This is a sponsored article from HSBC Private Banking.

Brent York
Global Head of Trust and Fiduciary Services
HSBC Global Private Banking

Displaced by the global pandemic, families are faced with new ways of living, working and a more imminent realisation of the need to take action on succession planning to secure their legacy.

No one could have planned for the impact that COVID-19 would have on almost every aspect of modern life. An inability to forecast accurately and the high level of unpredictability when faced with a global force of nature that touched all has prompted affluent Asian families to urgently reevaluate their legacies and the importance of having proper structures and strategies in place. There has been considerable time spent on succession planning over the last year, an activity that many felt regularly be put off to another day. But the working practices and changes in habit that have become the norm in the period, may help this be a more dynamic and easier process.

Asia’s great wealth transfer by first or second generations to the next was already well underway with USD1.9 trillion expected to be handed down over the next decade. But lockdowns of varying severity have forced families to spend more time at home together with the additional time spent with children and grandchildren stimulating a reflection on life’s priorities. The same situation has caused a very different situation where lockdowns have meant family members have been unable to see each other for extended periods of time. Both consequences have led to increased thoughts of succession.

For many affluent families and particularly those originating in Asia, internationalism is not uncommon when those families grow, and members become spread out around the world. Increasingly, younger family members are studying and staying abroad, building lives in different corners of the world. Traditional family businesses are also operating on a broader global platform, opening the door to more opportunities and growth potential but also creating challenges from changing regulations, tax transparency requirements and foreign market uncertainties. This all required new learnings and subsequently increased complexity in planning and structures, but an ease of travel and open borders meant that all was achievable. Families who were accustomed to travelling freely were suddenly unable to do so due to the pandemic. Displaced geographically and disconnected from each other, they were faced with unexpected scenarios that impeded the way they usually operated.

The decisionmakers within the family structures were forced to revisit their existing strategies and models to ensure their businesses and investments were economically viable in the new environment. For example, the tax implications for wealthy individuals forced to stay in another country for longer than expected or governments in some jurisdictions that amended inheritance tax legislation to cope with the fallout from COVID-19.

Almost instantly, most business activities and communication moved online. This forced people to become more tech literate, new services and applications which had never been heard of become staples. New language, terminology and acceptable business practices all evolved at lightning speed. The need to keep going during the pandemic drove a level of tech adoption that has changed the way affluent families will operate, and seem set to become the norm. Like so many industries there has been change that may prove irreversible with some finding opportunity and others struggling to keep up. Broadly though the forced digital transformation does prove to be a positive from a difficult period.

The widespread adoption of video conferencing enabled virtual meetings and had the unexpected effect of speeding up decision-making and planning processes. Not only were family members saving time on travel, without other social functions and distractions, individuals had more time to plan and get work done. Instead of infrequent large-scale meetings, shorter online sessions have taken place amongst even the slowest tech adopters, leading to faster decision-making and much more productive sessions.

Perhaps the timing of these changes around more efficient operations will prove to assist the greater urgency amongst first- or second-generation wealth creators grappling with the bigger questions of what would happen to the family and the business if they were not around.

The keys to success have never been clearer and were brought into sharp focus by the status quo of the world. Plan ahead and be adaptable to respond responsibly to the unknown whether internal or external forces. COVID-19 has certainly taught us that nothing is certain. Instead, the focus should be on creating flexible strategies that are best positioned to accommodate shifting regulations and policy changes as well as changing investment and business outlooks.

This is a sponsored article from HSBC Private Banking.