"In the past few years, interest in family offices has risen noticeably among wealthy people in Korea, and securities firms have begun rolling out related services. But in reality, they are often used only for private banking (PB) marketing."
Kim Hyeong-guk, head of Korea wealth management at Azimut Investment Management, an independent Italian asset manager, assessed the current state of Korea's family office (Family Office, FO) market this way. While global wealthy clients are heading to Singapore for bold tax breaks and asset growth, Korea is still considered to be stuck at the level of an "expanded version of PB services."
Kim worked at Macquarie Securities Korea before joining Azimut in 2015. Azimut is Italy's largest independent asset manager and specializes in the "multi-family office" field, which consolidates and manages funds from multiple wealthy clients. Based in Europe, it currently operates global wealth management businesses in 21 countries worldwide, including Singapore, Hong Kong, and Australia.
Kim said, "As recently as 2015, when we mentioned a family office to Korean clients, they would ask back, 'Is it a family-run business?,' showing how unfamiliar the concept itself was," and noted, "After the COVID-19 pandemic, securities firms studied Singapore's example and began attaching the name family office to their wealth management (WM) businesses."
He pointed out, however, that although only the label has been adopted, cases that actually have and operate with the core functions and structures of a true family office remain rare.
◇ Why European and U.S. wealthy head to Singapore… it all comes down to taxes
Behind Singapore's rapid rise as Asia's hub for family offices are bold tax benefits. If you deposit assets above a certain threshold, you receive practical incentives such as a corporate tax exemption and issuance of an Employment Pass (EP). The powerful tax advantages underpinning the family office boom that began in Europe and the United States and spread to Singapore are a key driver.
Kim said, "If you place about 23 billion won (25 million Singapore dollars) in assets in Singapore, you receive a corporate tax exemption along with EPs for executives," adding, "Thanks to these benefits, over the past three to four years there has been a surge of inbound wealthy clients from overseas, and 'single family offices' that set up their own entities to manage assets have jumped."
The weakening of Hong Kong's position—once one of the twin pillars of Asia's family office market—due to China's growing influence in the 2020s also created an opportunity for Singapore. Kim said, "Azimut also has a base in Hong Kong and knows the local situation well, and right now Hong Kong is in a position where inflows from Shanghai and Beijing are making up for the outflows of existing foreign capital," adding, "Recently, as Hong Kong has moved again to attract funds, some wealthy clients for whom China business is urgent have returned, but there is still a long line of pent-up demand to shift assets to Singapore."
◇ "If assets are 300 billion won or more, go 'single'; below that, 'multi' is advantageous"
Kim said that to use a family office most effectively, strategies should differ by asset size. He advised, "If assets are 300 billion to 500 billion won or more, it is advantageous to set up a 'single family office' and hire dedicated managers, but if below that, using a professional manager's 'multi-family office' service is far more efficient in terms of expense and operations."
Azimut places 80% to 90% of its investment assets in the U.S. market. Kim said, "Most clients pursue a stable absolute return of around 7% to 8% annually, so we build portfolios across various asset classes such as bonds and alternative investments rather than stocks."
It also allocates to local assets to meet onshore investment requirements tied to maintaining Singapore's tax benefits. He added, "In line with government rules, 10% of the overall portfolio is placed in local assets such as Singapore REITs or major financial stocks."
◇ "Lighter tax burdens and a developed investment ecosystem are needed for 'real' family offices to emerge"
Unlike overseas wealthy clients, Korean wealthy clients face structural constraints that make it difficult to set up family offices directly. Kim analyzed, "Many of the wealthy in Korea—so-called 'chaebol'—are stock rich but cash poor," adding, "Because they cannot easily sell shares due to the need to defend management control and maintain equity stakes, they lack the liquidity to establish and operate family offices."
As a result, among Korean wealthy clients who have recently shown interest in family offices, those who have sold companies or secured large amounts of cash through an exit tend to be the majority. Kim explained, "These wealthy clients are more inclined to get directly involved in asset management rather than entrusting asset management to existing PB services," adding, "As the desire to secure the initiative in asset management grows, they have naturally turned their attention to family offices."
Kim cited "the supply of quality investment products" and "financial education" as elements as important as tax benefits for the family office market to take root in Korea.
He said, "Many Korean wealthy clients have succeeded in their own areas of expertise, so they tend to be relatively less interested in investing," adding, "By contrast, in Singapore, investing itself is commonplace among wealthy clients, so their understanding of and interest in financial products are much higher." He said that from a young age, people should learn through systematic financial education to avoid trading-focused, leveraged investing and instead diversify across various assets to generate steady returns.
He also said, "Global investment products are first absorbed in the United States and Europe and then move on to places like Singapore and Hong Kong, so due to time lags and institutional differences, it is structurally difficult for good products to reach Korea," adding, "There are many wealthy people in Korea, but the reason the phrase 'there are no good investment products' keeps coming up is because of this."
Finally, Kim added, "Only when financial education fosters understanding of and interest in a variety of products will good managers emerge, and along with that, good products will increase in a virtuous cycle," adding, "Through this, family offices can also develop."