Asia’s Great Wealth Transfer

Our 2020 white paper, produced in collaboration with Hubbis, ‘Asia’s Great Wealth Transfer Implications for the Wealth Management Community’ researched the evolution of Asia’s wealth management market.

This paper specifically researched how Asia’s wealth management industry is positioning itself to help plan and manage the succession and legacy requirements of Asia’s elderly high net worth individuals (HNWIs) and ultra-high net worth individuals (UHNWIs) and business owners in anticipation of the vast wealth transfer to the second generation, and beyond to the younger generations, collectively the Next Gens.

It found that the reality is that some of Asia’s families are well organised and well prepared, but many are not. And another reality is that some of Asia’s wealth management community is remarkably well prepared for this transition, others less so.

The Challenges Ahead

The numbers vary, but there are estimates of as much as US$5 trillion that will likely transfer from the current holders and controllers of Asia’s vast private wealth to the second generation, and also further along the family generation chains to Asia’s Millennials (Gen Y), and even to Gen Z, collectively the Nextgens.

Poor advice, lax preparation of asset inventories, and the adoption of the wrong structures which lead to family disputes, tax problems, or the ‘disappearance’ of family assets, whether intentionally, or perhaps unwittingly, were all factors mentioned when the wealth management community was asked what is most likely to go wrong with estate planning and succession planning for Asian clients.

Note: Family wealth can be segmented into the family business, the family property, and the family financial assets.

Download the full report

Summary of Key Findings

• Wealthy and uber-rich clients and families in Asia are making progress on legacy and succession planning, but much more must be done
• Asia’s wealthy and super-rich families need to urgently advance their legacy and succession planning in place
• Asia’s wealthy families are starting to take a more professional approach to legacy and succession planning
• Even those Asian clients that have embraced legacy planning should review and improve their solutions
• Wealth preservation and family harmony – the two key priorities for successful legacy planning
• Asia’s founder generation must be coaxed and encouraged to grasp these issues and adopt a multi-generational perspective
• In Asia, the family business is central to family wealth and succession plans must be duly expedited
• A more concerted focus on business and family governance and disciplines will help greatly
• Regulations change, families evolve, and even the best-laid plans must be continually reviewed and refined
• There are so many areas where Asia’s HNW and UHNW clients can fail in these endeavours
• Life insurance can and probably should be a vital constituent of successful wealth planning
• Asia’s private banks and the independent asset management firms and multi-family offices (collectively henceforth the IAMs) can and should up their game for legacy planning and connecting to Asia’s NextGen clients
• Education on these matters is vital, and the wealth management community must take a lead role
• Asia’s wealth management community is making progress towards greater multi-generational connectivity
• But there are urgent reasons why incumbent banks and IAMs need to further boost their engagement with Asia’s NextGen clients
• The good news is that Asia’s NextGens are likely to be more receptive to advice and professional management of their wealth
• And Asia’s NextGens will adopt an increasingly ethical and sustainable approach to investments
• Banks and IAMs that do not deliver digital solutions and state-of-the-art connectivity will struggle

Post-Script