The Hard Task of Assessing Single Family Office Numbers Globally
Last month, the Swiss Single Family Office Association, in collaboration with UBS and the University of St Gallen, produced what is claimed to be the first survey of Swiss single-family offices (SFOs). The Association estimates that there are between 250 and 300 SFOs in Switzerland. The assessment of the country’s SFO population is refreshingly realistic and conservative, based on local market knowledge, undistorted by a need to boast about the country’s attractiveness to a family office.
There are two principal reasons why the Swiss Family Office Association’s assessment is appealing. The first is that competition between certain countries to attract family offices has led to spurious national claims of high numbers. The second is that the few estimates of the number of SFOs globally seem to be based on little more than guesswork.
Hong Kong’s claimed SFO population – is it realistic?
Two examples of countries where recent estimates of single-family office numbers distort a realistic assessment of the international single-family office market are Hong Kong and Singapore. Both have been in a race over the past couple of years to claim first prize in Asia for attracting SFOs to their shores.
According to a study by Deloitte in March 2024 on the “Family Office Landscape in Hong Kong”, there are 2,703 single family offices in Hong Kong. Rather than based on detailed market knowledge, the assessment depends on “a commonly accepted statistical methodology based on a global and proprietary database of 200,000 ultra-high net worth individuals and families”. However, Deloitte does concede that the correlation “between wealth and the establishment of single-family offices” may be “susceptible to a margin of error”.
The analysis reports that of the claimed 2,700 SFOs in Hong Kong, 535 or 20%, are drawn from the “wealth tier” of US$10m - US$30m. Most observers of the SFO market would agree that a family office cannot be established with a level of wealth less than $30m, and most are at a much higher level, but that still leaves 2,168 SFOs statistically calculated by Deloitte to exist in Hong Kong with wealth levels above US$30m. Of these, 885 are from the wealth tier of US$100m and above.
These apparently impressive numbers conveniently feed the narrative that the tax-favourable regime for family offices introduced by the HK Government “will take Hong Kong to the next level as the world’s pr-eminent center for family offices.” The USA, Switzerland, or Singapore may disagree with this view. The Deloitte report was commissioned by FamilyOfficeHK, a Hong Kong government body aiming to attract family offices to Hong Kong.
Two global consultants with totally different SFO market sizing estimates
At this point, it’s worth being reminded that in 2016, EY estimated that the global population of single family offices was 10,000, so by this measure, Deloitte is reporting that 27% of the world’s single family offices are in Hong Kong. KPMG’s global family office population assessment is more aggressive: it estimates 20,000 globally. The significant disparity between the two figures from well-known multinational firms illustrates the difficulty of the SFO market sizing task.
Singapore’s lowering of standards for SFOs has led to problems.
In Singapore, the city state’s Economic Development Board reports that 1,400 single-family offices have been established in the country, lured by favorable tax incentives promoted by the Monetary Authority. When Singapore first announced tax incentives for family offices in 2017, no minimum AuM was stipulated. So, anyone with a few million, or even less, could come in as a “family office” and receive a tax incentive.
In July 2023, the MAS raised the qualifying AuM level for the definition of an SFO to S$20m (US$15m), and according to HSBC, the qualifying level has now increased again to US$30m. The authorities have raised the bar and are taking longer to scrutinize the credentials of family offices seeking tax breaks since a record-breaking S$3bn money laundering case last year, which was connected to several so-called family offices. If entry standards are lowered, of course, risks will rise.
To be fair to EY, Deloitte, KPMG, and other pundits, assessing the number of family offices nationally or globally is a difficult task. It’s tempting to take a shortcut by assuming a certain percentage of the UNHW community is statistically likely to have a family office.
An extensive family offices database can support a professional approach to SFO market sizing.
However, the confidence with which these round number totals of SFOs are presented invites skepticism because the core family office data on which such assessments should be based requires a thorough and impartial study of actual single-family offices over sufficient time to build a substantial accumulation of data.
Moreover, any assessment of the number of single-family offices globally must account for the fact that only a certain percentage of the market is discoverable.
A preference for secrecy, privacy, security, and aversion to the taxman creates an environment where further single-family offices beyond those that are known are very hard to quantify.
Amidst such uncertainty, a professionally researched extensive Database of single-family offices, carefully screened for their valid credentials, can help assess market size.
The Family Offices Database from Highworth Research, part of With Intelligence, is the largest online database of SFOs available. It currently holds detailed profiles, including contacts, of over 2,700 SFOs in 74 countries. This number grows weekly as Highworth adds further profiles of family offices to its online platform.
Knowledge of the multiple sources of data used by Highworth allows the firm to be confident that approximately 2,500 more single-family offices will be identifiable over the next several years.
Beyond that, Highworth believes that there may be around 2,000 further SFOs globally who are off the radar and unlikely to be publicly discovered, although if their credentials as SFOs are genuine, they are still likely to be valuable clients for asset managers, banks, and professional advisors.