An evolving regulatory environment and rising geopolitical risks in Asia led to an all-time high in succession planning requests received at private banks, according to a recent report by Butterfield.
More than 80 percent of respondents surveyed saw increased requests for succession planning over the last five years, the highest ever reported, said the Singapore-based global trust and fiduciary service provider. Age was highlighted as the top motive to kickstart succession planning followed by a focus on wealth transfer, liquidity and business succession.
57 percent saw trusts as the vehicle of choice for succession planning in part due to the flexibility of asset protection. Whilst traditional financial assets naturally dominated trust holdings (98 percent), other asset classes held within such structures include operating businesses (68 percent), real estate (55 percent), life insurance (34 percent) and luxury assets (28 percent).
«With family-run businesses continuing to be the norm rather than the exception in Asia, understanding the strengths of a trust structure could prove to be paramount for relationship managers who wish to help clients on this stewardship journey,» said Brian Balleine, regional head of Asia at Butterfield.
Big Gap
While demand accelerates, a sizeable gap remains with just over 40 percent of relationship managers of high net worth individuals (HNWI) claiming to have begun actively planning for succession. Of those that have not started, 28 percent said they saw «no perceived need» for such activities.
«The findings reflect the deep complexity of succession planning in Asia,» said Balleine. «Whatever the reason, Asia’s first-generation HNWIs 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.»
