Asia is undergoing, what is considered to be, the largest wave of wealth transfer in history, as more wealthy families and high-net-worth individuals, or HNWIs, take steps to protect their wealth and businesses. Jane Pearce, Group Head of Trust at Butterfield, discusses the challenges and opportunities for succession planning.

Jane Pearce, how have inter-generational wealth transfer and succession planning in Asia evolved in recent years?

There’s considerable anecdotal evidence that succession planning across Asia has increased significantly. We’re seeing a growing interest from high-net-worth clients who are keen to establish a trust to ensure their wealth and businesses are passed smoothly down to the next generation.

Recently, our experience has been supported by a study that Butterfield in which 40 percent of relationship managers said their clients have enacted a succession plan or are actively planning for succession. Perhaps more interestingly, more than 80 percent of respondents have seen an increase in requests for succession planning from clients in Asia over the last five years, which shows there is an appetite for it.

«It’s quite possible that in the aftermath of the COVID-19 pandemic, there may well be another spike in interest»

There are probably a number of reasons for this. Firstly, wealthy families and HNWIs are better informed and more aware of the need to put plans in place. Ever since the global financial crisis, these groups have become increasingly knowledgeable about the options available to them.

Secondly, economic and geopolitical disruption has caused a lot of uncertainty, and HNWIs and families are looking to protect their assets as well as planning for the future. It’s quite possible that in the aftermath of the COVID-19 pandemic, there may well be another spike in interest.

«It’s also possible that there is still a lack of knowledge or understanding in some areas»

That said, there remain many HNWIs and families who haven’t implemented a plan for the transfer of wealth to the next generation. This could be due to procrastination, or conflicting priorities and interests among family members. It’s also possible that there is still a lack of knowledge or understanding in some areas.

What are some of the complexities of managing personal wealth in the region?

One of the things that we see time and again in Asia is that there is often no clear distinction between personal and business wealth. This regularly makes establishing structures more complex, because there can be a whole range of conflicting priorities.

«There’s also an increasing trend for families to own non-financial or lifestyle assets»

As Asian businesses have expanded globally, more HNWI and family wealth is now spread across international jurisdictions, which make taxation and other legal business and family wealth concerns more complicated. On the part of the trust company, this means that multi-jurisdictional expertise is essential.

There’s also an increasing trend for families to own non-financial or lifestyle assets such as private businesses, real estate, yachts, planes, artwork and so on. This increases the need for specialist knowledge and a comprehensive estate plan that can hold multiple asset types.

What has been the impact of the coronavirus outbreak on wealth and succession planning in the region?

The COVID-19 pandemic is a timely reminder that the preservation of HNWI or family wealth and assets, through the use of inheritance and succession planning, should be done as early as possible. And that it should be reviewed on a regular basis. If the outbreak has shown us one thing, it’s that we never truly know what is around the corner.

«The Singapore office is our hub for supporting our clients and developing our presence in Asia»

Geopolitical events, for instance, can unfold overnight and Asia, with its global manufacturing bases and supply chains and huge populations, will always be a part of any skirmishes.

Butterfield has been in Singapore for two years now. What are the key learning points or trends you have observed?

HNWIs are becoming sophisticated in their approach to enhancing, preserving and passing on their wealth and assets, and many are working with equally sophisticated and independent professionals to assist with their planning.

What are some of the more business-specific challenges that Asia has presented?

Hiring the best talent can still be a challenge as we continue to establish ourselves in the region. And raising awareness among HNWIs and families on the need for proper legacy structures, as there is no one-size-fits-all, can be a protracted process.

And what of the opportunities and future plans?

The Singapore office is our hub for supporting our clients and developing our presence in Asia – we are immensely proud to be in the region. Tighter regulatory conditions and industry consolidation globally may mean opportunities for trust acquisitions by Butterfield in quality jurisdictions where we can build scale and have good knowledge of the regulatory and business environment.

Butterfield is a full-service bank and wealth manager headquartered in Hamilton, Bermuda, providing services to clients from our offices in Bermuda, the Cayman Islands and Guernsey and Jersey, where our principal banking operations are located, and the Bahamas, Switzerland, Singapore, and the U.K., where we offer specialized financial services. Banking services comprise deposit, cash management and lending solutions for individual, business and institutional clients.

Wealth management services are composed of trust, private banking, and asset management. In Bermuda, the Cayman Islands and Guernsey, we offer both banking and wealth management. In The Bahamas, Singapore and Switzerland, we offer select wealth management services. In the U.K., we offer residential property lending. In Jersey, Butterfield Bank (Jersey) Limited offers select banking and wealth management services. The Bank of N.T. Butterfield & Son Limited is publicly traded on the New York Stock Exchange (symbol: NTB) and the Bermuda Stock Exchange (symbol: NTB.BH). Further details on the Butterfield Group can be obtained from our website at www.butterfieldgroup.com.

BERMUDA Butterfield Trust (Bermuda) Limited (BTBL) is licensed to conduct trust, investment and corporate service provider business by the Bermuda Monetary Authority. Address: 65 Front Street, Hamilton HM12, Bermuda.

CAYMAN Butterfield Trust (Cayman) Limited (BTCL) and Butterfield Fiduciary Services (Cayman) Limited (BFSCL) are licensed to conduct trust, investment and corporate service provider business by the Cayman Islands Monetary Authority. Address: 68 Fort Street, George Town, Grand Cayman, Cayman Islands. BTCL and BFSCL are wholly-owned subsidiaries of Butterfield Bank (Cayman) Limited.

THE BAHAMAS Butterfield Trust (Bahamas) Limited (BTBL Bahamas) is licensed and regulated by The Central Bank of The Bahamas under the Banks & Trust Companies Regulation Act, 2000. Address: 3rd Floor, Montague Sterling Centre, East Bay Street, Nassau, N.P., The Bahamas

GUERNSEY Butterfield Trust (Guernsey) Limited (BTGL) is licensed and regulated by the Guernsey Financial Services Commission under The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc., (Bailiwick of Guernsey) Law, 2000, as amended, under registration number 101113. BTGL is registered under the Data Protection (Bailiwick of Guernsey) Law 2017 under registration number 10959 and with the Guernsey Registry, under registration number 31645. BTGL’s registered office address is P.O. Box 25, Regency Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 3AP, Channel Islands.

NEW ZEALAND Butterfield Trust (New Zealand) Limited (BTNZL) is regulated by the New Zealand Ministry of Business, Innovation and Employment.

SWITZERLAND Butterfield Trust (Switzerland) Limited (BTSL) (the “Company”) is a Swiss-registered trust and fiduciary services company and part of the Butterfield Group. The Company’s registered address and principal place of business is at 16 boulevard des Tranchées, 1206 Geneva (Switzerland). The Company is a registered member of and regulated by the self-regulating association OAR-G, a government-approved self-regulatory body pursuant to Articles 24 and seq. of the Swiss Federal Act on Combating Money Laundering and Terrorist Financing (AMLA).© 2016 Butterfield Trust (Switzerland) Limited

SINGAPORE Butterfield Trust (Asia) Limited (BTAL) (Registration Number 201719034R) is a company incorporated in Singapore with its registered office at 80 Robinson Road #02-00 Singapore 068898. Butterfield Trust (Asia) Limited is regulated by the Monetary Authority of Singapore and holds a trust business license issued in accordance with the Trust Companies Act (Chapter 336) of Singapore.

BTBL, BTBL (Bahamas), BTGL, BTSL and BTAL are wholly-owned subsidiaries of The Bank of N.T. Butterfield & Son Limited.