Speaker 1: You're listening to Asia Centric from Bloomberg Intelligence, the podcast
Speaker 1: that pulls back the curtain non global business so you
Speaker 1: can invest better across the Pacific rim. I'm Tom Corbett
Speaker 1: in Hong Kong and I'm John Lee.
Speaker 2: Family Officers. They're the personal investment firms of uber rich,
Speaker 2: and along with mansions, yachts and private jets, they symbolize
Speaker 2: the trappings of wealth, power and privilege here in Asia.
Speaker 2: Singapore is becoming the new family office hotspot, wooing the
Speaker 2: rich with low taxes, business friendly policies, favorable regulations and
Speaker 2: an unbeatable location. Singapore's family office scene is booming, with
Speaker 2: more than one one hundred firms setting up shop there,
Speaker 2: up from just four hundred in twenty twenty. Make it
Speaker 2: home to more than four trillion dollars in assets.
Speaker 1: Google's Sergey Brinn and hedge fund billionaire Ray Dahlia are
Speaker 1: among those setting up shop. But why is Singapore such
Speaker 1: a draw for the world's billionaires?
Speaker 2: He's the growth sustainable and what are the risks?
Speaker 1: I hit Let's talk Singapore family offices with Sharon sim
Speaker 1: Family Office CEO. She's also a venture capitalist, a TV
Speaker 1: host and soon to be author of the coming book
Speaker 1: Why Women Don't Talk Money. Sharon, it's great to have you, Hi.
Speaker 3: Tom, Hi John. It's really great to be here with you, Sharon.
Speaker 2: Why is Singapore so attractive to set up a family office.
Speaker 3: I think Singapore has been very proactive in promoting Singapore
Speaker 3: as a wealth hub, and I think we have been
Speaker 3: cariting this process since twenty twelve. There's a lot more
Speaker 3: infrastructure and the government has been very supportive in terms
Speaker 3: of taxation text policies have been very favorable for new
Speaker 3: capital coming into Singapore. But I think the pivotal point
Speaker 3: for a family officers started about you mentioned three years ago,
Speaker 3: from twenty twenty onwards. Firstly, I think it's driven by
Speaker 3: what we have gone through during the pandemic. So during pandemic,
Speaker 3: Singapore went through similar lockdowns as most Asian countries. What
Speaker 3: is different, I think is how Singapore's policies have helped
Speaker 3: to mitigate a lot of the downside from COVID example,
Speaker 3: in terms of how we manage the whole quarantine system,
Speaker 3: how we have you know, make sure that the vaccination
Speaker 3: has been done very systematically in terms of many phases
Speaker 3: we've gone through. So that's given the ultra rich a
Speaker 3: sense that Singapore is a great place to be, not
Speaker 3: only for safety, but also I think the general sense
Speaker 3: that the government is really in control about how they
Speaker 3: manage various policies, which include helping a lot of the
Speaker 3: families settle into Singapore. The second point I think is
Speaker 3: maybe less well spoken about is actually the establishment of
Speaker 3: the VCC structure in Singapore. That's a variable capital company
Speaker 3: which was introduced us an early part of twenty twenty.
Speaker 3: It's actually a fund management structure, is a fund structure
Speaker 3: very similar to what we've seen in cabans, whereby we
Speaker 3: have umbrella structures, we have individual sub funds. And I
Speaker 3: think that really helps to propelsing and port forward as
Speaker 3: a really attractive place for ultra high network because, as
Speaker 3: we know, the fund structure is actually much simplified. Unlike
Speaker 3: trust you don't need to have a trustee for a VCC.
Speaker 3: You can issue and also redeem shares very efficiently without
Speaker 3: shareholder approval. And I think lastly as well, there is
Speaker 3: less financial reporting for all of the VCC funds.
Speaker 2: Sharon, who are the people setting up these family officers?
Speaker 2: Are they Chinese billionaires wishing to diversify out of China
Speaker 2: or they you know, people that made it in crypto.
Speaker 2: Is there a particular trend.
Speaker 3: I think all of the above, John is really really
Speaker 3: China money. As we know right a lot of billionaires,
Speaker 3: and also I think newly created well from China has
Speaker 3: been coming into Singapore and the Hong Kong And also
Speaker 3: I would say during the peak of crypto Domania, we
Speaker 3: did see a lot of crypto driven ventures setting up
Speaker 3: in Singapore. So we do have a very thriving Web
Speaker 3: three community in Singapore. But I think what's also important
Speaker 3: to understand is that it's not just China money. That's
Speaker 3: really the fleshy part of things. You would like to
Speaker 3: talk about all the billionaires from China, but what we
Speaker 3: have seen is also from the rest of Southeast Asia,
Speaker 3: particularly Indonesia, which is one of our neighboring countries and
Speaker 3: have always been very familiar with Singapore. Overall, part of
Speaker 3: it is new wealth driven by new technology IPOs, also
Speaker 3: old wealth really deciding that Singapore is the place to
Speaker 3: be for your future generations. And also thirdly we've seen
Speaker 3: a boom in commodities back in Indonesia.
Speaker 1: Sharon sim we've heard anecdotal media reports of ambitious finance
Speaker 1: majors and people in the industry rushing to try to
Speaker 1: fill these jobs in family offices. Are the jobs really
Speaker 1: that coveted, and if they are, what's the draw What
Speaker 1: do family offices look for in a workforce.
Speaker 3: I think there's always been a challenge in Singapore finding
Speaker 3: the right talent with the right jobs, particularly in family
Speaker 3: offices where things are still evolving very quickly. So I
Speaker 3: would say that there are jobs available. In fact, we've
Speaker 3: seen a lot more hiring from single family offices and
Speaker 3: also multi family offices. However, I think the profile of
Speaker 3: the candidates are different. I would say it's very specific.
Speaker 3: Back to your point about younger or what junior bankers
Speaker 3: thinking about making the switch, I think I've seen less
Speaker 3: of that. I've seen a lot more senior positions being filled,
Speaker 3: meaning CEO levels or CIO levels, especially for multi family offices.
Speaker 3: Is really targeting the very established private bankers right with
Speaker 3: strong client relationships the ability to actually bring asset under
Speaker 3: management up for the multi family offices. Another point to note,
Speaker 3: of course, is family offices by definition are very different.
Speaker 3: Each one is different from the other. Definitely, there's a
Speaker 3: lot of chemistry that need to happen with the principles.
Speaker 3: It's really not so straightforward as filling in a candidate
Speaker 3: with the right technical skills or the right financial background.
Speaker 3: It has to be combination of factors where you know,
Speaker 3: it's actually the personality fit, also the understanding of the
Speaker 3: family dynamics, and also the role that's required to be played.
Speaker 3: For instance, back in twenty nineteen, I started my own
Speaker 3: multi family office. The challenge is really finding the right
Speaker 3: personality for the role. Why do I say that, because
Speaker 3: I think it's really as startup. If you think about it,
Speaker 3: we're actually building a business from ground up. You have
Speaker 3: to be ready to roll up your sleeves. You make
Speaker 3: sure you know where to find the right rentals for
Speaker 3: the offices, how to establish technology, how do we implement
Speaker 3: compliance policies. So everything has been created.
Speaker 1: From ground up, and because the skill set is so
Speaker 1: precise and the talent pool perhaps relatively narrow, I would
Speaker 1: imagine that compensation packages are probably commensurate with that.
Speaker 3: That's a great question in theory. You're right, Tom, I
Speaker 3: think what we have seen in reality is that there
Speaker 3: has been a bit of a discount to join a
Speaker 3: family office. And this is something that is also very
Speaker 3: puzzling to all of us in the industry because, as
Speaker 3: you mentioned, it's a lot more work to join a
Speaker 3: newer setup in a family office. And also, I think
Speaker 3: the other point which is probably less appreciated, so the
Speaker 3: risk that we are taking to leave your institution, to
Speaker 3: leave a very comfortable role within a bank, for example,
Speaker 3: to join a startup. So unfortunately we have not seen
Speaker 3: the gap narrowing in Singapore. But if we reference what's
Speaker 3: going on in the US and Europe with the family
Speaker 3: office space is a lot more mature, a lot more professionalized.
Speaker 3: I think that describe and see or that premium is
Speaker 3: actually much clearer.
Speaker 2: Sharon, you alluded to the fact that overseas, family offices
Speaker 2: are a lot more mature. I know that in Europe,
Speaker 2: maybe in Switzerland, family offices have been around for two
Speaker 2: hundred years. It seems like in Singapore that the industry's
Speaker 2: grown in the last fifteen years. What are the big
Speaker 2: differences between working in a family office in Singapore versus, say,
Speaker 2: in Switzerland or elsewhere.
Speaker 3: I would say the difference is really the maturity of
Speaker 3: the wealth In Asia. I think we're looking at maybe
Speaker 3: first or second generation wealth and a lot of the
Speaker 3: families in Asia still run the business right, so they're
Speaker 3: still very much involved in operations and expansion of the
Speaker 3: family business. So they have not really had the opportunity
Speaker 3: to dispose of the family business and so therefore the
Speaker 3: liquidity situations very different from Switzerland, from Europe where the
Speaker 3: families have been multi generational, so the wealth has been
Speaker 3: changed over the years. The probably sold most of their
Speaker 3: original businesses and they're really just managing the wealth for
Speaker 3: families and future generations. So I think the fact that
Speaker 3: Asian wealth is still very young, very nascent. We have
Speaker 3: not even seen the transferred wealth to the next gen.
Speaker 3: The principles, for example, in most of the Asian family
Speaker 3: offices are still very hands on, so they like to
Speaker 3: understand where they're doing the investment. A lot of them
Speaker 3: do sit in the investment committee, so all the meetings
Speaker 3: the strategy of how the wealth is being deployed, so
Speaker 3: they do have that control, which is very typical of
Speaker 3: Asian families.
Speaker 1: Sharon sim if I read between the lines, it suggests
Speaker 1: that perhaps the greatest portion of the coming wealth boom,
Speaker 1: it still lies ahead of us. Am I right, I.
Speaker 3: Believe, So, I think there's a lot more that would
Speaker 3: happen with the transfer of wealth. We have seen reports
Speaker 3: where wealth acts is inciting two trillion of wealth in
Speaker 3: Asia that's going to be transferred to the next generation,
Speaker 3: and I think with this passing on the torch, you
Speaker 3: definitely would have the next generation looking at well preservation
Speaker 3: a lot differently. I think this is a good lead
Speaker 3: in to see how the nixttion viewing family offices and investment,
Speaker 3: which is very different from their parents, from their grandparents.
Speaker 3: A lot of them are very focused on doing good right,
Speaker 3: so it's not just about making investment returns. It's about
Speaker 3: creating the right impact. We have seen the rise of
Speaker 3: family officers looking at ESG investments, climate change philanthropy to
Speaker 3: a certain extent, I think next generation do want to
Speaker 3: make sure that they understand how their money is being
Speaker 3: deployed and the impact is creating for the causes that
Speaker 3: they believe in.
Speaker 1: How big a concern is legacy For the ultra high
Speaker 1: networth individual.
Speaker 3: It's important. I think they all feel very strongly that
Speaker 3: they want to give back. They have been very successful
Speaker 3: in life. They want to make sure that their success continues.
Speaker 3: So we have seen traditionally pure philanthropy, meaning just donating
Speaker 3: money to various causes. As I mentioned, I think the
Speaker 3: complexion of that has been changing. A lot of this
Speaker 3: money for philanthropy is kind of mixed together with so
Speaker 3: called impact investing, where they're bringing together purpose with profit.
Speaker 3: So I think with the right point, right time, where
Speaker 3: there are a lot more options for family officers to
Speaker 3: deploy that capital very thoughtfully, either through venture capital funds,
Speaker 3: very specific climate type funds. Were also seeing a lot
Speaker 3: esg funds getting funding from family offices, and to a
Speaker 3: certain extent, even pure venture capital, because I think the
Speaker 3: next generation is very conscious about how they want to
Speaker 3: change the world.
Speaker 2: So Sharon, is the next generation more admenable to investing
Speaker 2: in private assets. You sort of mentioned venture capital, but
Speaker 2: private equity, private debt, infrastructure versus say a traditional sixty
Speaker 2: to forty equity fixing COMPORTFOLI.
Speaker 3: We have really seen that happening, I think in terms
Speaker 3: of how the asset allocation within the family office space
Speaker 3: has been evolving. So sixty forty clearly is very traditional,
Speaker 3: and most of the banks have been kind of advising
Speaker 3: the portfolios to be diversified that way. But I think
Speaker 3: with recent times what we've seen is with the volatility,
Speaker 3: with inflation, with how the markets are being more dislocated,
Speaker 3: there's a lot more attention being paid to private equity,
Speaker 3: and now I think it's really private debt. So private
Speaker 3: debt is having this day in the sun where there's
Speaker 3: a lot more interest from family offices given where interest
Speaker 3: rates are going, and also the fact that there is
Speaker 3: going to be a bit of a distress in many
Speaker 3: many areas of the economy, so you know, having debt
Speaker 3: as a way to diversify that risk is great. So
Speaker 3: I think we've seen the progression of asset allocation over the.
Speaker 1: Years, Sharon, As investors, when we make an investment decision,
Speaker 1: we like to look both up and down when assessing
Speaker 1: the risk and the opportunity. From a family office standpoint,
Speaker 1: do you see any risks to the explosive growth in
Speaker 1: family offices and private wealth?
Speaker 3: I think the questions whether it's sustainable, right, I mean,
Speaker 3: the corrects are signing to show a little bit in Singapore,
Speaker 3: So I think this is quite clear from the recent
Speaker 3: announcement by MAS. Right, So what's going on right now
Speaker 3: is that MAS has announced late October that they're going
Speaker 3: to repeel the RFMC regime. That's actually the registered fund
Speaker 3: management companies and there are about two hundred eighty of
Speaker 3: them currently in Singapore. What that means is that MAS
Speaker 3: is trying to slow down firstly new applications for fund
Speaker 3: mentionment companies and secondly it's a bit of a consolidation
Speaker 3: move where the intention is to see up the fund
Speaker 3: mentionment companies that are driving and those that maybe are
Speaker 3: a little bit suboptimal, and to incentivize them to really
Speaker 3: rethink the business strategy. We have heard stories about how
Speaker 3: applications for family offices and also for fund menationement companies
Speaker 3: are being delayed. The wait time for applications have stretched
Speaker 3: from the usual four to six months to what we're
Speaker 3: hearing now on the grounds between even nine to twelve months.
Speaker 2: SAR was the MIAs rules in response to the big
Speaker 2: money laundering scandal in Singapore where the authority is uncovered.
Speaker 2: I think two billion dollars in cash, crypto properties, fast
Speaker 2: cars was all over the press, but was that the case.
Speaker 3: There's no official confirmation or denial of that. The big
Speaker 3: case that we've all talked about. You know, the two
Speaker 3: billion dollars is a huge number, and also I think
Speaker 3: there has much longer implication on how bank accounts are
Speaker 3: being set up, how the process of approval for ultra
Speaker 3: high network from all over the world coming to Singapore.
Speaker 3: It's going to be a lot more scrutiny going forward.
Speaker 3: So I think it's a trigger to kind of slow
Speaker 3: things down. But inherently I think the capacit of Singapore
Speaker 3: to bring in or to accept more capital. It's also
Speaker 3: the other factor that's alstually been a bit more ongoing, right,
Speaker 3: so MAS is also aware that you know, it's harder
Speaker 3: and harder to monitor and also to supervise given the
Speaker 3: huge quantity that's coming.
Speaker 2: In Sharon, there's over one one hundred family offices in Singapore.
Speaker 2: Is this leading to any consolidation, John, I.
Speaker 3: Think there's going to be a lot more consolidation happening
Speaker 3: in this space. This tremendous number of family offices and
Speaker 3: multi family offices being set up over the last three years,
Speaker 3: there has been ongoing discussions in the market around m
Speaker 3: and a happening. I think one of the big trigger
Speaker 3: is definitely the cost structures. It is actually quite expensive
Speaker 3: to maintain an office, to hire full staff of CIO,
Speaker 3: senior people, investment analysts, and I think we're seeing some
Speaker 3: challenge in the fact that you know they're not able
Speaker 3: to grow your asset under management as quickly as they think.
Speaker 3: The other factor is clearly the talent pool. Even though
Speaker 3: there's been a lot of turnaround in the market, I
Speaker 3: think finding the right person for the right job is
Speaker 3: very difficult. So that's actually constraining the growth of a
Speaker 3: lot of this external asset managers or multi family offices.
Speaker 1: Share and rising interest rates have really changed the equation
Speaker 1: for a lot of investors. Many have realigned their priorities.
Speaker 1: What are you hearing from your clients and from elsewhere
Speaker 1: in the family office business about where rates are headed
Speaker 1: and the impact of higher rates.
Speaker 3: I think the general consensus within my space is that
Speaker 3: industries are going to stay higher for longer. This is
Speaker 3: going to be a very structural high inflation cycle that
Speaker 3: many of us have not really experienced.
Speaker 1: Right in the generation or more right.
Speaker 3: Yeah, exactly so. I think in the last twenty over
Speaker 3: years we've been blessed with very low rates, and I
Speaker 3: think we have struggled to then naturally generate enough return
Speaker 3: given the higher rates. Now it's completely different, is a
Speaker 3: reverse where rates are going to stay a lot higher
Speaker 3: for longer, and I think as many impacts very clearly
Speaker 3: on financial markets and the way we invest. So families
Speaker 3: have been very very cautious this year in terms of
Speaker 3: the way to invest. So a lot of them have
Speaker 3: actually been just putting money in fixed deposit where you're
Speaker 3: getting a risk free rate of five plus percent for
Speaker 3: US dollars. They've actually been also investing in US treasuries
Speaker 3: money market instruments. So clearly, you know, the sense is
Speaker 3: that rates are attractive enough to just keep it in cash.
Speaker 3: So cash is king again for now.
Speaker 1: Well, definitely more so on a risk adjusted basis versus equities.
Speaker 1: If you can get five percent risk free, why would
Speaker 1: you invest in equities?
Speaker 3: Exactly right, So that's where the challenge comes in terms
Speaker 3: of how do we invest. If I look at a
Speaker 3: private equity fund, if I look at a private debt deal,
Speaker 3: this has to give me a double digit return to
Speaker 3: kind of justify the investment the time that we take
Speaker 3: to make those investment decisions. So this is a challenge
Speaker 3: I think with the way family offices are looking at investment.
Speaker 3: Because we're not bounded by investment mandates, we know we
Speaker 3: can be totally flexible. There's nothing wrong being one hundred
Speaker 3: percent in cash well Doe.
Speaker 1: Wealth preservation is a big priority for the high net
Speaker 1: worth investor.
Speaker 3: Exactly.
Speaker 1: You're listening to Asia Centric from Bloomberg Intelligence. By the way,
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Speaker 1: from our listeners. Sharon sim in your forthcoming book, Why
Speaker 1: Women Don't Talk Money, just the title hits on a
Speaker 1: subject that hits close to home for many women. It's
Speaker 1: true they don't talk money. Can you talk a little
Speaker 1: bit about why that has always been the case and
Speaker 1: how that is changing and reshaping the wealth management business.
Speaker 3: It's a subject that's very close to my heart. I
Speaker 3: think women in general avoid having those conversations around money.
Speaker 3: Having said that, if you look at research reports from Fidelity,
Speaker 3: women are actually better investors over the longer periods. The
Speaker 3: studies have shown that we upperform men by zero point
Speaker 3: four percent over a ten year period. Definitely, the capabilities
Speaker 3: are there. I think it's really the lack of opportunity
Speaker 3: and confidence from women to really get involved in making
Speaker 3: those investment decisions. I think the book is really about
Speaker 3: sharing those stories how women go through the various seasons
Speaker 3: of their lives, how they deal with challenges with money
Speaker 3: and investing. And we see that also throughout the family
Speaker 3: office space and wealth management, where more and more senior
Speaker 3: women are stepping up to take on leadership roles and
Speaker 3: making investment decisions on behalf of families. And I think
Speaker 3: that's really a positive sign that things are changing around
Speaker 3: the fringe. And the book is a series of interviews
Speaker 3: with twenty women in all walks of life, sharing the
Speaker 3: personal relationship with money, the emotions that women feel, as
Speaker 3: I mentioned, the lack of confidence and the sense of
Speaker 3: not understanding enough, those are actually very self crippling thoughts
Speaker 3: for women. In reality, I think women invest differently from men.
Speaker 3: The statistics have been shown that we think longer term
Speaker 3: in terms of our investment horizon. Women tend to actually
Speaker 3: do a lot more research. We tend to want to
Speaker 3: understand the investment that we're making because we actually committed
Speaker 3: to the investment for the long run.
Speaker 2: Sharon, I know your role model for a lot of women,
Speaker 2: especially in Singapore, and you must get this question all
Speaker 2: the time, what advice do you give them in their
Speaker 2: careers when they're starting off.
Speaker 3: I think the advice is really to keep learning, to
Speaker 3: really put yourself for positions that you think you're not
Speaker 3: ready for. That's something that I wish I have taken
Speaker 3: that advice when I was younger, So that's actually one
Speaker 3: thing that has actually served me well in later part
Speaker 3: of my career, where I decided to put myself out
Speaker 3: there right when you're given opportunity to try a new role.
Speaker 3: I think women in general worry too much, is a
Speaker 3: bit of overthinking about what they should do it, whereas
Speaker 3: I think men has less inhibition that way, so I
Speaker 3: think the confidence level is very different. So I would
Speaker 3: advise younger women to really do things they feel most
Speaker 3: uncomfortable in their careers. Make those choices early. You can
Speaker 3: learn from those mistakes earlier on, and I think it
Speaker 3: really helps you to broaden out your experience. The other
Speaker 3: advice is to start investing on a personal level. A
Speaker 3: lot of us feel uncomfortable making the very first investment.
Speaker 3: I think it's all a part of the learning process
Speaker 3: to make smaller bets, to maybe invest in financial instruments
Speaker 3: that you feel most comfortable in that you know a
Speaker 3: bit better and to kind of just continue this process.
Speaker 3: So for me as an investor, I started when I
Speaker 3: first joined the industry, when I was twenty two year old,
Speaker 3: straight up from college. I was actually right at a
Speaker 3: time where it was a dot com bubble, and you know,
Speaker 3: I lost a lot of money during the time. But
Speaker 3: I think it's important to go through that experience to
Speaker 3: understand that it's okay to make those mistakes and to
Speaker 3: pick yourself up and continue the investment journey.
Speaker 1: Your words remind me of two of my favorite sayings.
Speaker 1: One is time in the markets is more important than
Speaker 1: timing the markets, and you miss one hundred percent of
Speaker 1: the shots you never take.
Speaker 3: I love that, So just take those shots, just stay
Speaker 3: in the market d In the long run, everything should
Speaker 3: work out.
Speaker 1: Our guest has been Sharon sim Family Office CEO based
Speaker 1: in Singapore and author of the forthcoming book Why Women
Speaker 1: Don't Talk Money, coming from Penguin Random House in twenty
Speaker 1: twenty four. Sharon has been a fantastic conversation. We've talked
Speaker 1: about women and money and family offices and high net
Speaker 1: worth investing. It's been a very enlightening conversation. And we
Speaker 1: look forward to staying in touch.
Speaker 3: Thank you Tom, and thank you John. It's been a
Speaker 3: great experience speaking with you guys.
Speaker 1: I'm Tom Corbett in Hong Kong and I'm John Lee.
Speaker 2: And this podcast was edited by and you've been listening
Speaker 2: to the Asia Centric podcast