skip to log on skip to main content

Why family offices are moving to Australia

 

16 November 2017

 

 

 

 

 

For the very wealthy, the safety down under is just one good reason to move, writes Jason Murphy.

Family offices – those mysterious organisations managing the wealth of the world’s richest –don’t always stay put.

Because of investment, personal or even personnel issues, these offices sometimes have reason to move to new locations and operate in a new environment. One of the most common times a family office will move is when a family member moves.

And Australia is one place seen as an attractive destination for family offices.

 

Quick explanation: What is a family office?

Family offices are still a new enough concept to necessitate an introduction. A wealthy family – most often a very wealthy one – decides to in-source their wealth management and a range of other services. They establish a family office to manage the family’s assets but also provide services to the family hard to obtain elsewhere.

A family office can maintain and preserve not only wealth but family harmony. It can work over a long period to set and negotiate expectations over distributions, inheritances, and succession planning in the family businesses. It can establish agreed-on ways to manage disputes. A family office is often the centre of the family’s philanthropic pursuits and can also provide day-to-day administrative services to family members.

Whether it’s a one-person or full-scale operation with dozens of professional employees, family offices are only for the very wealthy. The most well-established and widely-known family office in Australia is that of famous retailing family Myer, which is worth an estimated $2.8 billion.

Family offices are not costless. The minimum asset level required to prudently establish a family office is said to be around $200 million. To defray costs, one family office may serve multiple families, and indeed the Myer family office does so, being what is known as a multi-family office. In 2017 it further expanded, merging with the Baillieu family office, known as the Mutual Trust.

We work with your, or your professional partners

Contact us

Why move a family office to Australia?

The tax implications of keeping assets in multiple jurisdictions are something to be mindful of, however, says ANZ Private established wealth director George Johnston.

Recently introduced estate taxes in South Korea and Japan might be a factor in moving family offices out of those countries, but flight to tax havens is not a priority for most established families, especially in the wake of recent leaks of accounts held in Caribbean jurisdictions.

“[Family offices] are set up so there is no issues or problems going forward. I think you see that more. They are not looking for complexity, they are looking for simplicity. And reputational risk is prominent in everything they do,” Johnston says.

“We have seen quite a lot of activity from China and from South Africa into Australia."
James Burkitt, CEO, The Table Club

Asia’s new family offices seek safety

While family offices are a regular feature in Europe, where the concept stretches back for many generations among the aristocracy, it is relatively new to most of Asia.

Bacon points out that high-net-worth Asian families are at a point where setting up a family office is starting to become worthwhile. While the fortunes in Asia are far newer than those of Europe, they are no less large, and family structures are starting to exhibit complexity as the second generation begins to contemplate generation three.

“Those families that are the first high-net-worth families in China - their kids are now in their 30s. So they are thinking through their own succession planning,“ Bacon says.

Australia’s rates of return and low political risk are attractive for many Asian investors. Australia also has a cadre of reliable professionals from which newly arrived family offices can hire and draw expertise, Burkitt explains.

“Several family offices actually have used local big four accounting firms to assist the move. And in one case a major law firm partner and a major accounting firm partner have joined the board of the Australian family office as independents. That is I think quite a sensible approach,” he adds.

 

The whole office doesn’t have to move

One of the big constraints to moving a family office is trusted staff. Families who have built trust are reluctant to have to do so again in a new environment, explains Johnston.

“They usually have a lot of trusted advisors and staff where they are and they have to sometimes re-engage and re-establish with accountants, lawyers, higher family office staff, and they send some of their existing staff across, which I’ve seen them do as well.

“Sometimes that’s why you have the dual family offices, because the staff don’t want to come to a new country but they are still employed by the family because with communication technology they can work for the family but be located somewhere else,” Johnston says.

 

To discuss what this insight could mean for you, talk to your ANZ Private Banker directly, or contact us below.

You might also like

ANZ Global Market Outlook 2018

INVESTMENT

January 2018

 

Read more

Pathways to Australia for the world's wealthy

PLANNING

June 2017

Read more

Significant Investor’s pathway to residency

INVESTMENT

December 2015

Read more

Contact us

Request a call back

Provide your details and we'll call when it suits you

Request a call back

   

Email us

Send us an email directly

contact_anzprivate@anz.com

Call us

Speak to the ANZ Private team directly

1800 316 926

We're available weekdays 9:00am to 6:00pm AEST

Find an ANZ Private office

Our locations across Australia

Find an office

1. NSW Trustee and Guardian, The Superannuation Complaints Tribunal Annual Report 2013/14

2. Source: Australian Taxation Office - www.ato.gov.au/Individuals/Deceased-estates/Being-an-executor/The-deceased-estate/

ANZ Private Bankers are representatives of Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ), the holder of Australian Financial Services Licence number 234527. This document ("document") is distributed to you by ANZ and may not be reproduced, distributed or published by any recipient for any purpose.

The information provided is general in nature only and does not take into account your personal objectives, financial situation or needs. Please consider its appropriateness to you before making any investment decisions. It should not be relied upon as a substitute for professional advice. For any product referred to above, ANZ recommends that you read any relevant offer document or product disclosure statement and consider if the product is appropriate for you. For products issued by ANZ, these documents are available at www.anz.com. This document is current as at the date of this publication but is subject to change. The document is provided and issued by ANZ unless another author is specified in the document, in which case it is provided and issued by that author. The views expressed are those of the authors only and do not necessarily reflect the opinions or views of ANZ, its employees or directors. Whilst care has been taken in preparing this document, ANZ and its related entities do not warrant or represent that the document is accurate or complete. To the extent permitted by law, ANZ and its related entities do not accept any responsibility or liability from the use of the information. Past performance is not indicative of future performance and any case study shown is for illustrative purposes only. Neither are a prediction of the actual outcome which will be achieved. Some of this information may have tax implications. We recommend that you seek specialist tax advice on how it may impact your tax obligations, liabilities or entitlements.