47% of Japan’s wealthy are over 66 and 15% are over 75. But excluding Japan, the High Net Worth Individuals (HNWIs) in Asia-Pacific 68% are relatively young (31–55 years of age). This shows that a large wave of wealth transfer will occur over the next decade in the APAC region.
This according to the 2011 Asia-Pacific Wealth Report published by CapGemini and Merrill Lynch. Download here.
Some other highlights:
- The primary concern of Asia-Pacific HNWIs hinges on the ability of the next generation to manage the family’s wealth, with 88% of HNW clients in Asia-
Pacific excluding Japan, and 75% in Japan, believing the next generation will not be able to adequately manage inherited wealth. These fears may be well-founded given some of the statistics on of succession planning in Asia-Pacific: About 30% of family businesses survive into a second generation, and a mere 10% into the third; and family disputes and sibling rivalry are the most frequent causes of a family business’s demise.
- Demand for succession-planning services is starting to grow significantly. Importantly, this new demand also reflects a cultural shift, as Asia-Pacific HNWIs have traditionally been uneasy discussing wealth- transfer issues openly.
- Unique social, cultural, and generational factors still create challenges for Firms in this space. Most notably, many HNWIs fear the next generation will not be able to properly manage inherited wealth. In fact, to be successful, Firms must often help HNWIs to manage not only the financial implications of succession planning, but the different attitudes among HNW families about the whole concept of wealth transfer.
Several leading firms have adopted innovative approaches to address the succession-planning challenges in Asia-Pacific, in particular seeking to engage and educate the next generation of HNW clients, and aiming to optimize HNWI wealth during the succession-planning and wealth-transfer processes.
- One boutique wealth management firm has started personalized family-by-family sessions
- The private banking arm of one leading global bank started a “legacy” seminar series
- The private banking arm of another leading global bank has launched a summer business school program.
- The wealth management arm of a leading global bank runs a two- to three-week summer program
One leading global wealth management firm has launched family office services in Asia-Pacific
- The private banking arm of one leading global bank has expanded its global wealth structuring (“trust”) operations in Asia-Pacific
- The private banking arm of another leading global bank has opened a wealth planning and fiduciary services division to support the private bank’s Advisors