Andy Liu, Founder of Flourishing Tree Family Office: This Is Work for the Grey-Haired

Andy Liu, Founder of Flourishing Tree Family Office

I first met Andy Liu in 2015, when my team and I were invited by Noah Wealth to research and map out the development of Noah—then ten years old and five years public. At the time, Andy was still one of Noah’s executives.

That very year, in 2015, he left Noah to start his own venture, and so began the entrepreneurial road of family-office work—a road that would sometimes have him “solving problems even in his dreams.” Over these seven years, he has been growing through constant exploration.

I asked him: if you could start over, if time could roll back to 2015, would you still choose the entrepreneurial path?

He said, perhaps not—if someone else could bear the pressure for you, why insist on carrying it yourself?

I believe this was his honest feeling. Many entrepreneurs who have been through the grind have voiced similar sentiments.

After all, building a business is hard.

In 2017, former partners invited him to co-found Gaoming Family Office. Carrying what he believed to be the right new ideas, he launched the new venture in high spirits. Sadly, two years later, Gaoming Family Office was suspended.

In 2020, he turned around and, together with a few companions, founded Flourishing Tree Family Office. I remember that after listening to his summary and reflections on the lessons of Gaoming’s failure, I told him: I think you’re about to rebound off the bottom.

In the blink of an eye, he has now walked another three years with Flourishing Tree. Entering the market through the consulting model, he has begun to acquire his first cohort of mature clients and to build up a body of mature practice.

On May 10, I connected from Toronto to Shanghai for a conversation with this installment’s guest of the “Chinese Family Office Journey”—Andy Liu, founder of Flourishing Tree Family Office.

The video below is from

Chinese Family Wealth

1. “We’ve Developed a Methodology”

Wang Xiaobo:

It’s been three years of Flourishing Tree. What reflections can you share?

Andy:

I’ve been following your interviews across the family-office world lately, and internally we’ve been studying some of your observations too. I think that at this stage everyone is exploring the methodology for a Chinese-style family office—there’s no ready-made template yet, so every family office is feeling its way. Single-family offices are exploring the single-family model; multi-family offices are exploring the multi-family model.

The services a Chinese family office can offer today are, I feel, capabilities drawn out by client needs—they are demand-driven, rather than a service or standard product we, as sellers, push onto clients.

To use an analogy: the client wants to eat a grand imperial banquet, but right now all we have are the raw ingredients. To turn those ingredients into a feast fit for the table, we still lack a master chef and a recipe—and along the way, we need to listen to what the client needs.

Flourishing Tree is a consulting-type family office, and consulting has always been our point of entry. It’s like going to see a doctor: the doctor listens to your situation, runs some tests, and then gives an overall diagnosis—telling you what state you’re in, what problems lie ahead, or how this state came about.

A good doctor cannot merely treat the head when the head aches and the foot when the foot hurts; they must offer a holistic approach to prevent problems from arising, so that the person can maintain a healthy way of living. This is our attitude too: to solve the client’s pain points, to build a healthy system for living, so the client can lead a fulfilling life.

Wang Xiaobo:

Everyone understands a fulfilling life differently. How do you convey such a soft, intangible ideal to clients through services or products?

Andy:

In serving clients, we have indeed developed a methodology.

When we interview a client, the first question we always explore is: what does wealth mean to this family? Whom do they wish to care for, and to what degree?

Because we are not an asset management company, the first thing we do is not to preserve and grow capital, but to help the family realize its true goals.

A family office cannot merely manage a client’s money. Different clients understand wealth differently, and they manage it differently too.

The first part is helping the client calculate the cash flow they need now and in the future. Wealth exists to serve people, so we start from the family’s intended uses—arranging the definite cash outlays for living, education, healthcare, elder care, and so on—and then plan where that cash will come from.

The second part is taking the funds that aren’t needed now and won’t be needed later, and using a certain methodology to preserve and grow them, pursuing higher-return financial investments that can bear a degree of risk.

The third part is industrial investment related to the family’s enterprise.

We sort these funds by purpose and attribute—which to allocate domestically, which to invest overseas, how to build the firewalls in between, what structures to use to hold them—all of this must be arranged holistically.

On the second part, financial investment, we also break it into five steps. First, we explore the client’s investment goals—their intended uses for wealth, their understanding of risk, and their risk tolerance must all be taken into account. Second, we sort out asset classes according to the client’s goals; each asset class has a different return/risk profile, so we select the right assets in the right regions and combine them so they can achieve the client’s goals. And because each year brings a different market and cycle, asset strategies and combinations will differ across macro environments. Next, because our clients are mature investors, they have accumulated many asset managers they trust and recommend to us for due diligence; we draw on our own and the client’s resource pools to track asset managers over the long term and in depth. Fourth, we go and inspect them together with the client; if the client is interested and willing to look deeper, we conduct due diligence, and after that the client makes the decision. Finally, we manage the ongoing relationship well, because this involves the moral and operational risks of the asset manager—if anything changes along the way, we need to redeem the funds at the first opportunity and adjust.

Wang Xiaobo:

Your services seem to have both a soft side and a hard side. How do you charge?

Andy:

For the first part, we charge a consulting fee. Here we’re a bit like lawyers. We discuss with the client, understand their needs, understand where their problems lie, assess the time and effort we’ll spend, and charge a consulting fee accordingly. Then, like McKinsey, we deliver to the client an overall consulting plan, structural plan, and adjustment plan tailored to them.

As for the plan, the client need not hand it to us to execute—they can, based on the solutions we provide, go find a trust company, a law firm, or an asset management company themselves. Of course, they may also entrust the execution to us, in which case we charge an additional execution fee.

This process usually takes a year to a year and a half.

Once the client’s structure is built, we provide investment advisory services—helping the client establish portfolio strategies and plans, screening and conducting due diligence on asset managers, and offering ongoing service and adjustment advice—in exchange for a certain percentage of the agreed volume of assets under service. On the asset-manager side, we do our best to negotiate lower fees for the client, so as to improve their effective returns.

Wang Xiaobo:

Is it hard to get clients to pay a consulting fee?

Andy:

Honestly, in China, getting clients to pay isn’t easy. This has to do with the state of financial services here and with clients’ willingness to pay.

Before coming to us, these clients have often already been to private banks, trusts, and other professional institutions. If those institutions could fully solve their problems, they wouldn’t come to us—because we are a consulting firm with no brand, relying entirely on the professional ability to solve complex problems and on the quality of our service.

Our clients tend to have holistic needs—they need to build an entire framework of thinking and establish an overall structure. We too work top-down, mapping out an overall plan for wealth governance and management. If a client isn’t like this, if they don’t have such needs, they might say what we do is too abstract. With such clients, we simply aren’t a match.

2. Clients Are Mostly the New Generation or the Second Generation

Wang Xiaobo:

Can Flourishing Tree’s current fee model support the team in a healthy way over time?

Andy:

It certainly can—otherwise you wouldn’t still see me in the family-office industry.

First, we have consulting fees and execution fees. Second, we also have income from the investment advisory side. Suppose a client has ten million US dollars to invest; we help them allocate assets according to the five steps I described, and then charge an investment advisory fee—this is the recurring income we earn from serving clients over the long term.

Also, our operating costs aren’t too high. We pursue a small-but-beautiful, stable team structure.

Wang Xiaobo:

After all this time exploring and practicing, you seem to have found your rhythm. What does your client profile look like?

Andy:

Our clients have several very distinct characteristics.

They are basically either the new generation or the second generation. The new generation predominates, mostly aged 40 to 55; the older first generation, over 55, is relatively rare. The second generation is mostly aged 30 to 35—fairly independent, treating family wealth management as their main career purpose. Both groups generally have overseas study experience, or have studied at institutions like CEIBS or Cheung Kong Graduate School of Business here at home. Their thinking is shaped by business school; they value management, accept professionalism, and are willing to pay for professional ability. Such clients are relatively easy to communicate with.

The clients we serve now don’t have enormous assets—total assets of 300 to 500 million yuan, investable assets of 100 to 300 million. Some are corporate executives who, when their company went public, or their options were cashed out, or their company was acquired by a listed institution, suddenly found themselves holding a large sum of cash or liquid stock. How to manage a large sum of assets that has appeared all at once becomes the client’s pain point.

Wang Xiaobo:

Is it difficult to acquire clients?

Andy:

I don’t think so. I have no obsession with client volume; rather, I hope every client can form a long-term, in-depth service relationship. So adding two or three new clients a year is just fine—it happens to suit our team’s current service capacity. For me, building this kind of small-but-beautiful family office is exactly what I want to do.

Wang Xiaobo:

I remember when you once told me about the lessons of Gaoming’s failure, you said that mature people were doing management, while the frontline people actually serving clients were too young to serve them well. Does that judgment still hold?

Andy:

It does. Now I am the one directly serving and communicating with clients, and I’m accountable for the client’s ultimate outcome. I believe a family office is not a young person’s calling; running one actually requires a certain amount of life experience. Do you see? I’ve got grey hair now.

A family-office practitioner must first be able to understand the client’s language—to grasp what the client says and what they leave unsaid, even the things the client hasn’t realized themselves.

The heart of a startup is the frontline business. No matter how well your headquarters is managed, without frontline business, success is impossible. We entrepreneurs who came up as executives are very used to acting like executives. I think at Flourishing Tree I have thoroughly adjusted my own mindset—no longer approaching this as an executive, but as a frontline client servicer. That is a great shift in positioning.

3. This Is a Long, Long Ski Slope

Wang Xiaobo:

Your team is gradually maturing. Do you think a family-office team is easy for others to replicate?

Andy:

You can recruit good private bankers and good trust managers, but family-office people are very hard to find. I think family-office work calls for a distinctive personality: you need to be attuned to people, and you need enough curiosity and passion to explore how to help others solve their problems.

A family office must continually study its clients and continually find possible solutions. By now I’ve given up on the idea of persuading clients; instead, I find clients whose values and thinking are fairly close to ours, who have a need for holistic wealth-management planning, and together we explore how to solve their problems and fulfill their wishes for family wealth. So perhaps “what is the meaning of wealth” is a good key for opening a connection with clients.

Some might think serving clients this way is too much trouble—little money earned for a lot of work—but we still choose this “hard but right” path.

Wang Xiaobo:

In an earlier interview of mine, a guest offered a view: in the family-office industry it’s hard to make quick money, but you can make big money. What do you think?

Andy:

A family office is an industry of slow, steady returns. If you want to make quick money or big money, you’d probably need to switch industries. But for a family office to be valuable to clients over the long term, in the end it still has to manage the client’s wealth.

The family offices that have survived in Europe and America are all ones that manage money, so Chinese family offices must also have their own wealth-management capability. But you have to be clear: do you just want to sell a product, or do you want to earn returns for your clients?

Where does the big money come from? I think it must come from an institution that has developed the ability to manage a client’s wealth well, and thereby earned the family’s trust. Everyone is different—some do advisory, some do asset management. It depends on the specific case.

Wang Xiaobo:

What do you hope Flourishing Tree will grow into?

Andy:

We don’t pursue excessive risk, we don’t do strange things—we simply follow common sense, help families endure for the long term, and help them be happier. I think Flourishing Tree is the same: we don’t chase scale, but it will naturally grow larger. I protect the principal and keep pursuing a little bit of growth, just like rolling a snowball. I believe this industry is surely a long, long ski slope.

We also very much hope to share Flourishing Tree’s capabilities in overall structural and management consulting. Recently, together with several CEIBS alumni, we launched the “Xuanwu Family Office” alliance—we want to work with like-minded partners to advance the shared exploration of the Chinese-style family office. This long, long ski slope of the Chinese family office needs companions to walk it together.