Asian family offices expect growth in investment outsourcing in 2024
SAINT HELIER, JERSEY — A recent Ocorian survey revealed a growing inclination towards investment outsourcing among Asian family offices within the next three years, driven by a focus on environmental, social, and governance (ESG) principles.
The survey included 31 investment managers overseeing over $15.3 billion in assets. Results showed that 90% expected a rise in outsourcing, with 42% predicting a significant increase. This shift is largely due to the need for specialized knowledge as these family offices expand into new investment areas.
Investopedia defines a family office as a private wealth management advisory firm that serves ultra-high-net-worth individuals (HNWI). Those with a net worth of $250 million might consider establishing a traditional family office, while those with at least $30 million might look at multi-family offices.
Ocorian Asia Pacific Regional Head Robin Harris explained that outsourcing offers access to specialized expertise from external providers. Key motivations for this trend include the demand for specialized services (74%), heightened risk appetite (52%), regulatory challenges (48%), and cost efficiency (29%).
ESG principles are central to this shift. About 90% of respondents acknowledge the importance of ESG in investment decisions, and 97% consider ESG adherence a fiduciary responsibility. Additionally, 87% foresee an increased focus on ESG factors from a fiduciary viewpoint in the near future.
Harris noted that ESG considerations are reshaping investment decision processes, with family offices now undertaking extensive due diligence on potential investments, evaluating aspects such as carbon footprint, diversity, sustainability, and ethical practices.
“By prioritizing ESG principles, Asian family offices may seek investment opportunities that align with their values and contribute to positive environmental and social outcomes. They may actively seek out companies or projects that demonstrate strong ESG performance, such as those with sustainable business practices, social impact initiatives, and effective governance structures,” he added.
