{"id":1145,"date":"2025-09-11T09:36:00","date_gmt":"2025-09-11T09:36:00","guid":{"rendered":"https:\/\/iqeq.com\/cn\/insights\/alternatives-and-outsourcing-the-evolving-model-of-family-offices-in-asia\/"},"modified":"2025-09-12T13:56:13","modified_gmt":"2025-09-12T13:56:13","slug":"alternatives-and-outsourcing-the-evolving-model-of-family-offices-in-asia","status":"publish","type":"post","link":"https:\/\/iqeq.com\/cn\/insights\/alternatives-and-outsourcing-the-evolving-model-of-family-offices-in-asia\/","title":{"rendered":"Alternatives and outsourcing: The evolving model of family offices in Asia"},"content":{"rendered":"
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By Divya Doshi, Managing Director, Sales, Asia and Middle East <\/em><\/p>\n

Fuelled by unprecedented intergenerational wealth transfer \u2013 estimated at US$5.8 trillion by 2030 \u2013 single- and multi-family offices are proliferating across Asia today. In Singapore<\/a> alone, there are now more than 2,000 single-family offices (SFOs), a 10-fold increase<\/a> on the number in 2019.<\/p>\n

As the number of family offices in Asia rises, two key trends are emerging: a strong move toward alternative investments and significant demand for outsourced services. Here\u2019s a look at what\u2019s driving these trends and how their convergence is reshaping the way firms in the region operate.<\/p>\n

Alternative investments are now a core allocation among family offices<\/h2>\n

Alternative investments represent a core allocation for most Asian-based family offices today. According to BNP Paribas\u2019 2024 Asia-Pacific Family Office Report, these assets now make up just over 50% of portfolios<\/a> on average, meaning they\u2019re a major yield-driver.<\/p>\n

As for what\u2019s behind this allocation, one factor is the quest for increased diversification<\/strong> \u2013\u00a0a priority for around a third of firms across Asia according to BNP. Alternative assets such as private equity, private debt, hedge funds and real estate tend to have a low correlation with traditional asset classes such as equities and bonds. Therefore, they can help family offices create portfolios that are more balanced, resilient and better positioned to achieve long-term, risk-adjusted returns. Note that in Asia, real estate remains a favoured asset class for wealth preservation, whereas hedge funds and private credit are popular as yield-enhancing diversifiers.<\/p>\n

Increased sophistication<\/strong> is another factor behind the shift into alternatives. As family offices in Asia mature, they\u2019re becoming more institutional in their approach to investing. No longer are they simply looking to the equity and fixed income markets for opportunities; instead, they\u2019re aiming to capitalise on unique opportunities that aren\u2019t available in the public markets.<\/p>\n

It\u2019s worth pointing out that with their long-term investment horizons<\/strong> and patient, unconstrained capital, Asian family offices are well-positioned to engage in direct investments, co-investments and private deals. This gives them access to a pipeline of exclusive opportunities in areas such as technology, infrastructure and sustainability. Younger generations are also more open to these kinds of opportunities as these investors like to align their long-term investments with their personal values.<\/p>\n

Looking ahead, alternatives are expected to see further inflows from Asian family offices. According to BNP\u2019s survey, 44% of family offices in the region plan to increase their allocations to alternative assets in the near term, while 40% plan to increase their exposure to private markets. Expect to see plenty of interest in private credit<\/a> investments \u2013 it\u2019s popular with family offices because it offers a combination of high yields, floating interest rates, and diversification from traditional fixed income markets as interest rates head lower. Infrastructure is also likely to be popular due to its perceived resilience and ability to generate stable cash flows.<\/p>\n

Why family offices are outsourcing critical functions<\/h2>\n

Turning to the outsourcing trend, one major driver here is the interest in alternative investments<\/strong>. As firms move to increase their exposure to asset classes such as private equity, private credit and infrastructure, they\u2019re realising that they have gaps in their expertise and capabilities \u2013 whether those gaps are in relation to deal-sourcing, reporting, analytics, risk management, compliance or other areas. By outsourcing certain functions, family offices can tap into the expertise of external service providers with experience in these specific asset classes. This allows them to benefit from the specialised skills and insights of these providers, enhancing efficiency and reducing risk.<\/p>\n

Another reason outsourcing is in demand is cross-border activity<\/strong>. Today, many family offices are establishing cross-border entities, pooling capital into feeder funds and alternative investment vehicles across Asia, the Middle East, Europe and North America. Here, firms are relying on a network of outsourced advisors and legal experts to navigate the complexity associated with such entities. Rather than building expensive in-house teams for every jurisdiction, it’s far more efficient to outsource these functions to expert third-party providers.<\/p>\n

Of course, cost management<\/strong> is also driving the move to outsourced services. Whilst having full operational control over the management of a family\u2019s wealth is appealing, the costs of doing so can be significant. For example, single family offices can expect annual expenses equivalent to 1% to 2% percent<\/a> of total assets under management (AUM). For smaller SFOs with less than $100 million in AUM, the cost ratio can be even higher.<\/p>\n

One major expense that family offices need to be aware of is personnel costs. These are often a firm\u2019s biggest expense, accounting for 45-65% of total operating costs, according to McKinsey<\/a>. Note that in several financial hubs in Asia such as Singapore and Hong Kong, there’s a \u2018talent war\u2019 underway, meaning that family offices often have to pay a premium to attract and retain efficient chief investment officers (CIOs), analysts, accountants, lawyers and administrative staff.<\/p>\n

Technology and infrastructure costs can also be significant. To build out a secure technology platform capable of handling multiple asset classes and providing real-time data analysis and reporting, firms can be looking at substantial outlays. By outsourcing critical functions to service providers, family offices can potentially reduce their costs significantly.<\/p>\n

As family offices in the region continue to institutionalise, we can expect to see more of them working with service providers that can cater to their evolving needs. One recent survey of 31 family offices in Asia \u2013 collectively responsible for more than $15.3 billion in AUM \u2013 showed that around 90% of respondents expect outsourcing to increase in the next three years, with 42% predicting a dramatic increase<\/a>.<\/p>\n

Expect Singapore to play a fundamental role in this outsourcing activity. Today, it dominates the Asian family office ecosystem, offering access to a wide range of asset managers, fund administrators and legal advisors, meaning it can help family offices access expertise in relation to investments, operational and technology challenges, and compliance.<\/p>\n

The future family office in Asia<\/h2>\n

In terms of what the future family office in Asia looks like, it will be lean and agile, allowing for quicker decision-making and a more dynamic investment approach. It\u2019ll also be digitally enabled, leveraging technology to streamline operations and enhance data analysis. It will be alternative-focused, relying on specialised talent to navigate these non-traditional asset classes. Finally, there will be a strong emphasis on governance to ensure transparency, accountability and the long-term sustainability of family wealth across generations<\/a>.<\/p>\n

Key takeaways<\/h2>\n