This news service had a wide-ranging conversation with the Singapore-based firm about demand for family office advice, asset allocation during a pandemic, risk management, and more.

Ultra-high net worth individuals are looking for guidance on legacy preservation and creating family offices as they reconsider existing financial arrangements amid the pandemic, multi-family office Golden Equator Wealth told WealthBriefingAsia recently. 

Clients in Asia, the Middle East and elsewhere have been jolted into recasting their business and liquid wealth by COVID-19 and the associated economic turmoil, Gary Tiernan, managing partner at the Singapore-based business, told this news service.

The firm’s clients have taken some profits on the equity market’s partial recovery in spring - fuelled by massive central bank intervention - and there’s a “higher than normal level of liquidity” in client portfolios, Tiernan said. He joined the multi-family office last November from Crossinvest Asia, where he was head of investments. Before that, he worked at Standard Chartered Private Bank, leading teams in centres around the world, and moved from Switzerland to Singapore in 2004, working with Deutsche Bank.

Families from the Middle East, Australia and Southeast Asia have approached Golden Equator Wealth about doing something different with their wealth, in part because they were not entirely happy with existing arrangements, Tiernan said. 

And another development is how clients will be looking more urgently at “insurance”, both in terms of their assets and because of a heightened need for risk management after an episode as massive as the coronavirus outbreak, he said. Golden Equator Wealth has been putting quite a dent in the wealth industry. This publication bestowed the award for best Southeast Asia Independent Wealth Manager at our awards ceremony in Singapore almost a year ago. Last year the organisation appointed Christopher Wilson as Philanthropy Ambassador and officially launched its NextGen Programme. In January 2018, tech billionaire Taizo Son was named special advisor to its parent Golden Equator Group.

And an MFO such as Golden Equator Wealth is competing for business in a region traditionally dominated by banks. Independent wealth management businesses – often founded by breakaway teams from large lenders – have arisen over the past decade (as shown by this research from 2017). Asia’s cohort of first-generation wealth creators are passing on assets to their next-generation families, requiring a shift in focus from a traditionally more transactional approach. 
 

Discounts
Family offices, handling clients taking a multi-generational approach, are important sources of “patient capital”, investing directly in companies and privately held businesses via private equity, private credit and venture. With many existing firms’ valuations hit hard by the pandemic, this produces opportunities for family office investors – and some challenges, Tiernan said. 

“There will be a lot of companies that will need funding. There will be a lot of opportunities….one of the biggest challenges for single- and multi-family offices is going to be filtering and assessing where one can make investments into a company,” he said.

Certain sectors such as energy-linked businesses, for example, have been pummelled by the virus-induced selloff to oil. A report by Australian banking group ANZ (source: CNBC, 4 May 2020) noted that companies in the energy sector were hurt particularly hard in Singapore and South Korea, while in China, real estate companies were under pressure. 

Family offices aren’t going to rush into buying companies if they’re unfamiliar with the sector; there is also a challenge in funding start-ups in the current environment, although Golden Equator’s in-house investment teams can help clients move more rapidly than otherwise, Tiernan said.

A sensitive issue in the present environment is for wealthy investors not be seen as snapping up businesses at a heavy discount and being somehow perceived, however unfairly, as profiting from others’ misfortunes. On the other hand, experienced holders of large capital pools have a vital role to play in recapitalising viable firms and getting the economic wheels spinning again, Tiernan said. “It is very important to look at these issues with sensitivity.”

Asset allocation
“In mid-March…we were telling our clients to buy equities…and that had been based on a long-term view and that they had enough liquidity that they did not need to worry about that money being put to work. We have sold some of that [position] now,” he said.

Asked about the partial recovery of equities after the dramatic selloff when the pandemic news broke, Tiernan thought that some equity markets had over-reacted to the stimulus measures of governments. Market levels don’t fit with the poor underlying state of the real economy, he said, echoing a view of several economists in recent weeks. 

“There is a higher-than-normal level of liquidity in portfolios….the key is flexibility,” he said. 

Risk awareness
The COVID-19 crisis raises the question of risk awareness on financial markets and human health. “When there’s a shock people think `I need better insurance than I’ve had’,” Tiernan said. 

“A lot of people’s investments have been lacking in insurance – I cast that term `insurance’ broadly,” he continued. “That is where good advisors should be thinking.”

Golden Equator Wealth is expanding its business; it has been “very actively hiring” and more hires are on the way, Tiernan said, adding that: “We see a level of opportunity and need for such a business as being very strong.".