The Tanoto Center for Asian Family Business and Entrepreneurship Studies recently addressed issues related to managing family wealth in the face of increased volatility and uncertainty in the global markets.
A luncheon talk on the topic was held in March and was attended by almost 50 family business owners and family office professionals from household names such as Lee Kum Kee, Shun Hing Group and Sino Group, together with Professor Kar Yan Tam, Dean of HKUST Business School, and other faculty.
Mr Leo Grohowski, Chief Investment Officer of BNY Mellon Wealth Management, shared his thoughts in view of the slowdown in the Chinese economy, normalization of US interest rates, and a sharp decline in oil prices.
Mr Grohowski expected that factors including sustainable growth amid persistent volatility, rising interest rates in the US, divergent monetary policies of different central banks, a strong dollar, stabilization of energy prices and modest equity gains, would continue to drive the markets in 2016.
To manage family wealth in this volatile environment, Mr Grohowski came up with the notion of the 3Ds, namely discipline, due diligence and diversification. “The next few years require rigorous discipline. When a family has a target rate on a given asset class, it is very hard to rebalance but families have to do so. They also need to do their due diligence. Families need professionals who can read those fund managers between the eyes, understand the investment process, and combine judgement with quantitative discipline. Finally, families need diversification. Sometimes these diversifiers are more expensive, but it ensures that you get the right solutions, not products that drive revenues to the advisory firm.
The luncheon talk was one of several events that the Tanoto Center has organized to bridge the knowledge gap between academics, practitioners and policymakers and to share the Center’s research findings on topics of concern to family businesses.
