Commentary from Paddy Balfour for Asian Investor, published on 23.07.23, original source: Talent hunt intensifies as Singapore family offices top 1,100, Author: Indira Vergis
As the number of single family offices in Singapore soars, demand for professionals across sustainability, client relationships and investment advisory is set to climb further.
Singapore’s family office boom is fuelling demand for all sorts of skilled professionals -- a trend that is set to continue in the medium term.
Single family offices in the city-state jumped to 1,100 at the end of 2022, according to the government, up from 700 at the end of 2021.
A government minister noted that at mid-March this year, there were at least 200 single family-office applicants waiting for approval to set up in Singapore.
“There is likely to be a whole wave of demand [for talent] with the growth in family offices,” said Stanley Teo, managing director for asset and wealth management and corporate and investment banking practices in Singapore at Profile Asia, an executive search consultancy.
These families come not just from Asia, but also Europe and the US. In turn, this has led to growing demand for professionals with related expertise.
BATTLE FOR TALENT
Currently, areas such as client relationship management, compliance, and investment advisory are experiencing a dearth of skilled professionals, according to Prashant Tandon, managing director and CEO for Dubai at wealth management firm Lighthouse Canton told AsianInvestor.
Tandon is among the entity’s leadership team that caters to non-resident Indians in different jurisdictions, including Singapore.
Another category that industry professionals have singled out as climbing in importance is sustainability-related roles.
“Family offices are seeing an increasing demand, given their ingrained culture around philanthropy combined with generational change and a more sophisticated approach to impact investing,” said Paddy Balfour, executive director at Acre, a specialised recruitment firm for sustainability-related roles.
Sustainability has gained considerable traction over the last few years.
“The industry is being nudged in that direction, even from a regulatory perspective. For instance, regulators worldwide, including those in Singapore, are increasingly recommending the incorporation of an ESG score in the strategy and decision-making processes” said Lighthouse Canton’s Tandon.
That sentiment is shared by other experts: “We are educating and holding hands of lots of families as they embark on the journey of sustainable and impact investments,” said Manish Tibrewal, co-founder of multi-family office Farro Capital.
Tibrewal told AsianInvestor earlier that the industry also lacks people who understand how to align the overall mission and vision of a family office to the family values, as well as design and implement family governance, philanthropy and similar non-finance aspects.
MORE TO COME
The search for talent is not unique to Singapore and is part of a broader issue for the financial services industry in many markets,
Government restrictions on immigration after the COVID-19 outbreak in Singapore and around the world, while justified, have complicated the hiring of talent, said Lighthouse Canton’s Tandon.
For families looking to set up a family office in an international jurisdiction, the motivation is often to diversify beyond their home bias and become tax efficient.
“In Asia, much of the wealth has been built up in the last two generations and families still tend to retain the original businesses from which the wealth was created,” said Mohit Ralhan, global CEO and managing partner at TIW Capital Group.
“In the US and to an even greater extent in Europe, wealth has been accumulated over several generations, and the family businesses were sold a long time ago, or otherwise converted into financial assets.”
As more liquidation events take place to remove concentration risk, more family offices will be set up in the region, he said.
“So, creating and expanding family offices in Asia is just in its first phase.
Over the last 10 years, assets under management (AUM) in Singapore has grown more than three-fold in Singapore. Of this incremental AUM two- thirds have come from abroad. The trend will likely continue as more wealthy families especially China and India set up offices in Singapore.”
Even additional requirements to encourage more local hiring and investing is unlikely to dent Singapore’s appeal.
DIFFERENT FAMILIES, DIFFERENT OFFICES
Single family offices that applied and received tax incentives in Singapore employed about 1,400 locals and permanent residents at the end of June 2022, senior government minister Tharman Shanmugharatnam said in early July.
At least two-thirds of them earned more than S$5,000 ($3,791) per month.
There are certain characteristics that most family offfices share, although there is no one-size-fits-all model.
“Family offices, especially single-family offices, don’t hire lots of people. At most, a single-family office can consist of five or so people, which means the people they hire tend to be quite senior and in terms of investment expertise has to be a very strong asset allocator across asset classes,” said Profile Asia’s Teo.
“Depending on how they grow, the more established firms in Singapore will have specialists in fixed income, equity and maybe even real estate to manage the portfolio. But the initial plan is always to provide a level of robustness in the asset allocation. And strategy abilities.”
Multiple family offices, meanwhile, want to grow their assets so they need senior people who can increase AUM, so they tend to hire from private banks or asset managers, he added.
“Then they decide whether they want to have their own internal investment capabilities or outsource those capabilities,” he said.
Amid the increasing need for skilled expertise, Singapore government is proactively deploying significant resources to develop talent through institutions such as Wealth Management Institute (WMI), said TIW Capital’s Ralhan.
WMI, backed by state-owned Temasek and GIC and supported by the Monetary Authority of Singapore, has accepted more than 1,200 enrolments for family office-related programmes since 2020.
It is gearing up to reach 5,000 enrolments into family office programs by 2025. “Talent is available and the efforts are in the right direction,” said Ralhan.
In addition to training, Singapore has built a strong ecosystem of capabilities to support family offices in the form of trust companies, philanthropy organisations and ancillary service providers such as tax, legal advisers, consultants and technology platform providers, especially since wealth management itself is shifting towards artificial intelligence, machine learning and data analytics, he said.