WARNING! A Guide on How to Start a Family Office in HK.

“According to Campden Research, there were some 7,300 single family offices worldwide as of July 2019, 38% more than at the end 2017. Within that total, Asia has recorded growth of 44% during the same time period, higher than anywhere else in the world.” — HKFSDC, 2020

Hong Kong has been witnessing the vigorous growth of family office business in recent years and benefits from it. Indeed, the intimate commercial bonding with Mainland China contributed tremendously to the trend and created such a potential environment for those who desire to start a family office in Hong Kong. The concept of family office is easy to comprehend, however, starting a family would be confusing to many entrepreneurs. So, let’s cut to the chase and get to know more on how to start a family office even if you are not sure what a family office is.

First of all, What is a family office?

Well, it is a private wealth investment company composed of a team of professionals in a variety of firms to handle investment issues and wealth management to ultra high-net-worth-individuals (HNWI). Unlike traditional wealth management companies, family offices offer a broad spectrum of one-stop solutions to the extremely wealthy families, from financial planning to insurance, or even tax services, etc..

Types of Family Office

Single-Family Office (SFO): The traditional family office where the whole team or company is hired by the family in particular to handle business related issues within that family.

Multi-Family Office (MFO): A simplified explanation is that multi-family provides services to multiple HNWI. Alternatively, this happens when more than one family would like to collaborate together, they will hire a MFO to assist the collaboration.

Virtual-Family Office (VFO): The advance of technology grants family office business a more secure and mature method in handling family issues. It also drives the evolution of family office to emerge prevalently as VFO. Many have proven the feasibility of  virtual family offices even if it is operated remotely. 

How to Start a Family Office?

Step 1: Understanding Needs of Individuals.

The first and foremost step in starting a family office is to understand the needs on the market, which means you have to understand the orientation and the purpose of a family office to the individuals, what HMWIs are looking for, and what services you are expected to provide, as detailed as possible. While brainstorming through the area of search, don’t forget to think about the organizational structure of your family office as well.

Step 2: Planning your Company Structure.

Now that you know the market needs, and you know your company’s orientation. It’s time to dig deep into the company structure. In order for your family office to operate smoothly, you need to outline the blueprint of your company’s structure, for instance, allocating resources, list of employees, and designing standard operating procedures. In this stage, it mostly surrounds your company’s operational issues.

Step 3: Implementation.

Needless to say, it is time to actually execute your plan. This includes hiring employees to work for your company. Keep in mind that reality does not necessarily reflect the plans in your head. Therefore, it is important to monitor your financial models to make it a continuous and healthy practice. There are other miscellaneous things such as setting up strategic communication protocol, continuous monitoring and assessing the company.

Step 4: Operation

Congratulations! When all things are settled, you are one step closer to becoming a successful entrepreneur. At this stage, your duty mainly revolves around reviews. To ensure optimal and maximized profit for your family office, you have to review your company’s report overtime on the performance of different aspects, ranging from legal, taxation to employees’ performance. You have to keep your business on solid ground.