The great wealth transfer has forced many high net worth clients into action, but most wealthy people in Asia have failed to put succession plans in place.
Trust provider Butterfield (Singapore) surveyed more than 50 relationship and wealth managers in Hong Kong and Singapore for its Navigating wealth transfer: Challenges and opportunities of succession planning in Asia 2019 report.
It found just over 40% said their clients have enacted a succession plan or are actively doing this.
When asked why their other clients don’t have a strategy in place, 31% said clients “have different priorities”, while 28% said they saw “no perceived need” for planning.
But, encouragingly, more than 80% of respondents have seen an increase in requests for succession planning over the last five years.
Conflicting priorities
Brian Balleine, regional head of Asia at Butterfield, said: “The findings reflect the deep complexity of succession planning in Asia.
“Even as we stand on the cusp of what is possibly the largest wealth transfer in history, many high net worth Asian families regularly face conflicting priorities and interests, with estate planning often deeply intertwined with company succession.
“Whatever the reason, Asia’s first-generation high net worth individuals need to start setting the wheels in motion for succession planning, especially given the current volatile market environment and the often-international residence of family members.”
Search for the right market solution
The triggers for clients to start succession planning discussions were age, wealth transfer/liquidity and business succession – in that order.
More than 60% of clients exploring their options start before the age of 50.
But there is an apparent shortage of solutions, with the wealth managers surveyed highlighting a “lack of variety” in products and services.
Risky business
Elsewhere, Butterfield’s white paper also noted that the evolving regulatory environment and associated risks was the biggest external challenge for Asian clients, according to relationship managers.
Geopolitical risk was another concern.
Balleine added: “With ever-evolving regulatory standards and the US-China trade deal still ongoing, coupled with the recent coronavirus disease 2019 (covid-19) outbreak in the region, these external risks are likely to remain major influencing factors on succession planning through 2020.”
