With the growing number of ultra-high-net-worth groups in Asia, numerous families in mainland China are entering the succession stage of the second and third generations. Coupled with Hong Kong’s efforts to build an international family office hub, this professional wealth management model originating from European and American aristocracy has become an important carrier for Eastern families to safeguard their assets and sustain their family heritage.
Interest in the family office sector has grown substantially in recent years. In its 2023 Policy Address, the Hong Kong Government released the Policy Statement on the Development of Family Office Services in Hong Kong, introducing a series of policies to boost the industry, which has sparked widespread curiosity about family offices among professionals across all sectors.
Per the widely recognised definition by the Family Office Association of America:
A family office is a specialised entity that delivers holistic wealth management and family-centric services to ultra-high-net-worth families. It drives long-term asset growth, aligns with a family’s strategic goals, and enables intergenerational wealth succession, capital preservation and appreciation.
To fully understand family offices, we must look back at their origins.
The concept of the family office first emerged to meet the wealth governance needs of European aristocratic families. As family fortunes expanded, Single Family Offices (SFOs) came into being. These private institutions managed assets exclusively according to the family’s requirements, with their core mission being the protection of family wealth.
Following the end of World War II, countless family businesses underwent restructuring via IPOs and mergers and acquisitions. Families behind these enterprises accumulated enormous capital through equity divestment, greatly expanding the client base for family offices.
Meanwhile, the scope of family office services continued to expand. Beyond traditional wealth succession, they branched into alternative investments, insurance, tax planning, legal structure advisory and other professional fields. To spread operational costs, some SFOs opened their services to external families, leading to the creation of Multi Family Offices (MFOs).
A famous example is the family office of the Rockefeller oil dynasty. In 1980, it was renamed Rockefeller Financial Services and became a U.S. SEC-registered investment advisor, extending its services from exclusive use by family members to asset management services for external clients.
Clearly, family offices are not a new concept. Many prominent European and American families have long relied on family offices to achieve intergenerational wealth preservation and growth. Distinguished families like the Rockefellers have sustained their wealth across three centuries, ensuring the long-term continuity of their family assets.
This history resonates strongly with today’s landscape.
Over the past two decades, the rapid development of the internet and new economy industries has created a large number of new high-net-worth individuals, resulting in a surge of ultra-high-net-worth families across Asia, particularly mainland China. Many of these families are now entering the second and third-generation succession period, creating an urgent demand for intergenerational wealth transfer — this is the core value of family offices, and the key reason for their rapid development across Asia in recent years.
Author: Chan Man Ching, Founding Secretary-General of Family Office Institute Hong Kong (FOIHK)