Inside the Chinese Family Office Sector

[Music] hello everyone um we're coming to the last session thank you guys for staying on we're going to try to make this you know very insightful and full of great stories from uh Chan um so for those of you um you know who might not know uh chimen and SDM he already said he's a the group CEO and co-founder of Raffles family office and Raffles family office is D headquartered in Hong Kong and Singapore it um obviously has offices in multiple Asian uh Financial Centers including Shanghai Beijing taipe and Bangkok um and Raffles provided um a suite of uh Services tailor to the ultra high net worth individuals across Asia and Beyond um to help them preserve grow and transfer their wealth and shiman personally he has uh 20 years of experience in uh private banking and wealth management he has held senior positions in other financial institutions before founding Raffles so I'm sure his deep understanding of the opportunities and challenges in the industry will you know help us gain a lot of insights uh today so Chan I've um yes known you and already spoken tons about your uh background and your family office can you um you know tell us directly from yourself and what's the story behind founding Raffles sure um you know it's good to be the last session of the day cuz everyone's a bit tired and I can just tell a lot of stories about myself to keep you entertained right so to tell you a little bit about myself um I was born in maau um the Las Vegas of the East um when I was 6 years old I moved to Hong Kong when I was 11 I moved to Singapore where I spent uh majority of my childhood about 10 11 years and then I did my degree in UK so after my graduating I came back to Hong Kong I started in um uh financial industry and that is where I spent about 10 years before I came across a bunch of uh Chinese entrepreneur whose company just got IPO and um the founder become one of the leading figure in the Chinese entrepreneur um Circle right I'm sure everybody know who they are so in about 2012 2013 that was when a bunch of them actually came to me I was I was in a bank you know I was working in a French bank and a bunch of them came came to me and say look you know we are not as big as our big boss right but the 10 11 of Us coming together we are actually not small at a point of time nobody knew that was called a family office they just said you know what I'm going to set up a investment firm to manage 11 of our assets comingo together um and can you help us run it so at a point of time I was thinking now I'm working for European bank and do I want to work for a bunch of Chinese entrepreneur why don't I set up some something for myself and that's when really the whole seat of Raffles family office started and then a few years later 2015 I decided to start proper and start raffle's family office that's that's how the whole story started perfect so I I think you know I follow uh you and the Raffles uh family office for a while now and I think your story um really you know the timeline you you just mentioned kind of uh atomizes the the the industry the industry has has has evolved has grown can you share with us you know how do you uh view the industry history and how it has evolved to today's big size sure I mean you know in in this industry I mean in Asia or greator China I think it's still a very um early stage of growth I mean there's a saying right if you at a family office industry if you want to find the biggest um amount of AUM you go to America it's North America to be precise uh if you want to look at the um wealth that has got a longest history you go to Europe Asia I think is the fastest growing no doubt I mean in Greater China you know at one point we were producing new billionaire every 72 84 hours we have a new billionaire right so I think that's where we are at however I think the industry in Asia especially my region greater China I think is still at a very very early nent stage right so I think in in that part um our philosophy or values are quite different from the Americans and Europeans right and what would that philosophy uh be given that this Market as you mentioned is pretty nent so you know if you have to compare your philosophies to your peers in the US and Europe what's the difference well you know first of all you know when you are dealing with uh families that are in the first and second and third Generations you know I think there's a lot of housekeeping that you have to do so a lot of our work um initially is about you know setting up the family constitutions the governance framework right and how do you run a properly run a family office because the biggest issue on hand is how do you transition from a familyowned entity to a properly run entity it still remain private right 80% of them probably still remain private however but you got to to run it like a listed company right and that's where the Constitution the governance framework is so important but whereas if you compare to you know the European or the American Family officers they are in their fifth 6th 10th 15th you know um generations and that's where those structures are very robust and it's been put in place and I think their focus are on the you know other things as as as as as compared to the Asian or majority of you know Chinese family offices interesting I I've actually seen reports saying that the Asian family offices uh governance is very robust that the peers and the US and European can learn from us I guess you know I've seen reports like that but you know just just for you when you um you know advise your clients uh and stuff on the governance uh what are some key uh themes uh you're you're you're you're talking to them about I mean governance this is a very big topic and long conversation I think this morning I was at a panel here and we talk about the the the human element right which is uh something that to be honest is is very understated and not very not discussed a lot of the time because ultimately you can have the perfect plan I mean to be honest nowadays with AI and Google you can go online and say you know what what is the perfect you know Constitution and governance framework and they can probably generate within 90 seconds right but ultimately if you need to really execute and make the plan the proposal into reality then the human element really takes a lot of experience and my and I advice a lot of times I mean take an example raffles's family office right um we have Pan Asia six offices across Asia right and and we service about 200 families about 40% of them are actually single family office and you would think that why does why would you have a single family office and still use a multif family office I mean first of all we have eight asset classes right which means that four alternative four traditional which means that when when the single family office come to us they can basically like going to the supermarket they are very strong in traditional they might be lacking in alternative they might be very strong in alternative and they want to you know do traditional so it's pick choose and pick however um one of the key thing a lot of times that we do is actually drawing up the governance framework and we say yeah you know why don't you just get a lawyer to do it right why don't you just get a auditor to do it big for consultant to Do It ultimately you've got to have somebody who's understand the family Dynamics but more importantly an independent professional and very likely uh licensed or trusted person to be taken care of that that is very very important because ultimately without family Harmony you cannot get anything done and that is sometimes um people don't talk about you know that's the first thing that we need to we need to sort it out because if a family go into dispute and there's lawsuit basically everything stop everything is in custody everything don't don't talk about risk and return we can't do anything so so that some one thing that we have to solve cool so let's switch gear to investment strategies um so on Chinese family office we already touch upon you know how it has grown rapidly but it's also very unique in its own way so you know what's the investment iies that they are um you know adopting or pursuing uh at the moment yeah um okay I I think if you if you look at investment strategy first of all you got to look at the the nature of the entrepreneur of the first the the wealth owner the person in control in China in Hong Kong or in Asia as a whole generally you're talking about entrepreneur that is still in the first second generation and there's a saying like you know the third Generations are either you know still in school or they are still very very young not even born yet right so the reality is when you talk to this first or second generation especially the first generation that has accumulated a lot of wealth within a very short period of time um you know their definition of risk is very different I I give you a live example right I mean you know if you talk to somebody who's from a traditional um industry the own money you talk about what is diversification oh you say you know what um 40% into Equity 40% into fixed income 20% into some alternative something else that's that's basically a general Golden Rule but if you talk to entrepreneur and say you know what I need to diversify my risk he might just say you know what I'm going to diversify into 100 private Equity Investments you know in five different sector but all private Equity right so then from a first generation point of view you look at the second you know this entrepreneur you're like really that is like putting 100% into the most risky asset but then the the entrepreneur would say you know what putting into you know fixed income is is basically guaranteed loss because you don't beat inflation right and you know there's no upside and he or she understand the risk as an entrepreneur as a startup so you say you know what I'm going to diversify 100 different so the the definition of risk is very different is very very different you mentioned about risky assets riskier assets so um you know why don't we throw in the mix of digital assets here cpto the Bitcoins and stuff you know what's I I guess what's the approach maybe from your experience raffle's family office what's your view to um digital assets sure I mean you know first of all I mean under raffles's group you know we have eight pillars and you know the digital asset set arm is called Revo digital family office we actually set up a subsidiary that is focused on digital assets I think about about four years ago uh we actually getting um reverse inquiry and say you know what I've got this amount of money can you manage it for us and of course say sure why don't we have a meeting in my office and that's how the whole thing started but these people they come me say you know what my 100 million 200 million 500 million asset is actually it's not US Dollars it's in Bitcoin right so what you know then we realize that actually we need to reinvent ourselves and if you look at you know what I said a few years back I think about um about three years ago two three years ago actually at a long event I said at point of time Bitcoin was about 20 30 40,000 and the one thing actually I I I I st it in public which you know at a forum was was that when Bitcoin hit 100,000 which it did a few a few days ago half of the world's billionaire is denominated in cryptocurrency so if the Raffles group do not have this arm then we are going to say no to half of the world's new billionaire the the reality is how this new billionaire sees the world how do they see risk the kind of custodian service they need the kind of investment strategy they need it's totally different and of course of course you know then you look at the government's regulatory uh framework and and all that so that's why you know out of the eight pillars this is the only one that is actually a subsidiary that is separated from the Raffles group I mean we are still the major shareholder but you know it has to be separated because the licensing the basic business model has to be reinvented so you know as we always say we need to unlearn and relearn ourselves and that that is literally what we did I see okay you you said it's important to understand how billionair viewed the world so let's talk about the Middle East how are they viewing the the Middle East the region uh where in you know also please share with us you know how many times you've been to um Abu Dhabi and then uh you know why are you here sure I mean I've been to Abu Dhabi quite a few times now and um last year my family holiday was here I brought my three kids uh to Dubai Abu Dhabi right um surprisingly or not surprising this coming Easter I'm bringing them back again right because I do firmly believe that um in the future in their future they cannot live without UAE or you know this region basically because I I mean I'm I would I would like to argue I'm still quite young you know but so I would say that you know even my generation you cannot not do business in the Gulf region in in in you know in this part of the world and definitely then you look at stability then you look at you know rule of law you look at regulatory framework you look at a government policy to attract businesses I think you know UAE Abu Dhabi I would say pretty much second to none in this region right so and and and for for myself you know as a father I would like my kids to be very familiar with this region so I'm always here I'm always here and I'm very happy to be here so you know on raffles's family office you know your your your plan your you know in this region um how do you uh going to take advantage of uh the UAE you mentioned about you know regulatory policies um quite welcoming I guess you know talking more specifically about Chinese family office um you know H H how can they take advantage of the UA sure I think one thing that you know I say you know if is one fundamental thing that family office do is really about managing risk and to manage risk is is one one you know the the the one and only thing the only free lunch in the world is you need to diversify right so when we say diversify and people think about you know putting different class asset class but from from my point of view from our point of view the first dation you have to consider is where do you put your money where do you customize right I I think with the geopolitics issues with all the different issue happening in the world um Middle East is definitely one of the most strategic and very important important um custodians that you know for Asian family because first of course in Asia you talk about Hong Kong Singapore you know where else in Asia I there's a few but mainly is about Hong Kong and Singapore but the moment you step out of this Asia continent then you know traditionally you look at Switzerland but what about you know other booking centers then then geopolitics come into play then you got to look at somewhere that is neutral that is I would say very well reg regulated and at the same time very welcoming right I think that's important so I think in to be honest I haven't been to anywhere in the world that is as welcoming as UAE as Abu Dhabi you know I I think this is this is it's hard to believe you have to be here to experience it so and that's what I always tell people when I go back to Hong Kong and China and Singapore like you've got to come and experience it cool so I think you know throughout uh you know today's uh uh Summit we heard so much about the warming ties between China and UAE and this year also marks the 4th uh anniversary of the Diplomatic ties and people are really looking forward to more activities more flows investment flows Talent flows between the region but we are at an early stage so if I may ask you what are the gaps that you you think are are out there and maybe the solutions to build gaps you know first of all there's always a perception Gap right a perception is always one of the hardest thing easiest to form but hardest to get rid of right I think um the perception is something but however I do think that you know besides the perception is a cultural differences right I mean Asia is a big place even for Asian like us I'm Chinese but for me doing business in northern part of China and southern part of China and western part of China very different right let alone going to Thailand you know let alone going to Taiwan and maybe even Korea Japan it's all very different so when we come to um Middle East UAE I think it's a big cultural differences that we still need to bridge the gap right and and and you've got to start from right bottom of it sometimes is as simple as making friends you know having a lot of friends here having a lot of uh business partners here maybe just come at understand the culture a little bit and that is what I'm literally showing my kids every time I come here I take them to the desert I take them to you know some of the very oldk and let look this is UAE this is how they where they came from right understand how how they think and why they think in certain way is so important so really perception is something that it takes time but I think UAE is taking a tremendous job in in positioning themselves right but at the same time but I think the culture is something that we have to work on and but you know there's a lot of cultural exchanges tonight Saturday night in this week I'm staying here for the cultural exchanges and that's that really I think you way you got to give it to the to the cultural um tourism board they doing so much sometime I even get jealous like I wish we we are doing more back home I see um if I may just to throw in uh ask you an to share an interesting story of you know when maybe your first time coming to um the UAE is there you know the biggest shock that you you have you know in terms of culture maybe the differences um I thought we discussed not to talk about it in the panel sure sure no I'm just kidding but you know there there are many stories but I would say um you know after my first two trip here um you know obviously we had a lot of uh meetings with the local Partners potential Partners Financial stakeholders Banks and all that you know one thing I realized which I didn't wasn't I didn't ask why but every time after meeting a lot of these things and we shake hand we say you know what let's take the conversation forward and one of the thing they always say is if I'm not wrong El Shala and and after about 10 meetings I ask them like why do you say that what does that mean you know like and and somebody somebody explained to me that in God's will right I I think you know you can say that oh that's just a habit of the of the local amires but at the same time if you really dig deeper into it the the history the culture uh the religion I think play a big part right so when you understand that part then how do we want to do business with the amires right or maybe you know other foreign talents in in this part of the world we have to understand why they are doing certain thing and that's why I say you know what they you know now that I've been in UAE about 10 times right and I think that part actually somehow always stick in my head and and is a simplest thing but how many of us actually understand coming from our part of the world and why do they say that the history the culture the religious reason behind they say that I think that's very important got it okay um so I think as I understand you're the founding chairman of the family office Association in Hong Kong yes um and obviously we know that you know the the the officials government officials Financial institutions uh from Hong Kong greater China are coming um to to the to the UAE but I want to ask you about the the role of Hong Kong and and the family office space and you know as a uh wealth management Hub yeah sure uh I think Hong Kong you know when I'm wearing the head of family office Association chairman or a founding chair I I think you know I I I'm a big believer in Hong Kong for for all the emotional reason but also for many lot iCal reason I think Hong Kong being Hong Kong everybody know where Hong Kong stand but more importantly Hong Kong is now at the heart of Greater Bay Area that people actually don't talk about greater Bay Area we call GBA area consists of 11 cities our population is about 70 million with a combine average GDP of I can't remember the number but it's about I think is about 40 50,000 US dollars is is one of the richest region in the world if GBA was the country is probably number 10 or number 11 in the world right so Hong Kong being the most open being the most um International City in the GBA area it plays a big part right so naturally Hong Kong is always the Gateway the super connect to China right it works both ways and I think I I truly believe Hong Kong and with the recent government policy and the incentive schemes I think Hong Kong is poised to be um definitely one of the um most influential family office if not wealth management Hub in the region and it can also help build the you know relation deepen the relationship between greater China and um in the UAE of course 100% cool yes um I think uh we have about a minute left so to just close the this fire side um I guess your outlook for uh Chinese family office the development and then the interaction with this part of the world I would say expect a lot more Asian family office especially Chinese family office coming to UAE I think that um I don't think we have seen anything concrete yet to be honest I think we are still touching uh and touch and goal starting to feel but the reality I would say is it probably is going to take a couple more years but once that happens I think um the Asian families and Chinese family office when they arrive in badges in in UAE I think you can really see a lot of differences and I mean first thing first thing you're going to see is a lot more Chinese restaurant around in in this region and and you know I just at lunch and around in in in in the Galleria in the basement uh I have to say I mean I actually literally told the chef I said this is the best Chinese restaurant I've tasted all of Hong Kong and China really I'm serious I'm serious and what kind of food no if you count that by by that index and that indicator I'm sure UAE is really right on top of the list right I mean you know a lot of Asian they still have Asian stomach so I think having enough restaurant here is is so important as well and and and let let's put it this way you know today there's really a lot of Asian food here and I'm sure um there's going to be a lot more to come perfect cool uh we're just on time thank you so much and thank you everyone for listening in thank you thank you have a good day thank you thank you so much iwan thank you Eileen ladies and gentlemen as we come to the end of our China UAE investment Summit we'd like to invite you all to head to the Rosewood Hotel there's going to be a really exciting Chinese Orchestra performance that starts at 6m so just look for the ladies wearing red and they're going to escort you to the hotel thank you so much for being with us and thank you for your invaluable contributions your presence have truly elevated the spirit of what defines Abu Dhabi Finance week we look forward to seeing you in future events until next time stay inspired my name is Han [Music]