FMC, SFO, MFO Are So Popular! Are They The Same?

FMC, SFO, MFO - Unveiling the Differences

Despite the rapid development of the Chinese family office scene, the family office concept remains confusing to many Chinese.

In China, the lines between family business offices and trusts are only beginning to be developed.

Due to China’s strict regulations, the “family offices” of China’s ultra-wealthy investors take the form of investment firms to manage their wealth.

Some of the more notable examples include Yunfeng Capital (located in Shanghai) which manages the fortunes of Jack Ma and David Yu, Wu Capital (located in Beijing) which controls the wealth of real estate tycoon Wu Yajun and Blue Pool Capital Ltd. (located in Hong Kong) which manages the fortunes of Jack Ma and Joe Tsai.

These investors are establishing their own investment firms to have more control over their investments and a more significant say in managing their money.

To many Chinese, the terms “fund management”, “single-family office”, and “multi-family office” all mean the same thing – raising and management of funds for investments.

Suppose your Chinese clients have approached you to start a family office for raising and managing investment funds.

This article will help you better understand these 3 different types of fund management companies in Singapore.

Fund Management Companies In Singapore

  • The fund management company (FMC) is the most general term. It refers to any company that manages money for other people or organisations.
  • A single-family office (SFO) is a type of FMC expressly set up to serve a single-family.
  • A multi-family office (MFO) is a company that provides services to multiple families.

What Is A FMC?

  • Any company that manages money for other people or organisations is called a fund management company.
  • The role of FMCs, in general, is to manage a large pool of funds for investment.
  • Individuals or corporations can contribute to the pooled funds by “buying into” an investment product.
  • The FMC would typically charge a fee for such investment advice.

What Is A SFO?

  • The concept of a family office has been around for a long time in the West.
  • The nature and function of the family office are generally established by its founder with a specific purpose in mind. They may change over time as the family grows, or their needs change across generations.
  • A SFO is a collection of staff who provides dedicated personal and professional services to a family.
  • A family office’s services are highly personalised and tailored to one family’s specific needs and preferences.
  • Wealth management, tax planning and compliance, investment management, and estate planning are some of the most common services provided by each family of offices.

What Is A MFO?

  • An MFO is a wealth management company that offers ultra-high-net-worth (UHNW) clients customised services.
  • A MFO typically employs a small team of experts in various fields, such as investment management, financial planning, tax planning, and estate planning.
  • MFOs provide a comprehensive wealth management approach that assists clients in preserving and growing their wealth over time.
  • The MFO as a business model arose due to rapid technological advancements in the financial markets, which necessitated greater sophistication and skill in financial advisers.
  • By providing a wide range of services and typically overseeing their clients’ entire financial portfolio, the MFO helps defray the high cost of maintaining an SFO.
  • MFO professionals can also provide specialised knowledge on income taxation, estate planning, and investments.
Each of these types of fund management companies comes with its advantages and disadvantages.
  • For example, a SFO is an excellent choice for families with a large amount of investable assets because they can provide various services tailored specifically to the family’s needs.
  • A MFO is ideal for families with fewer assets because it provides a broader range of services at a lower cost than a SFO.
Ultimately, the family’s specific needs and investable assets determine the best type of fund management company.

When managing your finances, it’s crucial to get the right advice. If you’re unsure whether you need to appoint a fund management company, MFO or even set up your own SFO, speak to us over video consultation via Lawyer AnywhereWe can discuss your needs and recommend the best solution for you.

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