With its robust financial infrastructure, world-class support services and a range of new governmental initiatives, Hong Kong offers the perfect environment for establishing a family office.
Hong Kong has an abundance of unique and well-established advantages as an international financial center, but an aspect that is often overlooked is the city’s status as a leading location for setting up family offices.
As private banks and wealth management advisory firms for ultra-high-net-worth families or individuals, family offices play a crucial role in asset and risk management, estate and succession planning, and providing support for personal and philanthropic activities, making them an indispensable resource for managing and growing intergenerational wealth. Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, says the city is ideally placed to serve these needs.
“Hong Kong has deep and mature roots as a sophisticated financial hub with free flow of capital, talent and information,” says Hui. “Our markets are highly open and internationalized, and our resilience is built around a tried and trusted legal system, low and simple tax structure, robust infrastructure support, internationally aligned regulatory regimes, a large pool of financial talents, and a full range of financial products.” Hui adds that the city is also “well-versed” in meeting the needs of ultra-high-net-worth individuals, many of whom are self-made, and that “bespoke services” in areas such as wealth management, insurance, financial planning, charitable sharing and wealth succession planning are in high demand.
Hui notes that as a regional center for philanthropy and sustainable finance, Hong Kong is also well-equipped to help family offices meet their non-financial needs, and that the city’s resilience and stability make it perfectly suited to an industry in which durability and longevity are key. “Home to 80 billionaires, Hong Kong is the third-richest city behind only Beijing and New York in the Forbes World’s Billionaire List 2021. This bodes well for Hong Kong’s aspiration to be the regional hub for family office businesses,” he says.
Dr. Eric Wang, Chairman and CEO of Oakwise Capital Management, agrees. “Hong Kong is an ideal place to launch family office businesses,” he says, noting that the city has the advantages of both offshore financial centers like Singapore and onshore financial centers such as Shanghai. “Successful family office management today requires maximizing resources and incorporating skilled practitioners across a variety of disciplines. Hong Kong offers top-quality professionals to facilitate these objectives,” he adds.
To further develop the city’s status as a hub for family offices, Hong Kong has introduced a range of initiatives over the past year. The Securities and Futures Commission of Hong Kong (SFC), the city’s regulatory body for family offices, issued the first licensing guidelines for family offices in September. Meanwhile, InvestHK, the government department tasked with attracting foreign direct investment, has set up a dedicated family office team to promote Hong Kong’s advantages globally and assist mainland and overseas family offices that are interested in operating in the city. Drawing on InvestHK’s network of 32 offices around the world, the new team provides one-stop support services and tailor-made solutions for every stage of the set-up journey.
“Some of the most sophisticated single-family offices in Asia are already based in Hong Kong,” says Thomas Ang, Head of Family Office Services Asia Pacific at Credit Suisse. “The latest initiatives will better allow the more sophisticated family offices to be able to tap into Hong Kong capital markets more efficiently. Also, the new set-ups will be able to enjoy the support and benefits given to help them grow.”
Enhanced Cross-border Opportunities
Hong Kong’s cross-border wealth management services are another feature that make it an attractive location for family offices. As well as being the largest private equity hub in Asia after mainland China, with private wealth management assets of US$1.9 trillion in 2019, Hong Kong is also Asia’s largest cross-border private wealth management center, and the second largest in the world after Switzerland. This position is set to be further strengthened by increased integration with mainland China and the city’s key role within the development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).
Noting that Hong Kong accounts for both the largest inbound and outbound direct investment for mainland China, Hui says that the Stock Connect and Bond Connect schemes give international investors unique access to markets in China, and vice versa. He adds that the city’s cross-border wealth management and investment services sector will be further enhanced by the new Wealth Management Connect scheme, which is poised to launch soon and will allow two‐way access to a wider spectrum of investment products in both jurisdictions, “providing a new and potent string to the bow of wealth managers seeking opportunities in the GBA.”
Thanks to aforementioned government initiatives, Dr. Wang believes there has never been a better time to start a family office in the city. “Hong Kong offers an unparalleled variety of investment opportunities and remains the dominant investment gateway to mainland China, which should be very attractive for family offices,” he says.