage1Real estate71%1Hedge fund and derivatives contracts71%3Art

88、and antiques50%4Commodities46%5Cryptocurrency32%When asked about their willingness to consider various alternative investments,some of our SFO respondents expressed interest in exploring Non-fungible Tokens(NFTs),Cryptocurrencies,and Commodities.However,a larger portion of the SFOs chose not to inve

89、st in NFTs or Cryptocurrencies.The mixed attitudes among our respondents is mainly due to the mix of new wealth and old wealth in our respondent pool,who have different risk appetites.RankingAlternative Investment under ConsiderationPercentage1Non-fungible token(NFT)18%2Cryptocurrency13%3Commodities

90、11%Table 6Table 5SINGLE FAMILY OFFICE IN GREATER CHINA-SURVEY RESULTS224.7.4.AVERAGE INVESTMENT RETURNIn our survey,we asked about the average investment returns of SFOs over the past three years.Approximately 41%of the respondents reported returns falling between 5%and 10%,while 31%indicated return

91、s ranging from 10%to 20%.Remarkably,total percentage 100%of the respondents reported positive returns.In the past three years(2020-2022),there were a plethora of world events,including the COVID-19 pandemic,geopolitical tensions and changing macro environments.The respondents indicate that most SFOs

92、 have adeptly managed risks through effective investment strategies,including diversification across various asset classes and geographic locations,as indicated in their other responses throughout this survey.4.7.5.IMPACT INVESTMENTImpact investment refers to investments made with the intention of g

93、enerating positive,measurable social and environmental impact,alongside financial returns.Our survey found that 93%of SFO respondents have engaged in impact investment to some extent.However,the majority of the responding SFOs(60%)indicated allocations of less than 10%of their family office assets t

94、o impact investments,and 7%have not made any impact investments at all.This suggests that while impact investing is well-recognized by SFOs,many of them are still at the early stages of commitment and readiness to allocate a significant portion of their investments towards impact investments.The SFO

95、s average investment return in the past three yearsImpact investment proportion of total investmentFigure 18Figure 190%0%5%10%15%30%10%20%30%60%25%50%20%40%45%70%35%40%Negative return4%0%7%0%-4.99%17%20%7%5%-9.99%41%11%-20%11%10%-20%31%20%22%234.7.6.FUTURE ASSET ALLOCATION STRATEGYThe top three pref

96、erences for the SFOs future asset location strategy are as follows:Increasing diversified asset classes,Increased allocation to long-term investment,and More direct investment and private equity funds.This highlights the contrast between family offices and institutional investors,who typically prior

97、itize specialization and competitiveness within their respective fields and tend to pursue shorter investment horizons with a focus on exits.The statements that best describe the SFOs future asset allocation strategyMore diversifed asset classesMore allocation to long-term investment0%5%10%15%20%25%

98、30%More co-investmentMore direct investment and private equity fundsMore reserve for liquid assetsMore allocation to impact investingOthers28%13%23%11%18%7%Figure 20SINGLE FAMILY OFFICE IN GREATER CHINA-SURVEY RESULTS244.8 THE NON-FINANCIAL ROLES OF SFOs4.8.1 FAMILY PHILANTHROPY We asked if the fami

99、ly office has been engaged in philanthropic activities by any means.Around 84%of the respondents replied yes to this question.Among the family offices that practice philanthropy,approximately 53%have chosen to establish private foundations,charitable trusts,or donor-advised funds(DAFs)8.This is foll

100、owed by 25%engaging in strategic philanthropy9,and 22%making direct monetary donations.The survey results suggest a shift in philanthropic approaches,evolving from the more straightforward method of direct monetary donations to more structured and strategic approaches,such as private foundations,cha

101、ritable trusts,DAFs,and strategic philanthropy.Whether the family has engaged in philanthropic activitiesHow the family has engaged in philanthropic activitiesNoWe have conducted strategic philanthropyWe do direct monetary donationYesWe have private foundation/charitable trust/donor advised funds(DA

102、Fs)8.Donor-advised fund(DAF)is a giving account established at a public charity that allows donors to recommend grants from the fund over time.9.Strategic philanthropy has a clearly defined philanthropic focus,and a professional process including due diligence,measurable outcome,and involvement of m

103、ultiple generations.84%16%53%22%25%Figure 21Figure 2225Family offices prioritize their philanthropic efforts in the following areas,ranked in order of significance:education(34%),relief of human suffering:poverty,hunger,natural disaster,etc.,(24%)as well as medical(22%).In our survey,we asked SFO re

104、spondents about the philanthropy engagement of the SFO founding family.The results show that the majority of families involve most of their members(69%),not just the founder or leader(31%).Our previous study suggests that some families foster stronger bonds among family members through engagement of

105、 family philanthropy10.To what extent the family engages in philanthropyOnly founder or leaderFamily membersPhilanthropic areas the family focus onEducationRelief of human suffering:poverty,hunger,natural disasters,etc0%5%10%15%20%25%35%30%40%Causes of interest:art,music,sport etcMedicalClimate chan

106、geOthers34%24%22%10%10%10.Hang Lung Groups Chen Qizong:Wealth Will Not Be Left for Only One Generation.HKUST Roger King Center for Asian Family Business and Family Office,July 6th,202069%31%Figure 23Figure 24SINGLE FAMILY OFFICE IN GREATER CHINA-SURVEY RESULTS26Regarding the percentage of family wea

107、lth allocated to philanthropy,the majority of the respondents(67%)allocate less than 10%,while approximately 30%allocate between 10%and 20%.Despite these seemingly modest allocations,we believe that even a small allocation to philanthropy,considering the substantial wealth and social influence of ce

108、rtain families within family offices,can result in considerable social impact.Percentage of family wealth allocated to philanthropy4.8.2 NURTURING THE NEXT GENERATIONBased on the survey results,families are planning to nurture the next generation using various methods,with the top choices being Best

109、 formal education(23%),External working experience(20%),Parental role models(18%),as well as Family philanthropy(14%).Family philanthropy could be a useful tool to unite generations and foster positive social impact through collective philanthropic endeavors that extend beyond monetary benefits.It e

110、ncourages unity and collaboration,particularly across different generations,whilst also promoting a meaningful and enduring legacy for families.How the family plans to nurture the next generation Best formal educationExternal working experience0%5%10%15%20%25%Family philantropyParental role models J

111、ob Opportunities in the family businessProvid start-up fund to nurture entrepreneuship spiritOthersNote:Multiple choices for the question23%18%13%20%14%11%Figure 25Figure 260%10%30%20%60%50%40%70%20%of family wealth3%27According to our respondents,the preferred locations for their next generation to

112、 receive university education are as follows:the United States(30%),the United Kingdom(22%),and Mainland China(19%).A comparison between SFOs from Hong Kong and Mainland China revealed significant differences in their preferences for university locations.Interestingly,SFOs in Mainland China prioriti

113、ze their home country as the most preferred location for their next generations university education,ranking it above the United States and Hong Kong.RankingChoices of Hong KongRespondentsRankingChoices of Mainland ChinaRespondents1United States1Mainland China2United Kingdom2United States3Hong Kong3

114、Hong Kong4.8.3 FAMILY GOVERNANCERegarding family governance,the vast majority of family office respondents(91%)have established a formal family governance system,either with a detailed or simple structure.Additionally,over half of the surveyed family offices maintain an in-house team dedicated to fa

115、mily governance,which emphasizes the paramount importance placed on this aspect of their operations.These findings highlight the multifaceted role of family offices,serving not only as financial investment platforms but also as a tool for managing family-related issues,setting them apart from other

116、institutional investors.Whether the family has a formal governance structureYes,the family has a detailed structureNo,but the family is considering to set it up soonYes,but just a simple structurePreferred region/country for the next generation to receive their university education0%5%10%15%20%25%35

117、%30%United States30%Hong Kong13%United Kingdom22%Canada9%Mainland China19%Australia4%Others3%66%9%25%Figure 27Table 7Figure 28SINGLE FAMILY OFFICE IN GREATER CHINA-SURVEY RESULTS284.9.1 INVESTMENT DECISIONS The investment decisions of family offices are typically made by an investment committee comp

118、osed of both family and non-family members(47%)or solely by family members(39%).This trend signifies a growing involvement of non-family professionals in the operational aspects of family offices.Our previous research on the professionalization of family offices indicates that,in the early stages of

119、 SFO development,investment decisions are typically made by principal family members,with non-family professionals gradually assuming a more prominent role as the family office matures and evolves over time.Given that some participating family offices have been established for over a decade,this res

120、ult may suggest that they have reached a more mature stage of development.4.9.2 RISK MANAGEMENT4.9 MANAGING THE FOInvestment decision maker in the SFOOthersFamily MembersInvestment Committee(family and non-family members)Non-family Chief Investment OfficerThe top five risk management items that SFO

121、cover are Investment risks(24%),Finance,tax,legal and compliance(20%),Family reputation(12%),Political risks(10%),and Cyber,technology and digital risks(9%).The results reveal that non-financial risk management was also emphasized in family offices risk management.Others0%5%10%15%20%25%30%Investment

122、 risks 24%Cyber,technology and digital risks 9%Family reputation 12%Marriage/divorce risks 6%Environmental risks 5%Financial,tax,legal and compliance risks 20%Physical and personal security 6%Political risks 10%Social risks 5%None 2%11.Peng Qian“The Professionalization of Family Offices Begins With

123、Taking in Internal Talents”,HKUST Roger King Center for Asian Family Business and Family Office,May 13 2023.Risk management items covered by the SFO47%39%8%6%Figure 29Figure 30Note:Multiple choices for the question294.9.3 TAX REGULATION New or changing tax laws and regulationsHeightened government/p

124、ublic requirements for global transparency and information exchange0%5%10%15%20%25%35%30%40%Increased regulatory uncertainty in the wake of pandemicIncreased complexity of tax compliance across multiple jurisdictionsThe movement towards digital tax filing processesOthers35%31%23%6%5%The significant

125、concerns for family offices regarding tax regulatory issues are as follows:New or changing laws and regulations(35%),Heightened government or public requirements for transparency and information exchange(31%),as well as the Increased complexity of tax compliance across multiple jurisdictions(23%).Th

126、e frequent changes and updates to global and local tax laws and regulations can significantly impact family office investment strategies,particularly in terms of location,asset allocation,and industry focus.4.9.4 DIGITAL TECHNOLOGIESIn our survey,we asked respondents about their plans to invest in d

127、igital technologies and tools over the next two years.The results showed that the top priorities are Workflow collaboration tools(30%)to improve work efficiency,and Cybersecurity solutions and incident response support(20%)to protect digital information.The third priority is Virtual and secure commu

128、nication tools for video conferencing(17%),which further underscores the emphasis on cybersecurity and reflects continued trends of remote working accelerated by the pandemic.Digital technologies and tools that the SFO plans to make a significant investment within the next two yearsWorkflow collabor

129、ation tools0%5%10%15%20%25%35%30%Others(please specify)30%Cybersecurity solutions and cybersecurity incident response support20%Virtual and secure communication tools(video conferencing)17%IT hardware(laptops,monitors,etc)16%Business intelligence9%Family portal technology8%Figure 31Figure 32Tax regu

130、latory issues that are of significant concern to SFOSINGLE FAMILY OFFICE IN GREATER CHINA-SURVEY RESULTS304.9.5 CHALLENGES OF MANAGING THE SFOAmong the challenges faced in managing family offices,our respondents identified Talent recruiting and retaining(28%)and Professionalization in FO operations(

131、17%)as their top priorities.This reflects the need for family offices to recruit talent and move towards professionalization.However,finding the right talents that align with family office requirements,which may differ from those of financial institutions and professional firms,is a challenging task

132、.Overall,the need for cultivating talent for family offices,and improvement in understanding the needs of non-family talents is heavily implied.Challenge of managing the SFOTalent recruiting and retainingProfessionalization in FO operation0%5%10%15%20%25%35%30%Developing trust between family and non

133、 family membersDesigning of proper remuneration scheme and performance measurementsRisk managementSearching for reliable service providersEngaging more family members in the FOOthers28%17%14%14%13%5%8%1%Figure 33314.10 SETTING UP THE FO4.10.1 JURISDICTION SELECTIONWhen establishing a family office,o

134、ur survey reveals that the most critical factors for selecting a jurisdiction are Familiarity with the country and geographical proximity(15%),Tax regime for investments(15%),and An ecosystem that supports family offices(13%).Notably,these results align with our other survey findings,which indicate

135、that Hong Kong is among the most popular choices for setting up SFOs due to possession of these key factors.Key considerations of selecting jurisdiction for setting up the SFOFamiliarity with the country and geographical proximityTax regime for investments0%2%4%6%10%8%12%14%16%18%Ease of injection a

136、nd repatriation of capital and moniesAn ecosystem to support FOStability and consistency of policies and legislationSafe social environmentGlobal mobility for family membersRegulatory framework and compliance requirementsOthers(please specify)15%15%13%13%12%11%10%10%1%Figure 34SINGLE FAMILY OFFICE I

137、N GREATER CHINA-SURVEY RESULTS324.10.2 MEASURING PERFORMANCE To assess the performance of FOs,our survey asked respondents to choose one or more metrics.The most frequently chosen metrics were Percentage growth AuM and Risk-adjusted return on investment(“ROI”),both at 37%.Another noteworthy metric i

138、s Operating costs,which garnered 18%of the responses.Additionally,under the“Others”category,respondents mentioned metrics such as Next generation development,Sufficient returns to cover operating costs,and philanthropic donations.It is worth noting that the choice of metrics varied among family offi

139、ces,reflecting their unique priorities and goals.These insights also provide valuable inputs for FOs to monitor their performance and align their strategies with stakeholder expectations.4.10.3 SPECIFIC PROFESSIONAL SERVICE NEEDSOur survey asked respondents to identify specific services that FOs nee

140、d,and the results reveal their top priorities.The two most popular choices are related to finance and risk management,with Tax planning and compliance support at 18%,and Financial investment and asset management at 13%.The next three choices pertain to family-related elements,with Next-generation ed

141、ucation(12%),Succession planning(11%),and Family governance(10%)receiving significant attention.The results of service needs reflects the complex and diverse needs of FOs.Performance measurement of the SFOFamily effective tax ratesRosk adjusted ROIPercentage growth in AuMOperating costsOthersSpecifi

142、c professional service that the family/SFO needs0%2%6%4%8%10%12%14%16%20%18%Tax planning and compliance support18%Financial investment and asset management13%Next generation education12%Succession planning11%Family governance10%37%37%18%5%3%Figure 36Figure 35Note:Multiple choices for the question334

143、.10.4 KEY VALUES OF THE FORegarding the open-ended question on the key values of the FOs owning family,our findings indicate that sustainability and the preservation of family and values are the top priorities.One response that captured this sentiment valued“integrity,wealth preservation,continuity,

144、and giving back to society.”Other answers included“doing good for future generations,”“family inheritance,”“building a sustainable world for the next generation,”and“integrity,achievements in life,and harmony.”These responses demonstrate a common theme of prioritizing the long-term sustainability of

145、 family and values,reflecting FOs unique emphasis on legacy and impact.4.10.5 IMPACT OF COVID-19 PANDEMICIn response to our open-ended question on the impact of the COVID-19 pandemic on the family and the FO,we received insightful feedback that highlighted the pandemics role as a stress test for FOs

146、.The responses indicated that FOs perceived the pandemic as an opportunity to improve in several key areas,including:-Enhancing risk management by adjusting their investment portfolios to mitigate market volatility.-Professionalizing their operations to ensure greater efficiency and effectiveness.-E

147、mbracing new ways of working,such as remote working,to adapt to the changing business landscape.MULTI-FAMILY OFFICE(MFO)SURVEY RESULTS355.1 GEOGRAPHICAL DISTRIBUTION OF MFO RESPONDENTS5.2 BACKGROUND OF MFO RESPONDENTSThe majority of the MFO respondents are located in Mainland China(71%)and 21%in Hon

148、g Kong,as well as 8%in other regions including Taiwan and Macau.Geographical distribution of MFO respondentsRespondents role and job responsibilities in the MFOHong KongMainland ChinaOthersRole and Job Responsibilities in the MFOOur respondents represented a diverse mix of key stakeholders in MFOs,s

149、uch as family shareholders,professional shareholders,family clients and other professional roles,such as investment advisors.All stakeholders in this survey are relatively evenly represented.Family shareholder of the MFOFamily client of the MFOOther roles of the MFOProfessional shareholder of the MF

150、O71%21%24%29%26%21%8%Figure 37Figure 38MULTI FAMILY OFFICE(MFO)SURVEY RESULTS36Age distribution of MFO respondentsGenderThe results indicated that the percentage of male respondents(55%)is slightly higher than that of female respondents(45%).Age of RespondentsAround 81%of the MFO respondents are wit

151、hin the age range of 31 to 50 years old.Comparatively,the SFO respondents from 4.4.3 aged between 31 to 50 represent a lower percentage(63%).This indicates that the average age of MFO respondents is younger than that of SFO respondents.Additionally,the age distribution of SFO respondents were broade

152、r,ranging from 18 to over 70 years old,while MFO respondents age range is more concentrated.Gender distribution of MFO respondentsFemaleMale55%45%0%10%20%30%50%40%41-5043%31-4038%51-6017%18-302%61-70Over 70Figure 39Figure 40375.3 TYPES OF MFOs5.4 NUMBER OF FAMLIES SERVED IN MFOSIn Greater China,ther

153、e are three main types of MFOs in general.The first type is the Independent Commercial MFO,which is owned by a group of families or professional investors,and its clients are families.This type of MFO has commercial needs to grow the client base and AuM.The second category is the Dependent Commercia

154、l MFO,which is a subsidiary of large institutions such as banks,accounting firms,law firms,or consulting firms.Its clients are also families.This type of MFO has commercial needs similar to those of Independent Commercial MFOs.The last type is the Closed MFO,which is formed by a small group of famil

155、ies who are both owners and serve themselves as their own clients.Typically,it has no obvious commercial purpose to engage with new clients.The survey results showed that most of the respondents are from either Independent Commercial MFOs(40%)or Dependent Commercial MFOs(36%).Approximately 24%of the

156、 respondents belong to Closed MFOs.Regarding the number of families served by MFOs,our survey results showed emphasis on that of numbers of families served 50 or less(81%).This indicates that small to medium-sized MFOs dominate in the Greater China region.Interestingly,the count of MFOs that manage

157、more than 100 families exceeds that of between 50 and 100.MFO types indicated by respondentsDependent commwecial MFO(commercial bank,PB,IB,etc)Independent commercial MFOClosed MFONumber of families served in MFO0%5%15%10%20%25%30%35%100 families14%40%24%36%Figure 41Figure 42MULTI FAMILY OFFICE(MFO)S

158、URVEY RESULTS385.6 PRODUCTS AND SERVICES PROVIDED BY MFOS5.5 PROPORTION OF FAMILIES TOTAL WEALTH IN MFOSOur survey results indicated that the most common products and services provided by MFOs of our respondents are related to finance.They include Equity and Fixed Income Investments(23%),Alternative

159、 Investments excluding PEVC investment(16%),Family Trusts(16%)and PEVC Investment(“Private Equity and Venture Capital”)(14%).Compared to SFOs,compliance services such as Legal,Tax Planning,Regulatory Advisory of MFOs have a higher ratio at 12%.The reason may be that compared to non-financial functio

160、ns with stronger personalized demands,such as family governance,financial function-related product services are easier to standardize and are more suitable for MFOs to serve multiple families considering the cost.The highest percentage of respondents(47%)reported contributing 20%to 50%of their famil

161、ies total wealth into the MFO.Only 16%of the respondents indicated putting in over 50%of their families total wealth in the MFO.The survey results suggest that the majority of respondents(84%)prefer to keep more than half of their total wealth under their own management.Portion of participating fami

162、lys total wealth that has been put into the MFOProducts and Services Provided by the MFO0%5%15%10%20%25%40%30%45%35%50%50%of the familys wealth16%20%-50%of the familys wealth47%20%of the familys wealth 37%Equity and fixed income investmentAlternative investment excluding PEVC investment0%5%10%15%20%

163、25%PEVC investmentFamily trustLegal,tax planning,regulatory advisory and compliance mattersFamily philanthropyOthersImpact investment23%16%16%14%13%10%6%2%Figure 43Figure 44Note:Multiple choices for the question395.7 MFOS FUTURE ASSEST ALLOCATION STRATEGY The statements that best describe the MFOs f

164、uture asset allocation strategyThe statements that best describe the SFOs future asset allocation strategyMore allocation to long-term investmentMore diversified asset classesMore diversified asset classesMore allocation to long-term investment0%0%5%5%10%10%15%15%20%20%25%25%30%30%More co-investment

165、More co-investmentMore direct investment and private equity fundsMore direct investment and private equity fundsMore reserve for liquid assetsMore reserve for liquid assetsOthersOthersMore allocation to impact investingMore allocation to impact investing25%28%24%23%18%17%12%14%11%11%8%7%2%Our MFO re

166、spondents top priorities in future asset allocation strategies are More allocation to long-term investment(25%),More diversified asset classes(24%)and More direct investment and private equity funds(18%).These priorities are similar to those of SFOs.The shared priorities also highlight the distinct

167、approach of family offices compared to institutional investors.Figure 45Figure 46MULTI FAMILY OFFICE(MFO)SURVEY RESULTS40Specific professional service that the family/FO needs(MFO respondents)Whether the respondent has interest in setting up SFO5.8 INTEREST IN SETTING UP SFO5.9 PROFESSIONAL SERVICES

168、 NEEDED BY MFOS AND POTENTIAL SFO USERSAlthough 60%of the MFO respondents are not interested in setting up an SFO,40%of them expressed their interest to set up their own SFO.The result on the most needed professional services of the MFO respondents and potential SFO users shows that tax planning and

169、 compliance support were identified as the most essential services(14%),followed by FO set-up and operation advisory(13%),and Succession planning(12%),which were ranked second and third,respectively,among MFO respondents.For those MFOs who replied“yes”to this question,we have followed up with three

170、more questions.The survey results pertaining to their preferred set-up location,drivers for the establishment,and challenges faced in setting up an SFO are included in our analysis in“Section 6.Potential Single Family Office Survey Results”:6.3 Preferred Setup Locations 6.4 Drivers for Establishing

171、SFO 6.5 Challenges in Establishing SFONoYes0%0%10%2%20%4%40%8%30%6%50%10%60%12%14%70%16%60%40%14%Tax planning and compliance support8%Philanthropy10%Financial investment and asset management6%Digital technlogy and it support13%FO set-up and operation advisory 7%Family governance10%Risk management4%M

172、&A support12%Succession planning7%Global mobility/relocation of family members9%Next generation educationOthersFigure 47Figure 48Note:Multiple choices for the question41Specific professional service that the family/FO needs(potential SFO respondents)0%2%4%8%6%10%12%14%16%18%20%Tax planning and compl

173、iance support18%Family governance10%Next generation education12%Fo set-up and operation advisory7%Digital technlogy and IT support4%Financial investment and asset management13%Risk management9%Philanthropy4%Succession planning11%Global mobility/relocation of family members6%M&A Support4%Others2%See

174、the comparison table below of the top five MFO and Potential SFO services selected.RankingMost needed services of MFO respondentsRankingMost needed service of potential SFO respondents1Tax planning and compliance support(14%)1Tax planning and compliance support(18%)2FO set-up and operation advisory(

175、13%)2Financial investment and asset management(13%)3Succession planning(12%)3Next generation education(12%)4Financial investment and asset management(10%)4Succession planning(11%)5Risk management(10%)5Family governance(10%)Both MFO and potential SFO respondents prioritize Tax planning and compliance

176、 support as their highest priority.Potential SFO respondents are more concerned with non-financial needs,such as Next generation education,Succession planning and Family governance.Figure 49Table 8Note:Multiple choices for the questionPOTENTIAL SINGLE FAMILY OFFICE(SFO)SURVEY RESULTS43The last part

177、of our survey focused on families who do not currently have a Family Office but are interested in setting up one in the future.6.1 GEOGRAPHICAL DISTRIBUTION OF POTENTIAL SFO USERS6.2 BACKGROUND OF POTENTIAL SFO USERSThe majority of the respondents(78%)expressing interest in setting up an SFO are loc

178、ated in Mainland China.This proportion is higher than the existing SFO(24%)and MFO(71%)users in the same location.The survey results suggest that in recent years,an increasing number of families in Mainland China with significant accumulated wealth have recognized the potential benefits of establish

179、ing a family office to address their complex needs.The concept of“family office”was introduced to Mainland China in the early 2010s,and over the past decade,there has been a noticeable surge in awareness and establishment of family offices,with many being formed in the last 5 years.AgeThe survey res

180、ults show a younger population,with nearly half of respondents falling in the age range of 31-40.These individuals may belong to the younger generations of family businesses or young entrepreneurs.Geographical distribution of potential SFO usersAge distribution of potential SFO usersMacauHong KongMa

181、inland ChinaTaiwanOthers78%10%8%2%2%0%10%20%30%50%40%47%31-4041-5027%51-608%12%18-304%61-702%Over 70Figure 50Figure 51POTENTIAL SINGLE FAMILY OFFICE IN GREATER CHINA-SURVEY RESULTS44GenderWe also observed a rather even split between females(57%)and males(43%)in terms of interest in setting up FOs,su

182、ggesting that women are playing an increasingly important role in their families.Also,this could be attributed to the growing influence of women in the business world,either as family members or professionals.Role Distribution in Future FOWe asked our respondents about their roles in their future FO

183、.The survey results show that most respondents(41%)are family members,confirming our assumption that FOs are mainly driven by family involvement.However,the results also suggest that non-family professionals will also participate in the formation of FOs.Gender Distribution of Potential SFO Responden

184、tsRespondents role in future family officeNon-family MemberMaleFamily MemberFemaleFamily Member(Founder/Leader)43%57%41%39%20%Figure 52Figure 53456.3 PREFERRED SETUP LOCATIONS To analyze the results of location preferences for the establishment of family offices,we compared the responses of potentia

185、l SFO users with those of MFO respondents who have expressed interest in establishing their own family office.Our results show that the most popular options are Hong Kong and Mainland China.Potential SFO UsersOur analysis of the location preferences of potential SFO users(as stated in Section 6.1)re

186、vealed that Hong Kong emerged as the preferred location for setting up family offices,with 40%of the respondents selecting it as their top choice.This preference is due to Hong Kongs status as an international financial hub,its availability of professional talent,favorable tax regime,and extensive e

187、xperience in operating family offices.Furthermore,its close proximity to Mainland China makes it a convenient location for families based in that region.Other popular jurisdictions for setting up family offices include Mainland China(32%),where the majority of respondents interested in establishing

188、SFOs are located,Singapore 19%,and other locations such as Taiwan and Macau.Preferred region to set up the SFO(potential SFO respondents)Preferred region to set up the SFO(MFO respondents)Mainland ChinaHong KongHong KongMainland ChinaSingaporeOthersMFO Respondents to Set up SFOResults for the same q

189、uestion indicate that Mainland China is the most popular choice(56%),followed by Hong Kong(20%)and Singapore(20%),which are tied for second place.Other jurisdictions,such as the Cayman Islands and Switzerland are also preferred locations.The ranking in the survey results of MFO respondents who showe

190、d interest in setting up their own SFOs differs from that of potential SFO users.Nevertheless,both MFO and SFO users alike recognize Hong Kong and Mainland China as the top choices for setting up a FO.OthersSingapore56%20%20%4%40%32%19%9%Figure 54Figure 55POTENTIAL SINGLE FAMILY OFFICE IN GREATER CH

191、INA-SURVEY RESULTS466.4 DRIVERS FOR ESTABLISHING SFO We have compared drivers for establishing SFO between potential SFO users and the MFO respondents who have expressed interest in establishing their own family office.Potential SFO UsersAccording to our survey results,wealth preservation and wealth

192、 growth(35%)and the Preservation of family harmony(28%)are the top reasons for setting up a family office.Exploring other business opportunities for the family for diversification(22%)was the third most popular choice.Table 9MFO Respondents to Set up SFOFor respondents who already have an MFO and ar

193、e looking to set up their own SFO,the top drivers are again Wealth preservation and wealth growth(36%)and the Preservation of family harmony(36%),followed by the Preservation of family values and legacy(18%).The slight differences among potential SFO users may be due to MFO respondents already have

194、exposure to new business opportunities and diversification through their existing MFOs.RankingReasons for Setting up the SFO(Potential SFO Respondents)RankingReasons for Setting up the SFO (MFO Respondents)1Wealth preservation and wealth Growth(35%)1Wealth preservation and wealth growth(36%)2Preserv

195、ation of family harmony(28%)2preservation of family harmony(36%)3Explore other business opportunities for the family to enter/diversify into(22%)3Preservation of family values and legacy(18%)4Preservation of family values and legacy(15%)4Explore other business opportunities for the family to enter/d

196、iversify into(10%)5Others(0%)5Others(0%)476.5 CHALLENGES IN ESTABLISHING SFO We have compared challenges for establishing SFO between potential SFO users and the MFO respondents who have expressed interest in establishing their own family office,we found the major challenges are lack of guidance/kno

197、wledge in establishing a FO and recruiting trustworthy external talents.Potential SFO UsersAccording to the survey,families who have an interest in setting up their own SFO indicate that the most significant challenges are Lack of guidance/knowledge in setting up a FO(36%),Recruiting trustworthy ext

198、ernal talents(34%),followed by the Costs of building up an SFO(16%).MFO Respondents to Set up SFOThis group of respondents showed similar findings,seen in the comparison table below.The top challenges were recruiting external talents(34%)and lack of guidance and knowledge in establishing FOs at 31%.

199、The third choice being the same for both groups,which was the cost of building up an SFO at 21%.RankingChallenges to Establish the SFO(Potential SFO Respondents)RankingChallenges to Establish the SFO(MFO Respondents Interested in SFOs)1Lack of guidance/knowledge in establishing a FO(36%)1Recruiting

200、trustworthy external talents(34%)2Recruiting trustworthy external talents(34%)2Lack of guidance/knowledge in establishing a FO(31%)3Cost of building up an SFO(16%)3Cost of building up an SFO(21%)4Choosing the right location(14%)4Choosing the right location(14%)5Others(0%)5Others(0%)Table 10LOOKING A

201、HEAD49Family Office in Mainland China and Hong KongBased on the survey results and our research into various aspects of family offices,we have observed significant differences in their development between Mainland China and Hong Kong.Specifically,there is a coexistence of both new and old wealth in

202、Hong Kong,while new wealth predominates in Mainland China.Furthermore,a considerable number of founders and leaders of SFOs in Hong Kong have their origins in Mainland China.As a result,Mainland Chinese families are likely to remain the primary driving force behind the promotion of family offices in

203、 Hong Kong,and the experience and expertise of Hong Kong family offices should prove valuable to their counterparts in Mainland China.In February 2023,the Hong Kong Special Administrative Region government announced budgeted spending of HKD 100 million(USD 12.7 million)over three years to attract mo

204、re family offices to Hong Kong.The governments objective over the subsequent five years is to draw more than 200 of the worlds leading families to establish new family offices or expand existing ones in Hong Kong.Our findings suggest that there should be a particular focus on attracting Mainland Chi

205、nese families.Since 19th May 2023,Hong Kong has implemented amendments to its tax regulations,offering profits tax concessions for eligible Family-owned Investment Holding Vehicles(FIHVs)managed by qualified SFOs in Hong Kong and Family-owned Special Purpose Entities(FSPEs).According to Christopher

206、Hui,the Secretary for Financial Services and the Treasury,only the assessable profits of FIHVs and FSPEs arising from qualifying transactions and incidental transactions will be eligible for profits tax concessions.FIHV shall be managed by an eligible SFO and fulfill the minimum asset threshold of H

207、KD240 million and substantial activities requirement14.”The introduction of this new tax concession regime is expected to facilitate the establishment and operation of family offices in Hong Kong,creating new business opportunities for the asset and wealth management sector and stimulating demand fo

208、r other related professional services15.Mr.Hui also indicated,“This would foster Hong Kongs position as a premier family office hub and as an international asset and wealth management center16.”By establishing a presence in multiple locations,including both Mainland China and Hong Kong,SFOs can prov

209、ide localized and tailored solutions while utilizing their extensive global networks and resources.In our follow-up dialogue with SFO respondents after the survey,more than half of the family offices expressed concerns over the geopolitical risks,emphasizing the growing need for diversification and

210、strategic portfolio management.This finding also highlights the unique dynamics of wealth creation and preservation in various regions within Greater China,demonstrating the diverse approaches and strategies that families employ to manage their wealth and legacy.12.Shusi He,“Hong Kong Budget adds fu

211、el to family office drive,”Asia Investor,22 February 2023,https:/ Concessions for Family-owned Investment Holding Vehicles,”Inland Revenue Department,https:/www.ird.gov.hk/eng/tax/bus_fihv.htm#a0114.“Government welcomes passage of Inland Revenue(Amendment)(Tax Concessions for Family-owned Investment

212、 Holding Vehicles)Bill 2022,”The Government of the Hong Kong SAR,10 May 2023,https:/www.info.gov.hk/gia/general/202305/10/P2023051000421.htm15.“Family office tax relief passed,”news.gov.hk,10 May 2023,https:/www.news.gov.hk/eng/2023/05/20230510/20230510_200744_218.html16.Ibid.LOOKING AHEAD50Establis

213、hment of SFO or MFOThe continuous growth of wealth is anticipated to drive an increase in the number of family offices,predominantly in the form of SFOs or MFOs.SFOs serve as comprehensive platforms that offer financial and compliance-related services,as well as non-financial services,enabling famil

214、ies to optimize their potential for wealth preservation and growth across generations while upholding their legacy and values.In contrast,MFOs tend to have a stronger focus on financial aspects,as returns on investments are more quantifiable.However,managing family-specific issues can be challenging

215、 for MFOs.MFOs are often considered an entry-level option for families starting to adopt family offices,or as the next step for families with existing SFOs seeking to grow their scale.It is worth noting that the services identified in the survey reflect the complex and diverse needs of family office

216、s.Through a comprehensive understanding of these priorities,family offices can collaborate with their advisors and partners to create customized solutions that are in line with their specific goals and values.Family Office:From Family to SocietyLooking toward the future,family offices are poised to

217、play a pivotal role in advancing societal progress.Notably,families differ significantly in their approaches to wealth succession,with some focusing solely on passing down wealth,others harboring ambitions for longevity.The latter group not only emphasizes long-term investment strategies and diversi

218、fication but also places importance on nurturing the next generation to become responsible“global citizens”and actively participating in philanthropic endeavors to address pressing environmental and social challenges.Family offices can empower families to navigate complex financial and family-relate

219、d matters while safeguarding their legacy and core values.51ABOUT HKUST BUSINESS SCHOOLABOUT HKUST ROGER KING CENTER FOR ASIAN FAMILY BUSINESS AND FAMILY OFFICE The School of Business and Management of The Hong Kong University of Science and Technology(HKUST Business School)is young,innovative and c

220、ommitted to advancing global business knowledge.The School has forged an international reputation for world class education programs and research performance,and has received many top global rankings.Always striving for excellence,the Schools strength lies in its full range of program offerings,high

221、 quality research conducted by world class faculty,as well as diverse and high-caliber students.Through its close collaboration with businesses,universities and research institutions worldwide,HKUST Business School seeks to advance business education and research and contribute to the economic and s

222、ocial advancement of the region.The Roger King Center for Asian Family Business and Family Office aims to be the worlds premier research and teaching center for Asian family businesses and family offices especially ethnic Chinese family businesses and family offices.The Center brings together academ

223、ics,policymakers and practitioners in an environment conducive to sharing their wisdom,failures,and successes for the benefit of future generations of family business leaders and communities in which they live.Recognizing the multi-disciplinary nature of the field of family business and family offic

224、e,the Center collaborates with various disciplines at HKUST and institutions around the world to organize academic and industry events such as seminars and forums,provide both custom and open programs,conduct and publish top-quality academic research and articles in leading journals and media,and wr

225、ite and teach cases on Asian family businesses and family offices.Website:https:/afbfo.hkust.edu.hk/Contact us:Email:afbfoust.hk LOOKING AHEAD52EY|BUILDING A BETTER WORKING WORLDEY exists to build a better working world,helping create long-term value for clients,people and society and build trust in

226、 the capital markets.Enabled by data and technology,diverse EY teams in over 150 countries provide trust through assurance and help clients grow,transform and operate.Working across assurance,consulting,law,strategy,tax and transactions,EY teams ask better questions to find new answers for the compl

227、ex issues facing our world today.EY refers to the global organization,and may refer to one or more,of the member firms of Ernst&Young Global Limited,each of which is a separate legal entity.Ernst&Young Global Limited,a UK company limited by guarantee,does not provide services to clients.Information

228、about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via member firms do not practice law where prohibited by local laws.For more information about our organization,please visit .ABOUT EY FAMILY ENTERPRISEAs tru

229、sted advisors to ambitious business-owning families,including more than 90%of the worlds top 500 family enterprises,EY teams have the experience and know-how to help the entire family enterprise families,their family business and their family office pursue growth opportunities while preserving value

230、s and building the family legacy.Drawing from more than 100 years of experience supporting the worlds most entrepreneurial families,EY Family Enterprise professionals are experienced in pinpointing and helping to optimize the drivers that impact family businesses growth and longevity,preserve wealth and culture,and solidify multigenerational legacies.Website:https:/ Contact us:https:/