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In his recent article, Private Client Services Director for Asia, Marcus Hinkley provides an insight into managing and protecting multi-generational wealth in Asia during COVID-19
COVID-19 impacts on family offices
Times of uncertainty have caused many wealthy families and individuals in Asia to review their legacy structures of family businesses and determine how their wealth will be managed and passed down to the next generation.
Anticipated inflation, weakening of the Yuan, hostility in Hong Kong, investment volatility, citizenship and access to assets in other locations: these are just some of the market triggers which are playing on the minds of high-net-worth families in Asia.
COVID-19 is also bringing attitudinal changes, reprioritisation, and in some cases additional downtime for families usually wrapped up in the pressures of running their businesses and strategizing their investments. Now is the time for many families to consider how they will put in place the future ownership and guardianship of their well-earned assets for their children, and future generations. Succession plans can be sensitive topic matters, so families are valuing the opportunity to bridge these conversations with the help of advisers.
Singapore has for some time now been recognised as one of the leading private banking and wealth management centres globally and in Asia. High net worth individuals have been looking to the island-state for its sound financial regulation, strong rule of law, as well as political and economic stability; the breadth and depth of advisers in Singapore also provides easy access to global and regional financial markets while providing a full suite of wealth management services to meet the needs of UHNWI.
What does wealth preservation look like?
1. Asset protection
During times of uncertainty, families who prepare, plan, and manage for market volatility well are those who take a more prudent and conservative approach to the stewardship of capital in the long term.
Strong governance and succession tools such as trusts, private trust companies and family funds, have been known to provide Asian families with greater transparency, and helps mitigate risk.
For the UHNWI, Singapore is a sophisticated jurisdiction in which to set-up their single family office due to the favourable tax, regulatory regimes, and permanent residence opportunities; Singapore has often served as a springboard for these international families, providing global linkages and facilitating global planning. In a recent article published by Santander in June 2020 titled ‘Singapore – Foreign Investment’, it was highlighted that there has been a surge of in inbound investments into Singapore compared to its neighbouring Asian countries. Singapore’s favourable lending requirements to foreign investors, simple regulatory system, tax incentives, a high-quality industrial real estate park, political stability and the absence of corruption continue to make it an attractive investment destination for high net worth families and individuals all over the world.
Across the globe, governments will need to shoulder extensive public debt arising from COVID-19 measures. This could play on the minds of those with international tax exposure and it will be important to them to make sure their international affairs are in order.
2. Expert family office credentials
In a recently published report by UBS titled ‘Chinese Wealth Management and Family Office’, it was stated that the maintenance of family wealth was the primary motivation for establishing a family office for high-net-worth families. Although the COVID-19 pandemic has increased economic uncertainty and investment-related disputes and has brought family offices into uncharted territory, it has also meant that family office models have had to adapt and master this paradigm shift. Some family offices have or may soon consider moving into a single-family office or multi-family office structure as they may be looking to pass wealth down to the next generation, have more control or have a holistic and independent approach to wealth management; most, however, may create new governance structures, upgrade their technology, hire new talented staff both locally and remotely, and look to outsource these services to a trusted advisers.
Beyond maintenance of wealth, more families are considering succession planning. It’s widely reported that the chance of transmission failure of wealth from the first generation to the second, is 70 per cent. Now more than ever, families are having the important conversations with their ‘adult children’ about whether the family are all on the same page when it comes to longer term objectives for family wealth. Does the next generation have the requisite skills and experience to manage the family’s financial wealth going forward? Is it time to ease younger family members onto relevant boards or involve them in more day-to day matters?
At Hawksford, we’ve been working with multiple Asia based businessmen who have been looking to set-up trusts and Single-Family Offices in Singapore. In recent months, we’ve seen that although many HNWIs are continuing to focus on growing their wealth, that more are starting to think about wealth preservation and the movement of wealth from first to second generation.
Hawksford - the home of family office
To preserve and enhance your wealth while ensuring it benefits the people and the causes you care about; you need a plan that reflects your specific circumstances. At Hawksford, we build unique family office solutions based on the goals of each individual family; as the circumstances, needs and expectations of every family are unique, so must our services be. We work closely with individuals and your advisers to ensure their objectives are being met.
3. Application to family businesses: Business and lifestyle needs
Family office services can be as much about protecting the commercial interests of a family, as the personal interests. As many families make adjustments to their lifestyles and businesses due to COVID-19, they may require services which are personalised to meet their needs. Many outsourced family office providers are now starting to provide concierge services such as private jet management, buying and selling of real estate, managing the payroll of the family business, or ensuring their tax and accounting requirements are met.
During times of change many families have been looking to outsource their Family Office requirements to specialised and experienced providers which offer personalised and flexible family office concierge office solutions, like Hawksford. At Hawksford we work with you every step of the way to build a tailored solution which is as unique as you.
The pandemic has also prompted many conversations about mortality which had led to a significant increase in individuals drawing up their Will, appointing Lasting Powers of Attorney and, for those with Trusts, amending their Memorandum of Wishes.
If this is something you require further assistance with, Hawksford have a team of experienced with over 30 years of collective experience in Will preparation and the administration of international estates and probate applications.
Hawksford as your trusted partner
Hawksford has a dedicated private client wealth team, regulated by Monetary Authority of Singapore, providing independent expertise in trust administration, multi-generational succession planning, asset protection and family governance for international families
To discuss your wealth management requirements today, please contact Marcus Hinkley, Private Client Services Director for Asia.
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