China’s wealth managers join forces to tap family office growth

Chinese wealth managers are increasingly teaming up to penetrate the top-end family office business sector in China in order to serve the burgeoning number of super rich, say industry insiders.

More wealth managing institutions, including banks, trusts and wealth management firms, are making the foray into the family office business at a time when it is still in the early stages in China.

With a long history in the US and Europe, family offices are organisations run on behalf of a high net worth family with the goal of wealth preservation and transferring wealth to future generations. Typically, they are composed of private bankers, asset managers and lawyers who take care of investments, taxes, trusts and legal matters.

Unlike in overseas markets – where a single family office, or those only serving a single wealthy family, are more common – in China there could be a larger number of multifamily offices, or organisations serving a number of ultra high net worth families, according to Wu Fei, an associate professor at the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University.

“We’ve seen a growing trend where local family offices are outsourcing their non-core business, or choosing to join hands with professional services providers in specific segments,” said Wu.

He said it could be too demanding and costly for a single institution to offer all types of services required by a high net worth family by their own staff. In these cases, the work can be outsourced in cooperation with other firms, including tax planning, family education and charity contributions.