According to Altrata's World Ultra Wealth 2023 report, Asia’s number of ultra-wealthy individuals overtook the figure in Europe for the first time back in 2019. Analysts predict that Asia’s global share of ultra-high net worth individuals will continue to grow in the coming years and could hit 29% by 2027, up from just 15% in 2004.
This growth presents significant opportunities to channel family wealth into investments, driven by the trends of “professionalisation” and “digitalisation for democratisation.”
“Single family offices are looking to professionalise their operations. This is one of the biggest trends I have seen in the wealth management space over the last few years, especially with family offices that have been established for some time now,” said Charlene Lin Managing Director, Wealth Management - Greater China and Asia Market at Lighthouse Canton.
Most family offices in Asia start organically, often managed by family members or trusted friends. The professionalisation of the office involves transitioning from informal management, typically by family members or trusted associates, to a structured and systematic approach overseen by experienced professionals. This shift ensures that the family office operates with enhanced expertise, governance, and strategic planning, ultimately providing more robust and sophisticated wealth management services.
“They tend to become more professional in the second or third stage of growth when they face difficulties navigating the financial system, managing multiple players, or handling administrative burdens,” Lin added.
Active Versus Passive Management
The shift towards professionalisation is also fuelled by family offices moving away from passive investments towards a more proactive approach, seen in their growing participation in direct investments, co-investments, and venture capital. By bypassing traditional channels, these offices seek greater control and understanding of their assets, preferring institutions that offer a broader investment landscape and detailed information.
"Setting up a family office requires more than legal understanding; it involves knowledge of accounting, finance, and investment processes," Lin noted.
Lin highlighted crucial aspects like optimizing tax and structures, proper accounting for financial assets, and the need for expertise in managing investments, emphasising the importance of each step in this wealth management lifecycle.
There is a growing trend of engaging professionals to oversee the entire process, from strategic planning to execution, ensuring the right expertise is involved at each stage.
“Relying on a single firm lacking comprehensive planning capabilities can lead to significant challenges in the future,” Lin shared.
This shift towards comprehensive planning also reflects a growing understanding among family offices that strategic planning and execution are vital for long-term success in a dynamic and complex financial landscape.
The Demand For Wealth Tech
The second major trend that Charlene Lin and the Lighthouse Canton’s team is seeing is wealth management experiencing a significant transformation in the digital era. Cutting-edge technologies are redefining traditional practices, ushering in a new era of efficiency, accuracy, and personalised client services.
“Clients are demanding seamless one-click execution, real-time portfolio information, and personalisation and customisation in the services that are offered to them,” shared Antoine Bracq, Managing Director, Global Head of Investment Advisory at Lighthouse Canton.
It is not surprising that Lighthouse Canton, being one of the first movers in the wealth management digitization space, is seeing this trend. According to Forbes, the wealth tech market was estimated to be around +USD5bn in 2023, and is expected to be three to four times that size by 2030.
Trends suggest that now each engagement and dashboard required by clients must be completely bespoke, tailored to the unique preferences of the individual or family office, reflecting their specific financial goals, risk tolerances, and investment strategies.
Aligning with this evolving need, Lighthouse Canton has leveraged technology to provide custom solutions that cater to the nuanced needs of each of its clients.
Efficiency in terms of time for portfolio building is also critical for clients here. Lighthouse Canton is using technology with a human touch to bring down this time from weeks to a few hours.
“When a client seeks portfolio advice, we efficiently gather the necessary prerequisites, input them into our system, and provide a comprehensive overview of the portfolio we are modelling,” shared Bracq.
Through technology, Lighthouse Canton is also aiming to democratise access to niche products like hedge funds and structured products.
“By pooling investments, we can lower the minimum investment from our high and ultra-high net worth clients, allowing them to diversify their wealth in multiple asset classes and also making these investment products more accessible," explained Bracq.
The potential of artificial intelligence in wealth management is also undeniable.
Predictive AI focuses on making forecasts or projections by analysing existing data sets and trends. In contrast, generative AI creates new data or content derived from existing information. Machine learning, another AI type, enables computers to learn by identifying patterns within data. Lighthouse Canton is looking towards integrating AI to offer conversational portfolio capabilities, enabling clients to ask detailed questions about their investments and receive immediate responses.
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"We're removing the need and friction in terms of getting the information," Antoine highlighted, emphasising the importance of real-time, accurate insights.
Also Read: How an Asian investment institution is disrupting the asset and wealth management space
Consolidation Services
Wealthy clients are also increasingly demanding accurate “consolidation services” through technology, to streamline decision-making and ensure their portfolios align with their family goals. As family office assets grow and cross-generational needs become more complex, the importance of consolidation services intensifies. Automation of asset aggregation and consolidation is highly desirable, enhancing decision-making capabilities and refining day-to-day wealth management.
This is an area where Lighthouse Canton sees active demand from its clients and has made this access possible for them, using its in-house technology solutions.
Also Read: The next-gen client engagement in wealth management is emerging
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