In Asia, rapid economic growth has led to a significant increase in the wealth of families, many of whom now grapple with the complexities of passing their fortunes to the next generation.
The transition of wealth from one generation to the next is a relatively new phenomenon in the region. Legacy planning is particularly relevant as more than 80% of businesses in Asia-Pacific are family-owned. As a result, ultra-high net worth (UHNW) individuals are increasingly relying on their wealth managers to support them in transferring wealth to the next generation.
Global events like the Covid-19 pandemic and geopolitical tensions have heightened awareness of the need for proactive planning.
However, succession plans in Asia are often informal or incomplete, according to Campden Wealth’s Asia-Pacific Family Office Report 2023. Cultural taboos associated with discussing legacy and the complexities of global asset structures often hinder the formalization of
these plans.
“Having formal wealth planning conversations helps to pre-empt future disputes or succession setbacks. With the right professional guidance and financial structures in place, affluent individuals have a better chance to achieve their legacy goals,” says Mike Tan, Global Head of Wealth Planning and Family Advisory, Standard Chartered.
“A good legacy plan is more than just handing wealth on to the next generation. Rather, it is about passing on family values, traditions, and aspirations to help future generations become and remain successful,” adds Tan.
Start Planning Early
UHNW families must navigate a variety of challenges to ensure their wealth and legacy are secured. This includes managing diverse asset portfolios, accommodating family dynamics, and complying with varying legal and tax regulations across jurisdictions.
To ensure a smooth transition, experts advise families to start the formal succession planning process early. “The time invested in evaluating advice and making informed decisions minimizes hasty choices that might result in disputes and unintended consequences,” says Tan.
Crafting Tailored Solutions
Banks play a pivotal role in guiding UHNW families through the complexities of wealth planning and succession. Standard Chartered Private Bank’s wealth planning and family advisory teams work closely with clients to develop tailored solutions that reflect the families’ unique aspirations, needs and values.
One key area of advisory is around family offices, where the bank guides clients in establishing appropriate structures and governance for their family offices to ensure that the family’s wealth and businesses are effectively overseen. These structures facilitate family decision-making and conflict resolution, which are essential for maintaining harmony within the family.
With heightened concerns over global issues like climate change and equality, and increasing awareness on Environmental, Social and Governance (ESG) issues, UHNW families are increasingly looking to invest in sectors and solutions that drive positive change. Standard Chartered’s Sustainable Banking Report 2023 found that US$8.2 trillion of individual investor capital could be directed toward sustainable investing across Asia, Africa and the Middle East by 2030.
To meet the growing needs of its clients in this area, Standard Chartered offers a range of sustainable solutions, including green deposits, sustainability-linked bonds and ESG-focused investment funds.
“For many UHNW individuals and families, sustainable investing not only helps generate positive impact, but is also a good diversification for their wealth portfolio,” says Tan.
Another critical area is strategic philanthropy. UHNW families are now adopting a more professional approach to philanthropy in order to create sustained and measurable impact.
Global Head of Wealth Planning and Family Advisory, Standard Chartered
“Having formal wealth planning conversations helps to pre-empt future disputes or succession setbacks. With the right professional guidance and financial structures in place, affluent individuals have a better chance to achieve their legacy goals.”
“We see growing interest from our clients to incorporate philanthropy into their legacy planning, and we work closely with them to enable structured and impactful giving that is aligned with their family values,” says Tan.
Supporting Your Wealth Planning Journey
Few families get it right the first time, and changing circumstances, laws and regulations also require families to review their plans from time to time.
“There are real, and possibly dire, risks of leaving wealth without a proper succession plan,” says Tan.
With its deep advisory expertise across the four wealth hubs of Hong Kong, Singapore, the U.A.E. and the U.K., Standard Chartered Private Bank is well positioned to support its clients in every step of their wealth planning journey.
