Hong Kong’s South China Morning Post article on February 24, original title: Crazy Rich Asians: The Next Generation and the Struggle to Successfully Fulfill Successful Succession Nirvana Chaudhry is the eldest son of Nepal’s richest family, a large conglomerate With businesses spanning financial services, packaging and communications, he is responsible for the group's day-to-day operations, but must defer to the family's investment committee on major decisions. Like many of the richest families in the Asia-Pacific region, the family understands the importance of having governance structures and rules in place to ensure that wealth is passed down from generation to generation. The Chaudhry Group's investment committee and family council provide checks and balances to ensure that the business philosophy set out by its founder and president, Binod Chaudhry, 68, continues to be followed.
$2.5 trillion in intergenerational wealth will change hands in Asia by 2030
Many of Asia-Pacific’s wealthiest families have entered a critical decade of wealth transfer, during which as first-generation founders begin to enter their twilight years , succession planning has become more and more important, and related management structures have become more and more the focus of attention. How exactly do you hand over control? Many prosperous business dynasties, especially in Asia, are delaying decisions for fear of change. Now, a watershed moment is quickly approaching, said Wealth Management Managers such as Huang Li, head of Asian family services at private bank Lonzo Switzerland.
Wealth research agency wealth-x and various regional surveys show that by 2030, US$2.5 trillion in intergenerational wealth is expected to change hands in Asia, and up to US$18.3 trillion in wealth transfers will occur globally during this period. This figure is equivalent to It is more than 6 times the market value of the US technology giant Microsoft.
A report released in 2023 by wealth consulting firm Kangton Wealth and Singapore-based Wanfang Family Office shows that about 47% of the richest families in the Asia-Pacific region will hand over the keys to their wealth kingdoms to the next generation during the same period. Huang Li said that the epidemic has also accelerated the implementation of succession plans, because wealthy Asian families with members spread across the world not only struggle to reconnect, but also face the reality of life's impermanence.
Family offices are growing rapidly
Angela Koh, head of wealth planning and family office advisory services at UOB in Singapore, said last year that succession planning is inevitably associated with taboos such as death, which will only increase the difficulty of succession and make it more difficult. It has become a sensitive topic that many families are unwilling to discuss.
Huang Li said that wealthy Asian families should develop clear instructions and governance structures like the Chaudhry family to reduce obstacles to wealth transfer.
The recent rapid increase in the establishment of family offices (specializing in wealth, asset management and succession planning) in places with preferential taxation, such as Singapore and Hong Kong, reflects the adoption of this advice by many families.
Next generation less interested in running family businesses
Still, wealth managers say intergenerational tensions remain over how money is handled and invested and how family businesses are run. "They need to think about creating an environment within the family business that flexibly allows the next generation to have different interests while ensuring the family legacy is protected," advises Peter Gorowski, an Asia-Pacific wealth advisor.
A partnership at blauwpark partners, a Singapore-based family office Nipkens said younger generations are generally starting to lose interest in running family businesses. "The first generation builds and creates wealth, the second generation increases this wealth base, and the third generation of heirs tends to be the most educated and usually prefers to pursue a career outside the home or focus on starting an investment business." He said, another On the other hand, the third generation often tends to implement more complex investment strategies but lacks the “empowerment” or power to make changes because seniors retain control. Even the latter’s tendency to maintain the “status quo” is outdated.
Another problem is where young heirs choose to invest the family business's capital. Many of the next generation leaders are Millennials and Generation Z. Compared with their predecessors, they generally prefer sustainable investments and investments aimed at combating climate change, as well as projects involving the environment, society and corporate governance.“Nearly half of Asia’s emerging generation are keen to accept higher risks than previous generations, and are eager to use technology and real-time information to make faster decisions,” said Anagno, Singapore head of advisory business for family office services at private bank Julius Baer S Topoulos said.
Gina Zhuang, an account manager at RBC Wealth Management, said that when it comes to managing family wealth, the priority for many in the next generation is to hold on to it while trying to leave their mark. "The older generation focuses on accumulating wealth and building businesses," said Zhuo Ailing, the company's public relations manager in Singapore. "Young people think more about their own lifestyle and find their life goals." (Author: Chen Sulin (sound), translated by Ding Ding) ▲
