With an estimated US$15 trillion of wealth being passed down to the next generation by 2030, there is a growing awareness amongst high net worth individuals (HNWIs) in Asia of the need for succession planning and wealth transfer, as many of them pass the age of 60 and are having to address the issue of succession for the first time.
This paper examines the dynamics of the succession planning market for Asia-Pacific’s HNWIs and the key role that trusts can play as a succession planning solution.
Download your complimentary copy of the research report of Navigating wealth transfer: Challenges and opportunities of succession planning in Asia 2019 today to read exclusive findings.
2019 Key Findings:
More than 80% of surveyed relationship managers (RMs) indicated that the number of clients requesting to begin their succession planning has increased during the last five years.
Yet, despite that increase, there remains a relative lack of action towards implementation, with less than half (40.2%) of clients either having a succession plan in place or actively planning their succession.
Of the trigger events that pushed Asia’s HNWIs to start developing their succession plan, “age” was the top motive, followed by “liquidity for their heirs” and “business succession”.
Among Asia-Pacific’s HNWIs who had already begun their succession planning strategy, the trend was to start early, with more than 60% of RMs’ clients exploring succession planning options before the age of 50.
As for their concerns about succession planning, HNWIs’ top priorities were “family legacy” and “business continuity” – no surprise considering that companies can lose nearly 60 percent of their value during the transition from one generation to another, and that many individuals will be passing on their operations to the next-generation for the first time.
Some of the key benefits of implementing a successful succession plan are well documented:
• Sheltering the business against economic and financial headwinds, as well as offering protection for family business structures and business continuity, with appropriate structures in place for the
eventual transition
• Protecting the family brand and legacy, and ensuring the family’s prosperity for generations to come
• Identifying future leaders from within the family and ensuring they are well-prepared and
well-equipped to take over at the right time
Trusts ranked first among the currently available succession planning vehicles in Asia, due to the flexibility to structure them to fit each HNWIs’ unique circumstances, according to Asian Private Banker’s succession planning study. Trust providers understand and are equipped to deal with complex family dynamics. Trusts can also accept and hold a wide range of assets, including family businesses and operating companies, rather than just financial assets.
Furthermore, trusts are dynastic, whereby the asset can be held by the trustee and enhanced and preserved for multiple generations. On average, 20% of RMs’ clients plan to pass on wealth beyond the next-generation.
Amongst surveyed RMs with clients who have a succession plan in place, encouragingly, more than 50% of clients use trusts as part of their plan. The role that trusts play in the succession planning process is critical. For RMs, understanding the strengths of using a trust structure and being able to communicate the benefits to their clients is paramount to implement a successful legacy plan for the next generations.
Download your complimentary copy of the research report of Navigating wealth transfer: Challenges and opportunities of succession planning in Asia 2019 today to read exclusive findings.
