Raffles Consulting Services
A practical investment-policy framework for Singapore family offices covering mandate, risk, liquidity, delegation, conflicts and reporting.
A useful family office investment policy statement, or IPS, is a decision constitution for capital. It should tell the family, board, investment committee and external managers what the portfolio is for, which risks are acceptable, how much liquidity must be protected, who may decide what, and how exceptions are approved. It should not be a market forecast, a product list or a generic asset-allocation chart.
For a Singapore family office, the IPS should be designed before managers are appointed and then aligned with the family mandate, ownership vehicles, regulatory status, tax position and governance documents. The policy can be concise, but every material sentence should have an owner, measurement method and escalation route.
Begin with the mandate, not the portfolio
EDB’s current single-family-office setup guide begins by asking the family to determine its mandate and identify needs such as wealth preservation, diversification, tax certainty, succession and philanthropy. That sequence matters. Two families with the same net worth may need very different portfolios because their spending, businesses, liabilities, generations and time horizons differ.
Write the mandate as a hierarchy:
- Non-negotiable obligations: taxes, debt, family support, business commitments and known capital calls.
- Primary purpose: preserve real purchasing power, fund intergenerational needs, support entrepreneurship, grow capital or a defined combination.
- Secondary purpose: philanthropy, impact, strategic access, family learning or legacy assets.
- Constraints: jurisdictions, concentration, liquidity, values, regulation, tax and prohibited exposures.
The IPS should state which objective takes priority when goals conflict. “Preserve capital and maximise returns” is not enough. A policy must decide what can be sacrificed, over what period and by whom.
The ten-part IPS
| Part | Decision to record | Evidence of operation |
|---|---|---|
| 1. Purpose | What the capital must achieve and fund | Cash-flow and family-obligation schedule |
| 2. Governance | Board, committee, family and manager authority | Delegation and reserved-matters matrix |
| 3. Risk | Loss, volatility, leverage and concentration limits | Risk dashboard and breach thresholds |
| 4. Liquidity | Minimum liquid reserves and capital-call coverage | Rolling 24-month liquidity ladder |
| 5. Allocation | Strategic ranges by risk source or asset class | Target and permitted-range report |
| 6. Selection | Manager and direct-investment due diligence | Approval memo and conflict declaration |
| 7. Operations | Custody, valuation, cash, data and provider controls | Control calendar and reconciliations |
| 8. Responsible investment | Values, exclusions, stewardship and impact intent | Mandate clauses and monitoring indicators |
| 9. Reporting | Performance, risk, cost and decision reports | Monthly dashboard and quarterly pack |
| 10. Exceptions | Who may depart, for how long and with what record | Dated exception register and cure plan |
1. Turn family needs into investable obligations
Build a 24-month cash-flow schedule and a longer obligation map. Include family distributions, education, healthcare, homes, philanthropy, taxes, debt service, insurance, business commitments and private-market capital calls. Separate committed obligations from preferences. The liquidity policy should be able to meet the first group without relying on forced sales.
Define the reporting currency and the currencies in which obligations arise. A globally mobile family may measure wealth in Singapore dollars while spending in several currencies. The IPS should say whether currency risk is hedged, tolerated or matched to liabilities and who may change the hedge.
2. Make decision rights explicit
The board is responsible for the entity and cannot outsource its legal duties. ACRA’s director guidance states that directors must act in the company’s best interests, keep proper records and meet financial-reporting and filing duties. The IPS should therefore distinguish family preferences from decisions made by directors for a company or fund vehicle.
Use four authority levels: approve, recommend, execute and monitor. For each asset class and transaction size, name the family council, board, investment committee, chief investment officer and external manager roles. Include related-party transactions, leverage, guarantees, investments in family businesses, new managers and exceptions. A quorum alone is not a conflict-control system, so conflicted persons should declare interests and step out where required.
3. Define risk in decisions, not adjectives
Terms such as “moderate” or “balanced” are too vague. Set measurable tolerances for total loss, drawdown, illiquidity, single issuer, manager, country, currency, counterparty, leverage and private-market commitments. Decide which limits are hard prohibitions, which create a warning and which require a cure within a stated period.
Stress the portfolio against family-specific events: a 30 per cent listed-market fall, delayed private distributions, a business capital call, loss of a key family income source, a property vacancy and two years of spending. The result should change the liquidity reserve or allocation if the family cannot tolerate the scenario.
4. Separate strategic allocation from implementation
The IPS should set strategic ranges broad enough to survive normal markets but narrow enough to constrain behaviour. A list of asset classes is only a start. Record the role of each allocation, such as liquidity, inflation protection, growth, income or diversification, and define the risk source that justifies it.
Do not write tactical opinions into a long-term policy. The committee can maintain a separate implementation paper for current tilts, manager changes and trade sequencing. This allows the IPS to remain stable while decisions respond to markets within approved boundaries.
5. Govern external managers and direct investments
Set due-diligence minimums for ownership, team, strategy, track record, risk, valuation, liquidity, operations, cyber security, service providers, fees, conflicts and regulatory status. The approval memo should state the investment thesis, expected role, failure conditions and exit constraints. Performance alone should not determine retention.
Direct investments need a separate gate. Record commercial sponsor, independent review, valuation, legal and tax work, shareholder rights, board participation, follow-on reserve, concentration effect and exit path. Family relationships or access should never replace an investment case.
6. Align the IPS with the Singapore structure
EDB notes that single family offices managing primarily family monies may operate under the applicable licensing-exemption framework. MAS’ current single-family-office licensing answer states that an exempt SFO must file a Notice of Commencement of Business, maintain accounts with a MAS-licensed bank for the SFO and its Singapore fund vehicles, and submit annual returns. The family should confirm that its investors and activities remain within the intended single-family perimeter.
If a VCC is used, ACRA states that every VCC must appoint a permissible fund manager and identifies director and officer requirements. The IPS should map which entity owns assets, which entity manages them, who sits on each board and which document controls each decision. An IPS cannot override legislation, a constitution, trust terms, fund documents or a manager’s regulatory duties.
Tax incentives and immigration programmes should be analysed separately. The policy may record constraints created by an approved incentive, but it should not promise that a portfolio or spending pattern will secure or retain a tax, permanent-residence or other outcome. Formal tax and legal work should be coordinated with appropriately qualified advisers.
7. Build reporting for action
A monthly dashboard should show total value, allocation against ranges, liquidity ladder, concentrations, leverage, currency, performance, fees, capital calls, breaches and decisions required. A quarterly pack can add manager attribution, stress tests, direct-investment developments and progress against family obligations.
Use one performance methodology and state whether returns are time-weighted or money-weighted. Show both gross and net results where useful. Compare each mandate with an appropriate benchmark and the total portfolio with the family’s objective, not only a market index. Record costs across management, performance, custody, administration, tax, legal and internal operations.
8. Control exceptions
Every real policy needs an exception process. Require the reason, amount, affected limit, conflicts, approving persons, duration and cure plan. An exception that remains open through repeated reviews is a policy change and should be approved as one.
Review the IPS annually and after a major event such as succession, sale of a family business, substantial distribution, change in residence, new generation joining governance, material tax or regulatory change, or a portfolio loss beyond the stated tolerance. Keep a change log so future generations understand why the policy evolved.
A one-page approval test
Before the family adopts the IPS, ask whether a new investment professional could use it to answer five questions without oral history: What is the capital for? How much loss and illiquidity can be accepted? Who decides? What is prohibited? What happens when a limit is breached? If any answer depends on an individual’s unwritten preference, the policy is not yet operational.
Raffles Consulting Services can facilitate the IPS process through our Family Office and UHNW Advisory practice. The family-office operating-model guide maps the wider governance and team, while the VCC launch-readiness guide helps families assess a fund vehicle and provider stack. Investment, tax, trust and legal decisions should be implemented with the relevant regulated and professional advisers.