Wealth Solutions & Wealth Planning
Tan Woon Hum of Shook Lin & Bok
Sep 23, 2022
Tan Woon Hum is Partner, Head of Trust, Asset & Wealth Management Practice at leading Singapore law firm Shook Lin & Bok. He joined a panel discussion on September 1 that focused on Singapore’s rising prominence as a go-to centre for UHNW wealth management and advisory and for the creation or expansion of family offices. Tan told delegates how Singapore’s star has been rising as a key jurisdiction for wealth and structuring as there is a global shift to onshore and to greater predictability, accountability, compliance, simplicity and transparency. And he said that more advances can and most likely will take place to further propel the Singapore proposition, as the machinery of government works in harmony to stay ahead of the competition.
Tan is a partner with major Singapore law firm Shook Lin & Bok and has garnered more than 26 years of experience as a lawyer. He heads the Trust, Asset & Wealth Management practice and is widely regarded as one of the market leaders specialising in investment funds, REITs, trusts and private wealth.
He advises numerous fund managers, wealth managers and EAMs, setting up Singapore and Cayman funds, getting CMS licences, RFMC & VCFMC approvals, setting up family offices and private trusts, including Sections 13O & 13U (formerly known as 13R & 13X) structures. He holds a law degree as well as an MBA (Finance).
Tan opened his remarks by agreeing with the many positive observations about Singapore’s rising and diversifying strengths as a regional and increasingly global hub for asset and wealth management, especially for very wealthy clients. He noted that his firm had seen strong and rising demand from greater China, followed by Indonesia and India.
“We are also seeing some healthy traction from Europe, and a little bit from Vietnam as well,” he told delegates. “Clients are considering the mid-level type of family office, or sometimes the very large clients, the ultra HNWIs look at either starting off with a single-family office, or perhaps go straight into multi-family office set-up, including taking up the MAS’s Capital Market Services license for fund management.”
“The ‘Big Bang’ approach, as I might call it, is to go straight for a multi-family office that has a substantial part of the core AUM from that single-family, but that also has the mandate to handle the wealth of perhaps two to five other large families in one substantial operation.”
Tan noted that some clients also choose to put a second team in Singapore to complement their core team, perhaps in Europe or Greater China region.
“They are looking for diversification, a Plan B in Singapore, perhaps not necessarily or primarily seeking migration to Singapore initially, but planning for the medium to longer-term,” he observed. “This might be for themselves, the founder generation, or for their second and third generations. Oftentimes, the patriarchs or matriarchs may not be able to leave their home base but want to help nurture the responsibilities and skills of the younger generation with the help of professional advisors. Accordingly, they might set up a team in Singapore to run a parallel structure here, while the founders continue to look after the businesses in their home country.”
Tan explained that in many cases working with large and complex clients with businesses and assets all over the region or the world, there are numerous issues to address and many professionals with different areas of expertise are required to deliver holistic advice and solutions. “These are big projects,” he said, “and you need the best lawyers, bankers, accountants, trustees, fund administrators, wealth planners, and others. Minimally, you really need three or four professionals, and you need to pull in the right people along the way.” And the costs, he said, are well worth it, especially for those families bringing in hundreds of millions of dollars of wealth, and sometimes billions.
He explained that if, for example, a client is looking at Singapore’s Global Investor Programme, they need to liaise with the Economic Development Board early on and then take all the right steps along the way. If they are looking at a family office and the ‘13’ suite of incentives, they will need distinct and tailored advice around those options, so that they appreciate the implications of their decisions and the full scope of potential vehicles and solutions on offer.
Tan said that although they are busy, bandwidth is not an issue for his practice group of 13 specialist asset and wealth management lawyers, but opening bank accounts for clients is a major bottleneck, according to feedback from his clients.
“Another key issue is finding the right trustees and other professional services experts,” he reported. “Many of our clients, especially the second and third generations speak fluent English, but many from Greater China also want proficient Chinese-speaking professionals to work with, whether it is the bankers, lawyers, tax advisors, or fund administrators and trustees. And finding really experienced professionals that can speak the Mandarin language proficiently, effectively and understanding them as well as their culture, that know how to handle the clients, is actually very important, and is still somewhat of a challenge today with some service providers.”
He expanded on the preferences amongst Greater China clients, noting that many of them remark that Singapore is ‘comfortable’ for them, almost like a Chinese city overseas, where they can speak their own language, enjoy Chinese food (different from the clients’ hometowns but nonetheless still Asian Chinese food). “They feel quite at home, they feel the closeness, and it is easy to fly back home which is within a few hours, and they can send their children and grandchildren to school or university here,” he explained. “It is easy for them and offers them a remarkably comprehensive financial and advisory base as well.”
And Singapore, at the same time, is a very global city and jurisdiction. “These very wealthy clients do consider Hong Kong, Dubai, and Switzerland, but as we see it, there is no doubt that Singapore is the sweet spot for most of them,” he said. “The only issue really was around the height of the pandemic and travel restrictions here, which saw some people choosing Dubai over Singapore, which we understand had a more liberal migration policy. But now that Singapore has reopened, we hear many clients stating the Dubai option was a short-term fix for them and that Singapore is much more on their radars again, especially for long term plans.”
Responding to comments on the Singapore Variable Capital Company (VCC) and its origins and objectives, Tan explained that his firm had worked with all kinds of fund managers and family offices and EAMs.
“We see the VCC used effectively for hedge funds, for private equity funds, credit funds and real estate funds, and we also have multi-family offices and single-family offices that partner up with licensed managers to do private label funds using the VCC structure,” he said.
“Yes,” he continued, “as a fellow panellist said, the VCC was initially meant perhaps for multi-family offices and those who wanted to create funds and sub-funds, where more than one investor is involved. But we see increasingly that single-family offices might want to have different funds for the founders, the children, and the younger generations, and therefore need a variety of sub-funds to reflect that diversity. If structured properly and approached professionally, the MAS can approve these types of arrangements.”
He added that the VCC is therefore immensely well thought-out and useful, offering a variety of advantages that provide such clients with significant flexibility, as well as fiscal and other advantages built in.
“There is the confidentiality, the flexible structure, the variable capital, where you have different waterfalls and the ability to pay cash dividends, even if there's no accounting profit,” he remarked. “These are all additional benefits that other funds may not have.”
From past conversations with Tan, we know that he is very much focused on the multi-generational aspects of his work nowadays, as the great wealth transfer takes place, and as Asia is a more open environment than it was a decade or few ago, when founder wealth was very private and closed, often hidden in exotic international offshore jurisdictions under structures that today would not be considered compliant and would most certainly be frowned upon.
“Things have changed markedly,” he told us.
“We deal naturally with the first, second and third generations, and there is no doubt that everyone is becoming more informed, especially amongst the younger generations, who are notably more sophisticated, more interested, more aware and many of whom arrive to see us with eyes wide open.”
Tan had in past discussions explained that the standard approaches taken some 10 or 20 years ago therefore really do not work today, and that lawyers nowadays need to dig much deeper into the situations and expectations of clients in order to deliver the right advice and most appropriate solutions. And this view was implicit in all his comments on September 1, during which he and fellow panellists re-confirmed just how significantly all these trends were benefitting Singapore and how the government and regulator were continuing to address these fascinating developments and challenges in order to offer the right base for UHNW wealth today and well into the future.
Tan Woon Hum
Partner, Head of Trust, Asset & Wealth Management Practice at Shook Lin & Bok
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