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ESG Investing / Asset Management
ESG part of fiduciary duty for Asia family offices
Rising interest in crypto, digital asset investment, third-party outsourcing, services
The Asset 24 Nov 2023

A focus on environmental, social and governance (ESG) principles will increase at family offices in Asia over the next three years, with almost all professionals working in the field believing that ESG is part of a family office’s fiduciary duty, according to a recent report.

Nine in 10 (90%) of those surveyed agree that ESG principles are a key consideration when it comes to Asian family office investment priorities, with 52% strongly agreeing, states a report by services provider Ocorian, which surveyed Asian family office professionals with a total of US$15 billion of assets under management.

The research shows that almost all (97%) believe ESG is part of a family office’s fiduciary duty and 87% predict an increasing focus on ESG principles from a fiduciary perspective over the next three years. Almost half (45%) predict a dramatic increase.

Crypto, digital assets

Nine in ten (90%) family office professionals in Asia say they are seeing their clients looking to include crypto and digital assets within their investment strategies.

However, there are a number of challenges for family offices looking to invest in crypto, the Ocorian report stresses, because as well as being a high-risk asset, family offices can be faced with regulatory and practical challenges, and inconsistencies between global tax regimes. Therefore, it’s vitally important, the report argues, that they access the right expertise to support them.

Third-party outsourcing

The research also finds that 74% are struggling to outsource to third parties that are willing to provide support with the regulation and reporting obligations of digital assets.

Family offices in Asia are set to outsource more key services as pressure builds from clients for a wider range of support and more sophistication. Around 90% say outsourcing will grow over the next three years with 42% predicting a dramatic increase over the period.

The key reason for increased outsourcing identified by the research is pressure from family office clients for more sophisticated services. Around 74% of family office professionals predicting an increase in outsourcing say family offices in Asia want more specialized services. However, 52% say the rising risk appetite of family offices is also driving increased demand for outsourcing.

Almost half (48%) believe regulatory pressures are pushing family offices in Asia to turn to outsourced suppliers for support, while 29% say outsourcing is more cost effective.

Family offices already make extensive use of third-party support, the research also finds. Around 71% say they use third parties for support on liquid assets, such as individual listed stocks, while 61% turn to third parties for help with illiquid assets, such as investing in private equity. Around half (52%) use third parties for personal financial management and 48% for wealth planning.

Up to 65% of family office professionals questioned say outsourcing will enable them to improve service levels while 61% state it’s increasingly expected by clients, and 58% say it allows them to focus on their core strengths.

Novia Lu, Ocorian’s business development director for Asia-Pacific, adds: “There is growing interest in ESG as well as private markets and digital assets, but overwhelmingly younger family members in Asia want to ensure the long-term growth of the office, underlying the fact that growth in the sector is strong.”

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