Chi Man Kwan
CEO and founder
Raffles Family Office
Q. Tell us about your firm.
Raffles Family Office is a multi-family office and a holding group for other companies. We started out as a simple independent asset manager (IAM) in 2014, but as we moved along, we realised that the demands from clients are a lot more complex.
Q. What are the other companies?
Besides the IAM business, we have an insurance brokerage in Hong Kong for onshore and offshore insurance products. We also have Raffles Properties, which focuses on commercial and residential property in Hong Kong, Singapore, Australia and the UK.
Aside from that, Raffles Corporate Services helps in company set-up, bank account openings and tax reporting. Raffles Finance is our money lending arm.
Q. How big is the firm?
There are four partners in Hong Kong and two local partners in Singapore, all of whom are bankers.
Apart from that, we have 13 relationship managers across Singapore and Hong Kong, and five people in the investment team. We have a total of 32 people in the company.
Q. What’s your client base?
The target client segment for the Hong Kong office is Chinese families. We recently launched our Singapore office and that will focus on the Malaysian, Thai, Indonesian and non-resident Indian markets. We are also attracting some other family offices in Asia to partner with us as well.
Q. How are you charging clients?
Most of our clients are in discretionary portfolios. We charge clients in two ways – a fixed, flat management fee and a performance fee on a case-by-case basis.
We also take retrocessions, but we disclose this to our clients.
Q. Do you have in-house products?
We have actively managed certificates (AMCs) based on in-house strategies. One of our funds is a balanced portfolio of equity and fixed income investments that has been designed with Julius Baer.
We are going to launch two new AMCs with other private banks that are pure equity and pure fixed income strategies by the end of the year.
Eventually, I think tech firms are going to come in and become a substantial shareholder in the market. We’ve been approached a few times by tech firms asking to become one of our cornerstone investorsChi Man Kwan
Q. Are you advising clients keen on investing in cryptocurrencies and blockchain?
We are not investing in crypto at the moment, but if the client is keen, we are able to provide advice.
Q. What’s the growth strategy of the firm?
In the next two years, we are going to grow assets by on-boarding principals of family offices, hiring more senior relationship managers and working with independent trustees on their investment accounts.
We are also speaking to a few smaller asset management firms for M&A opportunities, so that’s on the agenda.
Q. How are you engaging the next generation of your clientele?
Most of my clients’ kids are either in university or are in their early 30s. We always invite the ones in universities to be interns at our company. I want them to see what we are doing and, more importantly, what we are doing with their parents’ portfolios.
Q. Have you introduced any digital initiatives?
We are already running an account consolidation tool internally, which we use for client risk-profiling and statement consolidation based on their portfolios.
We are going to add asset classes such as property and insurance to the mix, and by 2020, hopefully the client can log into our website and use it.
Q. How has the IAM industry changed in the past five years?
In the past two years, IAMs have gained a lot of traction in terms of reputation. A lot of senior bankers are setting up their own units.
However, in Asia, IAMs are still 5.5% of the market share. In Hong Kong, my guess is it’s lower than that. Singapore is more advanced in this regard, but I think that in the next five years, Hong Kong will grow faster than Singapore.
Q. What are the challenges for the industry?
The first challenge is acceptance of the industry by clients, and I think that will happen within the next one or two years.
The second challenge is with the banks. Banks have to realise how to adapt to IAMs. A lot of the local banks in Hong Kong don’t know what an IAM is and they don’t have any IAM desks. The ones that do have an IAM desk don’t run it in a very formal way.
Q. Do you foresee big tech players playing a part in wealth management?
In Hong Kong, the government has a target to issue a certain number of virtual banking licences by the end of the year, which means that by 2019, you’re going to see new banks and brand names that have no physical office. For all of them, the target segment is millennials.
Eventually, I think tech firms are going to come in and become a substantial shareholder in the market. We’ve been approached a few times by tech firms asking to become one of our cornerstone investors, but we aren’t actively looking for any.
Q. What was the trigger for you to go it alone?
If there was one incident, it was when I was with a bank and had a high-profile Chinese client with companies listed in the US. When they came to the office and I met their gatekeeper, the terms they gave us were very harsh, and we accepted them.
That’s when I realised that when you’re on the buy-side of the table, you hold all the power. So I decided I wanted to sit on the other side of the table.
Q. What is the most unusual request you’ve received from a client?
Many clients want secrecy around their money, but some of them want to hide it from their loved ones; their wives.