Opportunities Available To Fund Managers From The Growing Professional Services Industry In Singapore

Co-authored by: Mok Heng Wah, Ho Hui Ling, Lim Sim Ving

Singapore has emerged as a top destination for fund management and corporate services providers due to several compelling factors that make it an attractive hub for investors, asset managers, and fund administrators alike. 

1. Singapore’s status as a financial hub

Singapore was ranked third in the 34th Global Financial Centres Index (“GFCI”) ranking published in September 2023, with London and New York taking the number 2 and number 1 spot respectively. Singapore also took over Hong Kong at the number 3 spot for the first time. The number of family offices in Singapore has also grown from 400 to 1,100 at the end of 2022.  In terms of assets under management (“AUM”) value, the amount has increased from S$3.9 trillion to S$5.4 trillion in 2021 and dipping to S$4.9 trillion in 2022. The rankings and statistics clearly indicate Singapore’s position as a key financial and wealth management hub in Asia and international markets. 

 

2. Government support for Wealth Management sector

The Singapore fund tax incentive schemes under 13D, 13O and 13U which are scheduled to lapse after 31 December 2024 have been extended to 31 December 2029 in the 2024 Budget announcement made by the Singapore government. This is a clear signal of support from the government to make Singapore the choice location for wealth management globally.  

 

3. Access to quality professional services

The attractiveness of Singapore as a hub for family offices, startups, entrepreneurs and fund managers goes beyond the tax incentives, geo-political developments and robust regulatory environment. The breadth and depth of Singapore professional services is another pull factor. From lawyers, bankers, accountants and other professionals, the full suite of professional support is easily available to asset managers in Singapore.

In recent years, global financial institutions and fund administration firms have increased their investments in Singapore and relocated their Asia-Pacific headquarters to Singapore. New fund administration firms with technology focus are also choosing Singapore as their key operating location. The attractiveness of the wealth management segment has even drawn big accounting firms to setup wealth management services to compete for market share.

 

4. Fragmentation of professional services market

The wealth management sector expansion in Singapore has also led to growth in the number of professional services and corporate services providers and/or fund administrators. Further, the allure of the wealth management pie has enticed new and non-traditional firms to compete for the market.

Accordingly, asset managers are spoiled for choice when it comes to choosing their outsource service providers. Cost and service reliability are the usual key consideration for asset managers. For bigger funds, regional and global network support from service providers is equally important. Technology offerings that promise real time access to valuation of portfolio and latest financial information top the list of selection requirements.

 

5. Shifting perceptions on service providers

Increasing operating costs in Singapore are of grave concerns to business owners and fund managers are not spared.  The pressure to optimise costs increases with the number of structures within their portfolio as most professional service fees are based on structure quantities.  Fund managers which have been complacent of costs due to available grants at inception now realise the need to de-cost on a sustainable basis.  This has led to many fund managers seeking out non-traditional service providers and to diversify their reliance on dominant one-stop solution service providers.

 

6. Unbundling of services

Fund managers are finding it cost effective to unbundle some portion of the services that they used to procure from a single corporate  service provider, such services include accounting, tax, regulatory compliance services, corporate secretarial and payroll.  Traditional players serving the wealth management sector were able to command pricing premiums and fund managers today are questioning if the premium on staple professional services are worth paying for.

For example, fund managers could potentially enjoy cost savings by engaging a reputable corporate secretarial firm to act as secretary.  Reputable and experienced secretarial firms have the capability to support fund managers in shares actions, share allotment, capital calls and investors call notifications. Similarly, other services like tax compliance reporting, payroll processing and to the extent of accounting bookkeeping services could be unbundled and sourced from different professional firms providing those services respectively.

For smaller fund managers, unbundling of services makes further sense in terms of service satisfaction. In the past, they would normally engage traditional service providers which are large firms.  Now, procuring different services allow fund managers to right-size their service providers, have better bargaining on fees and even access to the top decision makers of those service providers. 

 

In conclusion, the decision to engage an experienced service provider is a strategic imperative for asset/fund managers. From ensuring regulatory compliance to enhancing corporate governance and streamlining administrative processes, choosing the right corporate services provider in Singapore play a pivotal role in driving operational excellence and mitigating risks. By partnering with seasoned professionals who possess the requisite knowledge and expertise, fund management companies can navigate the complexities of the financial landscape with confidence and achieve sustainable growth in the long term.

 

About Ledgen

Ledgen Group is a premier professional firm with 20 years of experience providing accounting, tax, corporate secretarial and payroll services to businesses. It is headquartered in Singapore and has direct presence in Malaysia and Hong Kong. Ledgen Group also operates in other parts of Asia, Europe and America through our affiliates network and partners globally.  For queries on our services, please contact us @ enquiry@ledgengroup.com.

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