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Asia-Pacific’s wealthy families are more focused than ever on a clear, coordinated, sustainable succession plan for their family legacy and business assets. This demands solutions that can adapt to evolving needs across generations
The confluence of turbulent financial markets, lifestyle changes and the climate emergency are spurring a shift in mindset among many wealthy families in the Asia-Pacific region.
Coupled with changes in the sophistication levels, increasing divergences in the preferences and needs of older and younger family members alike, high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) are seeking more professional and structured ways to ensure a smooth wealth transition across generations and locations. Ultimately, they want to protect and sustain their legacy, in ways different from the past.
The recent HSBC Global Private Banking 2023 Global Entrepreneurial Wealth Report indicates that 73 per cent of HNW and UHNW entrepreneurs cite the preservation or distribution of wealth to the next generation as the most significant purpose of wealth. It also suggests that 50 per cent intend to pass their business on to the next generation or other family members.
Meanwhile, the rapid accumulation of wealth in the region continues. The expansion of wealth, along with the evolving dynamics of managing it, is accelerating efforts among wealthy families to find succession solutions that suit them, and they are more open to seeking help from trusted advisers to navigate an increasingly complex environment.
“We see an increasing focus not only on growing family wealth, but also on taking into account family, as well as business succession,” says Bryce Wan, market head of North Asia at HSBC Global Private Banking.
This requires a vision for the family, control and governance frameworks to implement and monitor it, and a way to ensure it is professionally managed. As a result, family offices are becoming the first point of contact for client engagement in many cases, Wan explains, as a way to deliver the common, overarching goal of protecting, preserving and growing family wealth.
Family offices gaining ground
A growing number of Asia’s HNWIs and UHNWIs are viewing family offices as a route to a more balanced and inclusive approach to family succession planning. In particular, such an approach can incorporate the multiple elements of a family balance sheet that contribute towards a successful transition. There is a growing realisation that financial capital is not the only form of capital. Besides growing financial wealth, families are exploring ways to promote leadership, common experiences, pride in shared achievements, better relationships and a shared identity. It encourages people to work together to achieve common goals.
“Families are realising that their wealth is more than just the money on the table,” says Henry Lam, regional head of wealth planning and advisory for HSBC Global Private Banking in Asia-Pacific. “It’s about the family members and how the family invests and engages in people, which are the family’s true assets.”
Family offices can also help meet the need for privacy and confidentiality that many HNWIs and UHNWIs seek, adds Lam, by streamlining the process of managing the wealth plan rather than relying on multiple parties. Furthermore, family offices can serve as a central point to educate family members on how to manage wealth in accordance with the agreed family plan. “They can bring in knowhow and involve families in the learning journey,” says Lam.
An example is using philanthropy to get family members involved, he adds. “Projects can help engage the next generation in how to structure goals, measure outcomes and, as a result, deploy resources more effectively.”
More broadly, the ever-greater role of family offices in family and business succession planning suits Hong Kong, in particular, as an international wealth hub. This was articulated by the government in March 2023 when it introduced eight policies to promote the family office eco-system in Hong Kong for global UHNW families. This was the culmination of years of policy research and ongoing industry consultations, of which HSBC was—and is—a part of.
