[Family Office Competition] ②-2 Mirae Asset Securities "Leveraging Global Presence to Provide Tailored Consulting"

"A family office is a long-term companion,
not a one-time service"
Kim Hwajung, Head of PWM Division at Mirae Asset Securities, discusses the future of wealth management

"A family office is not a one-time service, but a long-term process."

Kim Hwajung, Head of PWM Division at Mirae Asset Securities

This is how Kim Hwajung, Head of the PWM (Private Wealth Management) Division at Mirae Asset Securities, defines family office services. According to Kim, family office services are not about one-off meetings in luxurious offices, but rather about accompanying wealthy clients throughout their lives, acting as a "financial butler." Kim stated, "I do not consider it a family office service just because we multiply a client's money several times in a year or arrange a few meetings with accounting or law firms for tax savings or corporate establishment advice." He added, "The essence is listening to and solving clients' concerns, such as how to wisely pass on their assets to the next generation."

Mirae Asset Securities officially launched Korea's first family office brand in 2011. Last year, the company established the PWM division and deployed its "aces" to the front lines of the organization. Kim, who built his career as a fund manager at Mirae Asset Global Investments and a Hong Kong-based hedge fund, took the helm of the new VIP-dedicated team. In addition to its existing Family Office Center (FOC), The Sage Center One, and The Sage Gangnam Finance, last month the company expanded its footprint by opening "The Sage Family Office" at Parnas Tower. Asia Economy recently interviewed Kim to discuss the future of the family office market.

Kim explained that the reason securities firms are entering the family office market can be found in changes in the capital market since the pandemic. He said, "After COVID-19, asset prices have generally risen, leading to a rapid increase in emerging wealthy individuals in the market." He continued, "Many clients with assets of 5 billion to 10 billion won have grown their wealth through real estate, cryptocurrencies, or selling businesses after founding them, and have now entered the 20 billion to 30 billion won range." He also noted, "As the baby boomer generation, who built their wealth during Korea's high-growth era, begins to retire, more clients are thinking about long-term issues such as when and how to transfer assets to their children, rather than simply which stocks to buy today." He emphasized, "Unless securities firms like ours provide comprehensive solutions covering a wide range of fields, we cannot survive in the wealth management industry."

Mirae Asset Securities targets clients with assets ranging from 20 billion to 100 billion won as its main customer base. These clients are wealthy, but their asset levels are not quite high enough to justify establishing their own dedicated wealth management teams. Generally, from the lower end of 20 billion won, it becomes meaningful to seek legal advice regarding inheritance for their children. When clients have more than 100 billion won, it is common for them to hire personal wealth managers, making the utility of family office services less significant. Kim stated, "Large conglomerates often already have well-established plans for asset allocation to their children, so the demand for services is greater among small and medium-sized business owner families."

There is also collaboration with the investment banking (IB) division to provide additional services. Kim said, "In many cases, children do not wish to take over the family business." "In such cases, we work with the IB department to find potential buyers for the company," or sometimes pursue an initial public offering (IPO).

The family office sector remains one of the few markets still growing in Korea. However, considering the country's demographic structure, there are concerns that it will eventually hit a ceiling. Kim commented, "Compared to the United States, the size of the capital market is small, and even that is heavily concentrated in real estate." He added, "Now, even law firms and accounting firms have set up family office departments within their organizations, making the competition fiercer. Traditional high-net-worth clients are also abundant in the banking sector, which is considered a major player in the industry. I expect that in about 10 years, the market will be dominated by just a few companies."

Regarding future development, Mirae Asset Securities plans to leverage its global presence to expand its activities overseas. Kim said, "Recently, more clients are considering cross-border asset transfers and management." He continued, "By utilizing Mirae Asset Securities' 19 overseas networks, we will be able to support such clients with their asset transfers."