As Asia engages in its largest intergenerational wealth transfer in history, private banks across the region are beefing up their wealth planning and trust offerings in anticipation of rising demand. However, the concerns surrounding succession planning “cannot be resolved by just a product”, according to Marc Van de Walle, global head of products at Bank of Singapore.
“Most of the families that we deal with aim to protect the capital of the trust fund by at least having investments that increase higher than inflation or by growing it with a standard income stream,” Van de Walle told Asian Private Banker.
“Such decisions are usually made by the settlor or his/her trusted advisor during their lifetime. But what happens after that?”
Given that successors may have significantly different priorities in life — which might not include finance — Van de Walle pointed out that in the absence of any guidance given by the family, the trustees are likely to maintain the trust fund in deposits.
According to Van de Walle, wealth managers need to help clients engage in an aggressive line of thinking that addresses the hardest challenges and questions in succession planning.
“One of the key challenges in addressing succession planning is deciding who will take over the investment decisions after the settlor’s lifetime or incapacity,” he said. “In this regard, we maintain ongoing transparent conversations with the clients to address the what-ifs and to work towards minimising the ‘ifs’.”
By working through the tough questions via regular communication, the wealth manager can tailor a portfolio according to the client’s risk appetite and required returns. This, Van de Walle said, helps ensure funds are not left uninvested even if the next generation is disinterested.
“None of these questions can be addressed overnight and it takes years to put in place a solution,” he explained. “Therefore, we actively partner with our clients to work out these concerns which cannot be resolved by just a product.”
In an earlier interview, Robin Heng, global market head for the Philippines, Australia, Indonesia, Thailand, and Indochina at Bank of Singapore, told Asian Private Banker that the role of the private banker lies in taking emotion out of the equation and offering dispassionate advice on identifying objectives in wealth creation and preservation and aligning these objectives with succession planning and generational transition.
To address clients’ evolving succession planning needs, private banks in Hong Kong and Singapore are actively expanding their wealth and trust operations. To attract talent, some firms are offering as much as a 20-25% salary bump to wealth and trust planners, particularly those who speak Mandarin.