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THE FAMILY OFFICE


“In the next 20 years there are likely to be more wealthy people in Asia than in the rest of the world combined”


Chinese currency will herald huge changes that will impact on global financial markets and the Chinese domestic equity market, with liberalization leading to Chinese equities and debt being incorporated into the MSCI. As a result, all index-tracking pension and sovereign funds will automatically allocate funds to these indices, which will in turn have a major effect on the global bond markets as yuan bonds are issued and investment in China becomes more mainstream. In the next 20 years there are likely to be more


2015


THE YEAR WHEN THE CHINESE CURRENCY


BECOMES MORE FLEXIBLE AND FUNGIBLE.


wealthy people in Asia than in the rest of the world combined. They may flock to private banks, but many of the next generation who have been educated outside Asia may wish to diversify their home bias risk and globalize their investment interests. We are already seeing huge foreign direct investment by Chinese, estimated by the World Bank at US$100bn in 2011 in African infrastructure alone. These new wealthy will probably maintain active


interest in their future affairs. As many have the education and ability to oversee their families’ wealth, IFOA anticipates that the multifamily office model and single family offices will also grow rapidly. The 2008 Global Financial Crisis showed that


banks globally cannot be fully relied upon. As a result, a prudent person will seek a structure that provides transparency, liquidity and global risk management limits. For those with less interest and time, the private


multi-family office offers infrastructure and deal flow without the financial commitment of setting up a single family office. The commercial family office, which overlaps with the hybrid model, gives wealthy people control by outsourcing to independent investment professionals and other specialists on a needs and interest basis. The family office structure provides a flexible global


China, Taiwan, the Republic of Korea and Singapore – are leading the charge for Asian economic growth. Indications are that this region is consolidating into a major global player – even 10 years ago that seemed a long way off. However, the real expansion will come from 2015


when the Chinese currency, the yuan, becomes more flexible and fungible. The gradual relaxation of the


solution for UHNWIs, who have the money to employ the best minds to further the interests of one family group rather than external, arms-length stakeholders. It provides a unique alignment of interests for UHNWIs, giving them the peace of mind that is needed in these volatile times.


Scott A J MacDonald (scott@ifoa.com.au) is executive director and co-founder of IFOA.


FAMILY OFFICE: ASIA TOMORROW 35


THE FAMILY OFFICE


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