Planning/Series

Like the U.S. Rockefeller Family… Family Offices, a Solution for Ultra-High Net Worth Individuals

Just as the saying goes, "Wealth does not last for three generations," it is no easy task to maintain hard-earned wealth across several generations. So how do families like the Rothschilds of the UK and the Rockefellers of the US manage to preserve their wealth and further expand their businesses across generations? The secret lies in none other than the "family office."

With the recent significant increase in the number of ultra-high net worth (UHNW) individuals worldwide, the demand for family offices that systematically manage their assets is also rising rapidly. This trend is particularly surging in the Asian region.

Domestic financial institutions are also busy vying to secure a foothold in and enter the family office market. We spoke with Vice Chairman Hwang Sung-joon, who leads the independent multi-family office strategy at Alder Investments after working at Credit Suisse and Samsung Securities, to learn about the current state of family offices both domestically and internationally.

Vice Chairman Hwang emphasized, "The needs of Korea's ultra-high net worth individuals go beyond simple asset management to integrated management encompassing investment, tax, legal, and succession," adding, "Especially for those with assets of over 100 billion won, an independent multi-family office is a solution that meets global standards."

He continued, "Just as Singapore and Hong Kong have grown into family office hubs, Korea can open up a new market supporting family governance, succession, and global investment if it is equipped with an institutional foundation and professional workforce," adding that "the key factors are execution capability, a transparent fee structure, and client data security."

Vice Chairman Hwang suggested the following four criteria to consider when selecting a multi-family office.

First and foremost, the most critical factor to consider is ensuring independence and objectivity. A family office must be established to be free from vested interests regarding the sale of specific financial institutions or products. If independence is not guaranteed, there is a risk that every proposal will ultimately result in a 'sale.' Therefore, an attitude that prioritizes the client based on independence and objectivity is a fundamental requirement for a family office.

The second point concerns globally oriented asset allocation and alternative investments. It is essential to verify whether the family office systematically manages global asset allocation and investment processes across its entire portfolio. This enables effective risk management and portfolio diversification, while allowing access to exclusive domestic and international alternative investment opportunities that go beyond traditional investment products. Strategic asset allocation enables multi-family offices to manage risk in a balanced manner, preserve and grow assets across generations, and optimize returns despite market volatility. Approaches to alternative investments, such as private equity and hedge funds, strengthen portfolio diversification while offering opportunities for higher returns. Furthermore, they enhance resilience against inflation and open market instability, which are difficult to address with traditional investments alone.

The third factor is a top-tier professional network that has formed a 'One-Team' system. It is also a crucial factor to assess whether the family office collaborates with a leading professional network. They must have established networks with experts in various fields—such as family governance, tax, law, accounting, real estate, housing and migration, and insurance—or act as a control tower to effectively connect onshore and offshore structuring needs.

Finally, there are reporting and security. It is necessary to verify whether transparent and regular reports are provided within a standardized reporting framework that integrates assets, cash flows, and risks. In terms of data protection, it is advisable to apply financial industry-level controls. This includes separation of duties, encryption, and the storage and management of access logs.

As such, multi-family offices can leverage efficiency, expertise, global networks, governance, and technological capabilities to translate the complex challenges faced by Korea's wealthy—namely inheritance, succession, global asset allocation, and legacy preservation—into actionable solutions.

Vice Chairman Hwang said, "As wealth is passed down through generations to the second and third, the needs of families are becoming more diverse," adding, "Families need partners who can help them realize their vision from a long-term perspective, and multi-family offices can fill that role."

Vice Chairman Hwang graduated from Yonsei University with a degree in Business Administration and earned an MBA from the University of Chicago. Prior to joining Alder Investment, he served as the Head of Samsung Securities Hong Kong and the Head of Corporate Business at Samsung Securities. He also oversaw products, solutions, and the ultra-high net worth platform at Credit Suisse Asia Pacific Private Wealth Management, where he has provided exceptional solutions to entrepreneurs, business owners, and wealthy individuals through his global perspective and insights.

Press Release: Like the U.S. Rockefeller Family… Family Offices, a Solution for Ultra-High Net Worth Individuals - Maeil Business Newspaper