FEATURE: The $30tn Great Wealth Transfer Can Be an ‘Evolution, Not Revolution’ – Report

In November, Geoff Cook, CEO Jersey Finance, spoke to Spears about succession planning.

A private wealth transfer worth $30 trillion between baby boomers and the current generation is imminent, but with ample professional advice there is no cause for undue stress, a Jersey-based report assures.

The recent report, Flourishing Futures: Making Succession a Success, by Jersey Finance demystifies the challenges around this much-talked phenomenon, with an insight into real succession-related problems HNWs face through a series of case studies provided by law firm Bedell Cristin. Presented as a 10-point guide for trustees, families and advisers, the report draws from Jersey’s experience as an international finance centre (IFC) holding over £400 billion worth of private wealth in trusts over a 50-year period.

‘[It’s an] evolution, not revolution,’ the report describes the succession planning attitude trustees need to adapt to ensure a smooth transition of wealth. From identifying the values of the wealth founding family to analysing the impact a nuptial agreement might have on the transfer, HNWs and their advisers worldwide need a comprehensive plan to accommodate the intergenerational transaction, it says. A case study within the report shows how Bedell Cristin had used these suggestions to help the new generation of a family whose founders survived a civil war in the 1900s, transfer the wealth into a Jersey foundation to provide aid for civil war refugees.

‘Jersey is widely regarded as one of the biggest trust centres in the world – there is a responsibility and obligation on us,’ Jersey Finance CEO Geoff Cook tells Spear’s about the rationale behind the study. 'We are stewarding so much value to create the platforms and the capabilities that allow HNWs to transfer or deploy their wealth in a way that they wish to’.

The recommendations in the guide reflect the many complexities HNW families from all corners of the globe, particularly those from the Middle East and Asia, where wealth accrual is so ‘phenomenal’ that for many this will be the first transfer after over 30 years. But only a quarter of these families have a strategy in place, Cook says.

‘I don’t think you can start too early,’ he says of having a transfer plan, which he says should be the result of an in-depth conversation between founders and the next generation of proprietors.  ‘We would advise, for the high-net-worth individual, that it’s an important thing, because generational planning can take quite a long time.’

One of the main challenges HNWs and advisers face in succession planning is the sheer difference in attitudes between the old and the young, with the latter not having quite the loyalty the former might have to their respective trusted advisers. ‘The younger generation are a little bit more transactional,’ Cook notes, ‘they are a little more independent-thinking and they want information available at their fingertips at any place, any time and through any kind of medium’.

This is because client knowledge is becoming increasingly crucial, he stresses, adding that there is a case now more than ever for an understanding of how the family structures, legal setting, wishes, future priorities and culture of each HNW client will influence their style of intergenerational transfer. ‘Service demands are changing – it’s very important that financial centres and the private wealth advisers in them aren’t complacent,’ Cook warns. ‘You can become out of date, or even irrelevant.’

The report also urges for greater innovation in the private wealth space, where Jersey has been offering services as an IFC with ‘a multichannel approach’ – using the expertise of more than 13,300 ‘highly-skilled’ and experienced professionals. This new outlook to client service is part of a greater ‘lateral’ discussion around wealth that is going on globally, Cook concludes. ‘”With great wealth comes great responsibility” is a much more prevalent attitude now.’

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