The dawning of a new era of wealth in Singapore
Singapore may be the smallest nation in Southeast Asia, but the tropical city-state has big ambitions.
An urban island occupying just 225 square miles – roughly half the size of London – the country ranks as one of the world’s top financial centres and global logistics hubs.
More and more of the world’s top wealth holders are attracted there by its clean and eco-friendly urban environment, attractive tax regime, political stability, and high standards of living. Asian families, too, are on the cusp of one of the most significant periods of inter-generational wealth transfer. So much so that the number of family offices in Singapore has doubled since the end of 2019 to around 400, according to the government1.
We caught up with Evonne Tan, Head of Barclays Private Bank in Singapore; James Penny, Head of Asia (excluding India) at Barclays Private Bank; and Dr Kenneth Goh, Assistant Professor of Strategic Management and Academic Director of the Business Families Institute at Singapore Management University, to discuss what’s next for Singapore as it emerges from COVID-19, and adjusts to a new era of wealth creation and succession.
James Penny: Evonne, it’s great to talk to you as always. I’m mindful that you’ve only recently joined Barclays Private Bank in Singapore, so perhaps we should start by asking how you’ve found it so far?
Evonne Tan: Thank you, James. I was only appointed to my role in July, but it’s been a fantastic first five months. I’ve been most impressed with the inclusive culture at Barclays and strong collaborative DNA across its divisions. I’m also honoured and very excited to be part of the Barclays team participating in the Asian growth story.
James Penny: That’s great to hear. What’s been your experience of working with family offices in Asia and the growing family office trend in Singapore?
Evonne Tan: Interestingly, Asian family offices are relatively young. Most are still in their first or second generations, unlike their Western counterparts that have existed for multiple generations. Only now are we starting to see significant inter-generational wealth transfers taking place in Asia, with many of this first generation now ageing or passing on.
But succession planning and wealth preservation are certainly an increasingly frequent topic of conversation at the dinner table among these families.
We’ve also seen a trend towards the creation of many Asian family office networks, which help provide a platform for knowledge sharing and education – particularly on the topics of succession planning and sustainability.
James Penny: And in your view, what industries, sectors or developments are currently causing a stir in Singapore?
Evonne Tan: Without doubt, sustainability and climate change have been part of almost every conversation I’ve had with clients recently. The pandemic has made people more aware of these issues, and clients are interested to know more and understand how they can participate. Certainly 2021, being the year of COP26, has put climate change to the forefront of people’s minds.
In Singapore this year, the government unveiled its ‘Singapore Green Plan 2030’ and has made various commitments to meet its sustainability ambitions. This has also been driving the focus and interest we see with our Singapore clients.
The second big topic of conversation is digitalisation and fintech in Southeast Asia. A recent Reuters report2 noted that fintech funding in Southeast Asia had tripled this year, with Singapore accounting for nearly half of the region’s deals.
James Penny: Very interesting, thank you. Turning to you if I may Kenneth, it’s great that you could join us, too. As you know, the global pandemic has brought economic inequality into sharp focus. But all over the world, the pandemic has accelerated people’s desires to give something back to society. What have you been seeing on the ground in Singapore?
Kenneth Goh: Thanks James. Singapore has been praised for its handling of the pandemic with one of the lowest case fatality rates of 0.3% in the world3, and over $100 billion provided in financial assistance4 5. But even with these measures, those on lower incomes have still borne the brunt of the pandemic.
This is where civic society is needed to step in to help – and we’ve seen many inspiring responses to the COVID-19 crisis through philanthropic capital, as well as ground-up initiatives. As a result of this increased awareness of inequalities, many are now aware of the potential for impact investing to drive positive change at both a local and global level.
James Penny: With Asian family offices mostly in their first or second generations, they are only now approaching their first wealth transfer – how can these families navigate the tricky process of succession planning?
Kenneth Goh: Indeed, what’s tricky in succession planning are the dynamics within the family. The current generation should plan early, make their expectations known to the rest of the family, and work with trusted advisors.
While this may sound like common sense, many first-generation owners tend to delay succession planning because they’re too focused on the day-to-day running of the business. Some also avoid doing so because the topic of succession can be sensitive and potentially contentious. They would rather keep the peace than rock the boat.
But first-generation owners need to understand that it’s better to have these difficult conversations while they’re still in a capacity to prevent tensions from escalating – as such conflict could eventually affect the business, their family and also their wealth when they’re not around.
James Penny: Are you seeing the younger generation in Singapore adopting a more sustainable mind-set when it comes to investing? Our recent report with Campden Wealth and GIST – Investing for Global Impact: A Power for Good 2021 [PDF, 8.6MB] – found that younger wealth holders were bringing about a generational shift in thinking around impact investing.
Kenneth Goh: Yes, there’s certainly a greater appetite amongst younger wealth holders for impact investing – after all, it’s the younger generation who are most affected by the situation in the long term. The challenge going forward is to sustain this appetite for sustainable solutions.
James Penny: Finally, how do we see Singapore emerging from the pandemic?
Evonne Tan: In my view, Singapore is taking advantage of the opportunities presented by the recent key shifts and trends in the global economy – especially as it looks to establish itself as a digital and fintech hub, and it clearly has an increased focus on sustainability.
We’re also seeing private capital flowing into the city-state, with many family offices setting up in Singapore so they’re at the heart of the action in Southeast Asia. And with the dynamics of inter-generational wealth transfer that we discussed earlier, the future certainly looks bright for Singapore.
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