Booming Chinese family offices recruit top bankers in Singapore

A boom in mainland Chinese family offices setting up in Singapore is drawing in thousands of financial professionals, including from global investment banks, creating what some finance heads are calling a new “hedge fund” industry in the city state.

Wealthy mainland Chinese moving assets out of President Xi Jinping’s China account for up to half of a rise in Singapore-based single family offices — the private wealth management firms set up for rich individuals and their relatives. Numbers have jumped nearly threefold since the coronavirus pandemic began and, according to some estimates, now total as many as 1,500.

“The large family offices are trying to offer the kind of salary senior wealth professionals at private banks are paid,” said Caroline Lee, a former private banker who manages a Singapore-based single family office for a group of Chinese clients. “A lot [depends] on the individual bankers, but it might appeal to people who feel there is too much politics at a big bank.”

Founders of the family offices often used the structure to secure employment visas and move their families to the city state, recruitment professionals said. Many of the structures would historically employ family members in important positions, whether or not they had previous experience in asset management.

However, since April this year, Singapore-based family offices have been required to hire at least two investment professionals to qualify for tax exemptions. Larger funds must have at least three.

The rules have created the incentive for a collective hiring spree of thousands of asset management, private wealth management and other banking professionals. This would make it a “lot tougher” to find talent, Lee added. “They must be willing to pay.”

Derrick Tan, who left the Bank of Singapore to start up his own wealth management firm to work with single family offices last year, said “Fomo” — fear of missing out — was a key driver for creating the offices.

“I was asking many of them the purpose in setting up a family office, and it seemed like 20 or 30 years ago — when you listed your company because your friend or colleague listed a company,” he said.

​​Kher Sheng Lee, Asian head of the Alternative Investment Management Association in Singapore, said he was seeing many more family offices hire from top banks and asset managers. They look for “individuals with specific investment focus and expertise”, he said.

The investment banking head for a US bank based in Singapore said he had lost a number of professionals to family offices. “I know of several other [banks] where they have lost someone senior and that person has gone straight to a family office. We are probably going to see more of them taking whole teams with them.”

Bankers and other advisers said that although the family offices were conservative and largely focused on property and publicly listed equities, their risk appetite was likely to rise over time. Increasingly they were expected to behave like hedge funds, one said.

Caught by surprise by the surging numbers of family office funds, Singapore’s government this year tightened the rules, with higher minimum capital and hiring requirements.

To qualify for tax exemptions and hiring investment professionals, applicants must commit to increasing assets under management to S$20mn (US$15mn) within a two-year period. At least 10 per cent of AUM — or $10mn, whichever is greater — must be invested locally, such as in Singaporean equities or start-ups.