In order to establish an Asian asset management center that differs from those of Singapore and Hong Kong, the Financial Supervisory Commission plans to relax more than 50 regulations within two years. One of its most important directives will be to promote family offices. This more open direction will provide Taiwan with new opportunities in Asian asset management.

“Family offices” refers to one-stop wealth management for high-net-worth families (generally defined as having investable assets of more than US$100 million), creating comprehensive wealth management strategies, customized inheritance and succession plans, and philanthropic planning, etc., to secure the family’s wealth across multiple generations. They have been popular in Europe and the United States for many years. As the number of wealthy Asians continues to increase, the growth potential of this business in the Asia-Pacific has attracted much attention. According to a report by Deloitte Private, the region currently has approximately 2,290 family offices, forecast to increase to 3,200 by 2030. Taiwan is a late adopter, but that also means plenty of room for growth. Therefore, it is worth considering how a Taiwanese version of family offices can be established, reflecting Taiwan’s unique advantages.

Indeed, over the past 20 years, almost all family office opportunities in the Asia-Pacific region have been seized by Hong Kong and Singapore. According to the recent McKinsey Asian Family Office report, Singapore and Hong Kong account for 15% of the world’s single family wealth management offices. In Taiwan, it was not until the recent economic peak that the industry garnered much attention.

However, Taiwan’s wealth and economic vitality are far from inferior to Singapore’s and Hong Kong’s. The 2024 UBS Billionaires Report noted that over the past 10 years, the number of Taiwanese billionaires (with assets over US$ 1 billion) has reached 47, tied with Singapore for the fourth highest in the Asia-Pacific – trailing only China, India and Hong Kong.

In addition to its large number of wealthy people, Taiwan also has a unique advantage over Singapore and Hong Kong: the strength of its small and medium-sized enterprises, many of whom are “hidden champions” who dominate specific sub-fields, relying on their core technological advantages. With the ubiquity of hardware manufacturers in southern Taiwan, and with the southern financial zone gaining momentum, these companies could constitute a solid customer base for family offices.

Another UBS report showed that the total wealth of the world’s billionaires has surged by 121% in the past 10 years, with those in tech fields such as AI, e-commerce, social media and digital payments growing the fastest, from US$788.9 billion in 2015 to US$2.4 trillion in 2024.

In the future, revolutionary technologies such as AI, IoT (Internet of Things), and the cloud will continue to alter the economic paradigm. These technologies all rely on semiconductors, and Taiwan is a world leader in semiconductor and AI-related products by market share, arguably forming the world’s most complete AI supply chain. With this advantage, Taiwan is expected to produce increasing numbers of wealthy families.

Generally speaking, wealthy families establish “family charters” (a document that stipulates the family governance structure, core values of the family business, and the principles that to which the managers of the family business must adhere) in their base of operations, before implementing the charter with the help of a family office. Family charters focus on allowing future generations to trace their origins and pass on family culture and values, with less regard for factors like regulations and tax incentives. As an increasing number of wealthy families establish family charters in Taiwan, the family office industry will grow accordingly.

With the passage of generations, these hidden champions are likely to gradually become owned by family members, or to integrate more non-family members. Passing down core technologies and wealth is imperative to sustainable operations during this process. Moreover, given geopolitical uncertainty and unprecedented changes in the global financial and tax environment, risk management will become even more important. Under these circumstances, these companies will inevitably rely increasingly on professional advisory teams such as family offices.

To develop this industry, the government can create a tax and regulatory environment in line with that of other countries. It also must abstain from restricting Taiwanese from setting up overseas family offices, or from restricting their capital outflows. It must recognize that it is commonplace for the wealthy to transfer funds between countries, especially since Taiwanese businesses have long spread their footprints worldwide, and have become accustomed to internationalization. Restrictions will only scare away capital.

In addition, Taiwan can consider how to fully leverage its advantages in the AI supply chain to create family offices that rival those in Singapore and Hong Kong, differentiating itself in a completely new financial services landscape. Similarly, Taiwan’s asset managers can utilize AI, blockchain, and other cutting-edge technologies to create fully customizable investment platforms tailor-made to client needs.

Finally, both the government and private sector should realize that besides resources such as capital and personal connections that the general public does not have, the wealthy also possess international vision. The crux will lie in Taiwan’s ability to capitalize on its existing advantages, while ensuring that capital and the business it brings remain inside the country. Currently, Taiwan has no specific regulations for the operation and oversight of family offices, and the number of qualified professionals in the field remains low. The government must stipulate the rules of the game, allowing Taiwanese businesses to collaborate with financial institutions in Hong Kong, Singapore and beyond. This joint collaboration will allow family offices to provide tax planning and cross-border asset management services, expanding their reach into global markets, and increasing the depth and breadth of their business.