Unlike institutional investors, the family office segment is not strictly regulated and hence has more flexibility in managing its investments in terms of risk, investment horizon, and asset classes. Family offices have unique needs, and their investment decisions are influenced on the basis of whether their wealth is in the hands of the first or second generation, as the former tends to have a conservative mindset, while the latter tends to be more open to newer and rapidly evolving themes, such as private assets, digital assets, sustainability, and impact investing.

Cerulli’s research discussions indicate that some family offices have their own investment teams that look into direct investments in stocks, bonds, and exchange-traded funds (ETFs). They may also look into direct deals in private asset classes, but at times they could also use fund structures to invest. Technology, green technology, healthcare, impact investing, and private market strategies, such as private equity, real estate, and venture capital, are some of the areas that family offices are looking to invest in.

Some asset managers in Singapore and Hong Kong secure family office clients directly through their institutional teams, while others rely on private banks due to lack of transparency and information available in this segment. Private banks have benefited from the growth of family offices. For instance, DBS Private Bank’s family office AUM doubled over the last two years, it said in its 2022 annual report.

2. Asian investors warm up to DPM

Given market complexities and uncertainty, investors are likely to increasingly rely on their wealth managers for professional advice. With changing mindsets and rising market volatility, Asian investors are expected to increase their use of DPM.

Banks’ current teams of relationship managers are not expected to be sufficient to meet clients’ demands for dedicated services, and this is likely to result into higher turnover and poaching of relationship managers as competition increases. Banks need to ramp up their digital initiatives to access individual wealth, as this cannot be done only through relationship managers. Banks have already jumped into the game to meet the needs of next-generation investors and have to be strategically placed over the long term when the current tech-savvy generation will have accumulated significant wealth.

For instance, with demand for digitally delivered professional wealth management services growing exponentially in China, UBS Fund Distribution (Shenzhen) in October 2022 launched WE.UBS, a digital-led platform offering wealth management services to affluent clients, which the Swiss bank said is the first digital-led wealth management platform launched by a global wealth manager in China. UBS also plans to focus on clients in the Greater Bay Area before expanding the scope to other cities.

4. Making alternatives accessible to Asia’s retail investors

Alternative investments are becoming increasingly popular among high-net-worth (HNW) and ultra-HNW Asian investors open to diversifying their portfolios with uncorrelated asset classes that can mitigate risk and yield better returns. According to Preqin, private capital assets in the overall Asia Pacific region will reach US$2.3 trillion by 2026, driven by the growth of private equity and venture capital across the entire market.

Private banks are increasingly favoring semi-liquid options, improving individual investors’ access to alternative investments. Additionally, digital wealth platforms have the potential to enhance accessibility for retail investors, while family offices are emerging as another noteworthy channel seeking private market opportunities.

The range of product offerings within alternative asset types is expanding, suggesting a growing confidence among fund managers in the region’s alternative investment markets. Distributors show a preference for private equity strategies. Private banks are particularly keen on these and hedge funds, whereas retail banks have shown a strong interest in real estate strategies.