Cover From left: Cynthia Lee, regional head of wealth planning and advisory for Asia Pacific, Global Private Banking at HSBC; Ronna Chao, CEO of Novel Investment Partners. Outfits: Frey jacket, top, skirt, Loro Piana boots (Cynthia Lee), Frey jacket and trousers, Salvatore Ferragamo shoes (Ronna Chao) (Photo: Affa Chan/Tatler Hong Kong)

Cynthia Lee and Ronna Chao discuss why trusted partnerships are key to shaping multi-generational goals

As many prominent families in the region seek to manage the transition of wealth, business and power to succeeding generations, there has been an extraordinary rise in the formation of single-family offices in Asia, with Hong Kong and Singapore proving the more popular jurisdictions.

“This is a blooming trend we’ve seen during the past few years,” says Cynthia Lee, regional head of wealth planning and advisory for Asia Pacific, Global Private Banking at HSBC. While some have been around for decades, HSBC Global Private Banking estimates that 44 per cent of Asia’s 1,300 family offices were set up in just the past two years. “Hong Kong as the core office and a satellite office in Singapore is a trending phenomenon, yet we are also seeing similar set ups in London and New York,” says Lee.

The growth in family office establishments in the region is thanks in part to government incentives. Singapore is heavily promoting its tax incentives available to families in this regard, says Lee, and Hong Kong has been quick to follow suit with the introduction of several initiatives.

In the 2021-22 budget, Hong Kong’s financial secretary undertook to review tax arrangements for family offices, while in June 2021 InvestHK set up a dedicated team to promote Hong Kong as a hub for family offices.

Hong Kong’s potential as a family office hub is promising, with more than 10,000 ultra-high-net-worth (UHNW) families in the rest of the Greater Bay Area.

Lee highlights the importance of family offices in Hong Kong and Singapore serving as hubs within the region. “There is a need for UHNW families to be able to institutionalise themselves and have a way to not just organise their collective financial affairs, and to further foster families’ philanthropic agendas and family governance agendas, amongst others,” she explains.

Family Offices

Novel Investment Partners is a family office that was established in Hong Kong almost two decades ago. Ronna Chao is the company’s chief executive, and together with a team of professionals, has been instrumental in setting its strategy for asset management and growth. Chao is also the chairperson of Novetex, the family’s textile business.

By the 1990s, the operational side of the textile business for the Chaos was self-sufficient in terms of funding and even investing in growth, which meant that cash was accumulating in the bank at a time when deposit rates were not very attractive.

“There was a conscious effort among the shareholders to have a more structured and systematic way of managing our cash,” says Chao. “We started from an investment angle.”

The family started out making sizable commitments to a small number of private equity and hedge funds firms, and as the operation matured, it developed a more diversified portfolio that focused on different strategies, sectors and investment horizons.

Today, the family’s portfolios ranges in strategy from buy-out to seed-stage to ESG investing, and covers a broad range of geographies and sectors.

“We’ve grown as we’ve gone along,” says Chao. “We really look at our family office operation as a business now, instead of just trying to find things that would improve our returns.”

The key to building a successful family office, according to Chao, is to start out with a clear goal. “Your goals can evolve, but it’s important that you define them from the outset. Over time you figure out your own strengths, see where the gaps are, and find people to help you fill those gaps.”

Increased Accountability and Transparency

“A family office is a good way for families to have participation and visibility into how collective decisions are being made,” says Lee. “It puts in place checks and balances, and provides a family governance framework and structure for interacting with all relevant stakeholders.”

Meeting that growth potential can present challenges. With so many family offices being set up in the region, it can be difficult for newcomers to hire experienced personnel. Even for established offices, retaining staff can be an issue.

The pandemic has also expedited digitisation across the board for all businesses worldwide—including family offices—many of which have embraced digitisation to aid communication, facilitate day to day dealings and engagements with various providers and to achieve better staff efficiency.

“As with any business, the more you digitise, the greater the cybersecurity risk becomes,” says Lee. “And because they handle confidential, sensitive information, they need to have the right systems, protections and usage policies, amongst others, in place.”

Despite the challenges they face, family offices are an ideal vehicle to aid the organisation and management of private wealth, to facilitate succession and legacy planning, and to allow the continual pursuit of families’ philanthropic ventures.

The Modern Philanthropists

“At HSBC, many of our high-net-worth (HNW) clients are very engaged in philanthropy, and we can see how they prefer to manage their giving in a strategic way. We can also see they are using different structures and giving vehicles for their philanthropy,” says Lee. “They are focused on making long-term, greater impacts though sustainable financing methods and family philanthropy is an important topic during succession planning. They also seek more advice on setting a philanthropic vision and mission for their family”.

Family offices can play an essential role in shaping and refining a common sense of purpose, which can in turn be expressed in a multitude of ways.

Chao and her father, Ronald, both studied in Japan, developing shared experiences and a lifelong belief in the value of cross-cultural education. Ronald founded the Bai Xian Education foundation in 2013. The foundation’s core values revolve around diversity and respect, empowerment, integrity and commitment to excellence and community. Today, Chao continues her father’s vision and the family’s philanthropic journey.

“The basis for the foundation is that when these young people become future leaders in their own respective capacities, they will have the understanding and the willingness to learn about others and not be clouded by preconceptions,” says Chao, whose vision and values continue to grow the foundation. By building bridges across cultures, the foundation seeks to nurture a new generation of leaders in Asia through its Asian Future Leaders Scholarship Program and educational programs, creating opportunities for intercultural exchange and learning. It also creates a new generation of alumni that share and embrace the foundation’s values.

The pandemic has served as a wake-up call, and has changed the way many philanthropists in the region address global issues. “In the past, our clients made donations because they were passionate about a topic and saw an opportunity to give. Now they are seeking advice on how to follow a structure and strategy, measure the impact achieved and provide support through funding, skills and networks,” she explains.

This changing mindset has led to a greater collaboration among modern philanthropists. “They want to meet other philanthropists, talk about their projects and influence each other. They see themselves as part of a larger ecosystem to address societal needs. Within that context, their role is to catalyse new solutions to solve environmental or social challenges,” says Lee.

This has taken the form of funding pilot projects and utilising different methods to tackle issues. Successful projects are then broadcast to other funds and policy makers, encouraging like-minded philanthropists to support these new approaches. “They believe that this will enable innovation in the social sector, and see that systemic challenges are tackled from multiple approaches,” Lee explains.

Modern philanthropists recognise the multitude of ways to tackle root causes, explains Lee. “Their philanthropic dollars will be more effective if they coordinating giving to achieve a collective impact. For instance, a number of clients formed a group to discuss ways they can address climate change. They are coordinating funding so that actions along the value chain—from advocating for policies and conducting research to carbon offsetting projects and the education of local communities—receive funding.”

Building a Sustainable Future

HSBC Global Private Banking has worked closely with several prominent families, helping them to manage, protect and sustain their wealth and legacy. The private bank’s wealth planning and advisory team also offers its services to facilitate connection, providing a platform to connect like-minded philanthropic individuals together to drive positive change.

Sustaining wealth and legacy requires a long-term partnership built on goals and values that are shared within the family and by trusted advisers who can help to shape and refine this common sense of purpose and achieve their goals and ambitions, building a better, sustainable future for generations to come.

The information contained in this article has not been reviewed in the light of your individual circumstances and is for information purposes only. It does not purport to provide legal, taxation or other advice and should not be taken as such. No client or other reader should act or refrain from acting on the basis of the content of this article without seeking specific professional advice.

  • PhotographyAffa Chan
  • StylingStephanie Levy
  • Stylist's AssistantBibek Rai, Kathy Li
  • HairWendy Lee at Wendy's Workshop
  • Make-UpWendy Lee at Wendy's Workshop
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