Rising Interest in Succession Planning Amongst Wealthiest Clients
A survey in Asia reveals that high-net-worth clients have shown increased interest in succession planning. A top risk lies in beneficiaries not being able to properly manage inherited assets.
High-Net-Worth Individuals (HNWIs) are showing increased interest in succession planning, according to a research by Transamerica Life Bermuda and Asian Private Banker. Based on their 2018 study, 32 percent of relationship managers (RMs) saw a significant increase in succession planning while 45 percent of RMs noticed a slight increase in interest.
«More families want to pass on their wealth with warm hands,» said Nicholas Kourteff, chief executive of Transamerica Life Bermuda at a recent media event. This is possibly due to the fact that HNWIs are increasingly aware of dispute risks amongst the children especially when they are not around, Kourteff noted.
The study «Succession Planning 2018: Perceptions and Opportunities for HNWIs» was conducted from February 2018 to September 2018 included in-depth interviews with over 100 HNWIs, with special focus on Hong Kong and Singapore.
Top Risks
The success of succession plans is often threatened by both internal and external risks, the study showed. The top internal risk ranked by RMs (and agreed by end-clients) is that beneficiaries would not be able to properly manage their inherited assets. The second-highest risk ranked by RMs is the possible disputes among family members.
Top external risks cited by RMs include regulatory risks, political or geopolitical risks, and cross-border jurisdiction risks, especially in a time when global regulation and tax environment is rising globally. «Clients in need of fiscal optimisation are progressively seeking alternatives that could ensure an unscathed wealth transfer to their successors in such an environment. One of these alternatives is life insurance policies, which RMs and end-clients rank as one of their top three succession planning tools,» said Stratos Pourzitakis, head of research at Asian Private Banker.
Top Tools
Apart from universal life insurance, end-clients use other succession planning tools, the contributing RMs noted. The most important are joint investments, whole life insurance policies, annuity products, and trusts.
According to Asian Private Banker, the region is experiencing the largest wealth transfer in history and is home to 6.2 million HNWIs whose investable assets totalled $21.6 trillion in 2017.
