How to set up a Family Office in Singapore

2020 was a bumper year for Family Offices in Singapore with an estimated 200 single-family offices in Singapore managing assets of about US$20bn as of December last year

The popularity of Singapore as a place to establish a Family Office does not seem to be dissipating, with Google Co-Founder Sergey Brin recently setting up a Family Office here, joining hedge fund manager Ray Dalio and inventor James Dyson among other high-profile billionaires.

From economic and political stability, to deep ecosystem and Family Office-friendly policies such as the new Variable Capital Company (VCC) framework, there are plenty of reasons why Singapore is the location of choice for many wealthy individuals and families.

Dominik Heer, COO of Alpadis Group, explains some of the steps needed to set up a Family Office in Singapore:

Understand what your objectives are

Every family is different, and it is important to begin by articulating what your objectives and needs of the Family Office are. Objectives could be the day-to-day administration of their high-value assets, relocation services, estate planning, concierge services, among other reasons.

While the overall structure of a Family Office may not vary by a huge amount, the make up of the different service providers may change depending on the overall objectives. This could include bringing in tax advisors if the objective is to minimize tax exposure, immigration experts if they want family members to live and work in certain countries, etc.

Establish your risk appetite

Discretionary wealth management is usually part of a Family Office’s remit and so it is important to establish the risk appetite and investment objectives of the family. Some families may wish to generate a regular, consistent stream of income from their various assets, others may wish to grow the value of those assets and their overall investments.

The mandate of the family office and investment strategy will then build from there, and understanding risk appetite will also influence which assets would be injected into the Family Office

Apply for MAS licensing and tax exemptions

Singapore provides a number of tax and regulatory incentives for families looking to set up a Family Office. Depending on whether you are setting up a Single or Multi Family Office you will need to apply for a fund management licence, which allows you to manage funds for multiple families.

Single Family Offices may, in the future, wish to leverage the VCC structure to set up sub-funds for different branches of the family, one for operating the business, one for asset management etc, or for different asset classes such as Private Equity, listed equities, bonds etc. This safeguards against the co-mingling of risks and provides cost efficiencies with services providers able to operate across multiple sub-funds.

The Monetary Authority of Singapore (MAS) is looking into relaxing the requirement for “permissible fund managers” subject to certain conditions. The enhancements may widen the scope of permissible fund managers to allow SFOs to manage VCCs, alongside certain safeguards. It is also important that the Family Office adhere to all substance and transparency requirements expected of them in Singapore.

Use a neutral service provider

It is important that the family engage with a neutral service provider. By that I mean a service provider that does not have any ‘preferred’ strategy or product and are impartial when it comes to the client. Their focus should be on the client’s needs, not on pushing any particular financial product or service.

Alpadis Group, for instance, are able to provide turnkey solutions in terms of the infrastructure that needs to be put in place to allow wealthy families to achieve their goals. We are able to do this in an independent, impartial manner as we are completely neutral and independent from any financial institution.

For more information and advice on setting up a Family Office in Singapore, contact Alpadis Group