Family matters | cpjobs

Family matters

Published on Saturday, 24 Nov 2018
Founder of RFO explains providing investment guidance for high-net-worth clients entails many complexities

With all due modesty, Kwan Chi Man can lay claim to two special qualities: he is by nature very entrepreneurial and he has always been good with numbers.

And it’s the combination of those talents that led him set up and now run an organisation which looks after the investments of groups of clients and, in particular, three or four generations of the same family, who may have different agendas but share a common pool of wealth. 

“In simple terms, we manage wealthy people’s money,” says the founder and chief executive of Raffles Family Office, which provides asset protection and related services for high-net-worth clients with holdings usually in the range of US$50-100 million. “They need someone who is independent and trusted, who understands the private banking world and can be the gatekeeper for all their wealth management requirements.”

Doing that, though, involves all kinds of complexities plus an astute appreciation of long-term investment opportunities.

The client may have to deal with tax issues in different jurisdictions or want to put money into separate legal structures. There can be inheritance issues and a need to reconcile contrasting family views about priorities and broader strategy. And it is essential to offer access to everything from external asset management (EAM) and insurance brokerage to corporate services and overseas property.

“People in Asia generally believe in bricks and mortar, and a lot of clients still accumulate their wealth in relation to the property market,” Kwan says. “If they have strong views on this, we accommodate their needs. But, overall, the rule of thumb is diversification, not just parking money in equities and fixed-income, but considering different asset classes, financial markets and instruments, including private equity investments.”

Kwan has a built a 30-strong team in Hong Kong consisting of “front-office” former bankers and operational support staff. The organisation works with 12 different private banks to obtain comprehensive services and competitive terms and, when necessary, can also draw on their expertise. 

“I have to make sure the client makes money before we make money,” says Kwan, noting that RFO gets its income from management and performance fees. “We can’t guarantee returns, but we will recommend, for example, some investments in low-risk bonds to protect capital. We also have to understand governance and under what circumstances assets, or a business, should pass to the next generation. That requires careful planning and a long-term view.”

Born in Macau, where his mother worked in a plastic flower factory, Kwan’s first job was helping her complete extra orders at home. His father, based in Hong Kong, worked in a toy factory and then in another making instant noodles. However, once residency issues were sorted out in the mid-1980s, his parents were able to start a small business trading jade and antiques, which they subsequently built into a very successful enterprise.         

“We lived in the Kwai Chung in a three-room 500 square foot apartment my grandparents owned,” he says. “There were bunk beds, a table and a cupboard, and we rented out the third room to an old lady.”

At school, a knack for languages, including Portuguese, meant he was asked to translate for the teachers in a class with quite a few new arrivals, but even so he still had to repeat Primary 1.     

“I just didn’t like the education part of school; I didn’t see the point of doing well in the academic field. But I was very good at numbers and could do sums really quickly.”   

Believing Singapore offered better education, his parents sent him off there, aged 10, to stay with an uncle and, in effect, find his way. Kwan still vividly recalls crying non-stop on the flight from Hong Kong and his later struggles.    

“No school would accept me because I got 8 out of 100 for the entry test English paper,” he says. “So, I went to a place that was about close down to improve my English. Spending time at the Junction 8 shopping mall, I would see kids from a school with a very cool uniform, a green blazer with metal buttons. My friends and family said it was impossible to get in there, but I didn’t believe them and worked really hard for the next six months and made it.”

At the prestigious Catholic High School, he went on to star as a sprinter, excelled in dual-language debates, was selected for the “Maths Olympics”, and found the courage and confidence to be a vocal and respected student leader.

“Mostly that came from inside, but the school gave me a lot of opportunities. I was moulded and shaped by the experience.”

With cash from part-time jobs in an ice cream parlour, trading mobile phones and selling Hello Kitty items, he went off to Lancaster University for a three-year degree in economics and business management. He readily admits, though, that his real focus as a student was a “double major” in poker and football.

“I made a lot of friends and even represented the university at poker.”

After graduating, he continued the online trading he’d already started at college, and did well enough selling Livestrong wristbands and Lord of the Rings costume props to put well over HK$1 million in the bank. That, though, soon went on travel, a few luxuries and some poor stock choices, meaning Kwan effectively had to start again.

“I was ashamed to tell my parents. But it was a lesson learnt and I decided to work in a bank.”

He started with DBS as a management trainee in 2008 and then joined Standard Chartered, where he specialised in investment and insurance products. Next came a spell developing the China market for BNP Paribas before starting RFO with three others in 2014.    

“I wanted to change from representing a bank to representing clients.” he says. “We’re now looking to increase headcount and set up our own fund products.”  

 

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