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Family matters: untangling the complexities of family wealth and succession for Asia-Pacific investors
Omar Shokur
Regional Head for Asia, Private Clients
High-net-worth individuals (HNWIs) across the Asia-Pacific (APAC) region are contending with multiple external challenges, including economic headwinds, trade disputes, and geopolitical tensions. However, they can also face significant challenges closer to home, such as a lack of communication and alignment of vision among family members. If these internal challenges aren’t resolved effectively, they can damage family relationships, disrupt intergenerational wealth transfers, and, ultimately, threaten the security of family wealth.
Therefore, it has never been more important for HNWIs to understand the values and issues that motivate them and other family members, so they can make wealth-planning decisions that support their needs and goals. To find out how APAC’s investors are doing in this area, we and our strategic partners surveyed over 390 HNWIs in Australia, China, Hong Kong, Japan, Malaysia, Singapore, Taiwan, Thailand, and the Philippines.
In showing how APAC’s families are approaching their wealth today, our findings reveal that perspectives among family members often conflict – which could result in significant problems when it comes to intergenerational wealth transfers.
We caught up with Omar Shokur, Regional Head for Asia, Private Clients, Lombard Odier, to explore the findings.
download our wealth planning report.
We explore how Asia-Pacific's HNWIs and their families are approaching the deeper, human dimensions of wealth: governance, succession, communication and generational readiness. Discover practical insights on alignment, structuring and planning, to protect your family’s legacy for generations to come.
download our wealth planning report: The Wealth Blueprint: Building Wealth, Sustaining Legacy.
Which findings were you most surprised by?
We found several surprising paradoxes in the results. Broadly, these paradoxes highlight a disparity between intention and action. And they suggest that, while investors have a generally good understanding of risk, many are also – for whatever reason – not well positioned to act.
For example, APAC’s HNW families recognise the importance of alignment, governance and long-term continuity, but often lack the structures, frameworks, and conversations they need to achieve them. This first paradox of our report further reveals an interesting finding: large numbers of Baby Boomers and Gen-Xers have not discussed alignment with other family members, despite also saying they care about having a shared family vision.
We also found that comprehensive alignment is far more common among families with formal governance structures in place. Even so, many families said they either do not think they need such structures or have none in place. Conversely, among those who said they do recognise the importance of governance structures, families in many markets – such as Japan and the Philippines – still show high misalignment.
Our findings suggest a significant level of complacency when it comes to managing family wealth, which risks causing conflict within families. Communication is key. Without it, the sharing of knowledge and values is compromised, and alignment becomes very difficult to achieve.
APAC’s HNW families recognise the importance of alignment, governance and long-term continuity, but often lack the structures, frameworks, and conversations they need to achieve them
Explore our in-depth results on how APAC wealthy families are approaching investment decisions, wealth planning and succession here.
What do HNW families identify as the primary challenges around managing family governance?
Communication – or lack thereof – is a common theme. APAC’s families are focussed on intergenerational issues, a lack of interest from some family members, and differing long-term visions. Poor communication is the root of each of these challenges, suggesting that many investors could benefit from the kind of family alignment professional wealth advisors can facilitate.
Investors also cited difficulties in obtaining agreement between family members as the most significant barrier to a smooth succession. Significantly, the younger generations were more likely to identify sensitive discussions as a challenge than their older counterparts. This suggests a communication gap between age groups, potentially due to a lack of confidence among younger generations when it comes to broaching sensitive topics with their older counterparts.
Herein lies another paradox: APAC families understand that communication and alignment are essential to successful wealth transfer, yet many still avoid the open and structured conversations needed to address sensitive issues across generations.
Notably, while nearly nine in 10 of respondents who receive professional advice said they had some degree of alignment within their families, compared to slightly over half of respondents who are not advised. This exposes the extent of the problem in APAC – a problem that becomes even more significant when we consider the monumental intergenerational transfer of wealth set to occur over the next five to 10 years and beyond.
These are striking data points that show how the right wealth advice can greatly improve communication and nurture confidence.
APAC families understand that communication and alignment are essential to successful wealth transfer, yet many still avoid the open and structured conversations needed to address sensitive issues across generations
How confident are the younger generations in their readiness to inherit responsibility for family wealth?
HNWIs overwhelmingly want to preserve wealth across generations. But many younger investors – including, for example, 42.9 % of Gen Z – aren’t confident in their ability to manage family wealth responsibly. And many older investors agree with them.
Our study shows that older family members’ confidence in the next generation is low, with just 16.7% expressing strong confidence in their readiness to inherit family wealth. Despite this, yet another paradox is that even though families place strong emphasis on preserving wealth across generations, most of these older family members’ are simultaneously failing to equip their heirs for success, with only a minority having either a formal governance structure or full succession plan in place – each of which is essential to preparing the next generation for the responsibility they will inherit.
We partner with IMD Business School often, and greatly appreciate that they’ve kindly lent their expertise and insights within our report. One insight that they shared that resonates strongly with our findings is the need to reframe the topic of succession from a narrow “who’s next” conversation to one that is structured, multigenerational, and takes into account a wider group of stakeholders within the family.
IMD delves deeper to their Lotus Model of succession – Leadership, Ownership, Transforming the organisation, Uniting the family, and Strengthening governance, and how families should approach these aspects respectively across their succession journey.
Even though families place strong emphasis on preserving wealth across generations, most of these older family members’ are simultaneously failing to equip their heirs for success
Wealth aside, how do APACs HNWIs feel about the prospect of transferring the family business itself?
Given the findings around intergenerational wealth transfers we just discussed, the results are surprising. An overwhelming majority of HNWIs – more than nine in 10 – said their family business is well-positioned for a smooth transition to the next generation, and 72.7% expressed some degree of confidence in the next generation’s ability to grow the family business.
This is heartening, considering that family businesses are the cornerstone of many Asian economies. However, there are some geographical differences, with confidence lower among HNWIs in markets such as Japan, Malaysia, and the Philippines. This suggests more work needs to be done in this area.
While HNW families generally accept that many emerging technologies will prove to be game changers, but many, especially within the older generations, remain wary
How will wealth management change in the APAC region over the next five years?
APAC HNWIs believe digital innovation will have the biggest impact on the wealth management industry in the next five years.
While this may be unsurprising, it also reveals another paradox: while HNW families generally accept that many emerging technologies will prove to be game changers, but many, especially within the older generations, remain wary. For example, HNWIs identify resistance to change from senior family members, and the challenge of balancing tradition and modernity, as key potential roadblocks their families face in managing family governance.
Ultimately, these findings underscore the role wealth managers can play by offering APAC HNWIs quality advice. For Lombard Odier, wealth planning is at the heart of our support to clients, and we constantly rethink and adapt how we manage our clients’ wealth to enable them to protect, grow, and transmit them to the next generation.
How are Middle East families also reacting to governance and succession challenges? Find out here.
This is a marketing communication issued by Bank Lombard Odier & Co Ltd (hereinafter “Lombard Odier”).
It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication.
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