HKUST Business School Magazine

With the announcement in early 2023 of new measures designed to attract and support family offices, Hong Kong demonstrated its intention to strengthen its attractiveness for this sector amid increasing competition from other global financial centers. The latest incentives, which were outlined at the city’s high-profile Wealth for Good summit, include a revamped investment-migration scheme, which will now include RMB-denominated assets, as well as ready access to art storage facilities at the airport. The goal is to see at least 200 family offices – the private companies used by high-net-worth families to manage their investments and philanthropic interests – based in Hong Kong by the end of 2025. There is also a broader aim to showcase the city’s range of wealth management services and expertise and to reinforce its position as Asia’s pre-eminent financial hub. “There are many types of large family businesses around the world. According to research, in a number of countries, up to half the listed companies are family-owned or governed, many of them having their own single family office,” says Switzerland-based Professor Denise Kenyon-Rouvinez, a member of the World Economic Forum Expert Network and the Principal Program Director of Family Office programs at the Wealth Management Institute in Singapore. She visited Hong Kong in 2023 and conducted a seminar hosted by the School on the challenges and opportunities facing family businesses and family offices. “Family businesses and family offices need a proper governance system, and a succession plan for the transfer of ownership and leadership. The family office holds a special place. It is there to manage private wealth and make investments, which can provide for future financial needs and enable the family’s philanthropic activities,” says Kenyon-Rouvinez. Harmony is difficult to achieve Managing a family office is less straightforward than it might sound. Even in the most harmonious situations, deciding on the right structure, timing, mandates, locations and professional advisers usually requires protracted discussions. Members of the first generation, which founded the business that underpins the family’s fortune, don’t always see eye to eye with later generations on how to proceed. The notion of a “shared dream” tends to change over time. The relative merits of new investment opportunities, often tied to the latest technologies, may divide opinion. There may be conflicting views on whether to focus investments closer to home or embark on a more global approach. What one person sees as tax efficiency might look like an unnecessary flirtation with risk to another. “At the outset, there are many questions to consider,” says Kenyon-Rouvinez, who has worked extensively with leading families over the last 30 years, helping them to resolve complex governance and wealth management issues. “In Asia, there are many types of family offices and multiple ways of managing them. At that level of private wealth a bespoke approach is needed. A successful business usually has a very clear structure for governance, based on a unique culture and its own clear way of doing things, forming an important part of its competitive advantage. A family office needs a similar approach to defining its strategy,” says Kenyon-Rouvinez. Biz@HKUST 37