Korean brokerages ramp up family office business to target the super-rich

[Photo by Lee Seung-hwan]

Korean securities firms are increasing their interest in family office business, targeting the super-rich for their needs for business succession, mergers and acquisitions and fundraising.

Family office business aims to provide comprehensive solutions tailored to individual families, including business succession, social contribution activities, foundation establishment and asset inheritance and gift consulting.

Brokerage houses are enhancing their services for the super-rich while also collaborating with accounting firms to provide special asset management.

According to sources on Tuesday, securities firms are strengthening their comprehensive customized services for so-called big-hand clients, meeting their need in asset allocation, inheritance and gift, and tax-related matters.

Among the active players in this field are NH Investment & Securities Co. and Korea Investment & Securities Co.

NH Investment has signed a business cooperation agreement with local tax and accounting firms such as EY Han Young and Young & Jin Accounting for business succession consulting. NH Investment’s Premier Blue headquarters, which specializes in managing super-rich assets worth more than 3 billion won ($2.3 million), is leading the business. The Premier Blue also operates a family office service for ultra-high net worth individuals with deposit assets of over 10 billion won.

Korea Investment signed a partnership agreement with Samjeong KPMG to provide tailored services for super-rich clients at the end of last year. The agreement includes jointly developing M&A for small and medium-sized enterprises, fundraising markets and providing related services.

Samjeong KPMG said that they would also cooperate in channeling growth capital and pre-IPO investments.

[Photo by Kim Ho-young]

Mirae Asset Securities Co. and Samsung Securities Co. are also heavyweights in this field. Mirae Asset launched the first family office service in the industry in 2011 and presented the Mirae Asset Sage Club Family Office in 2021, targeting customers with deposit assets of over 10 billion won, comprising a system that collaborates with legal professionals, tax accountants and real estate experts. The company carries out business and asset succession consulting through internal consultants such as lawyers, accountants, tax accountants and real estate experts and enhances customer consulting through cooperation with partner companies for additional professional consulting.

Samsung Securities opened a dedicated outlet for ultra-high net worth individuals in 2010 and started the Super Rich Exclusive Success & Investment service. Based on this service, it opened The SNI Center, a new rich-dedicated sales organization, early last year. It has also an impressive lineup of partner companies, including top-notch law firms in Korea.

According to the Global Wealth Report 2022 released by Credit Suisse last year, there were 1.29 million millionaires with assets of more than $1 million among Korean adults last year, up about 10 percent compared with 1.17 million in 2020.

In particular, demand for family businesses is expected to increase as the maximum tax deduction cap related to family business succession goes up from 50 billion won to 60 billion won this year. From the accounting industry’s point of view, joint ventures with the securities industry can create an opportunity to increase demand.