Asian families facing wealth-transfer challenges

High-net-wealth parents in Asia are looking to transfer generational wealth, knowledge and skills to ensure their children uphold their family's reputation and maintain its wealth growth.

That transfer is often unsuccessful, found a recent study by Swiss private bank Julius Baer, but wealth management consultancy Scorpio Partnership has taken a closer look at this area.

The Julius Baer report showed that Japanese HNW parents viewed personal values (37%) as the most important attributes to transfer, but also the hardest to transfer successfully (42%).

The Scorpio survey delved into how generational transfers occur in Asia and found there are thre broad types of parent, who hold differing views on how to transfer wealth, knowledge and skills.

One type believes that values cannot be taught, another advocates instilling values through being roles models and the third holds off from moulding their children.

One interviewee said members of the next generation needed to find their own direction and that the role of the parent is to provide support.

Asia’s wealthy are at a crossroads. The competing and often conflicting traditional family and contemporary Western values that provide the next generation with room to grow independently, also mean that wealth managers need to be especially sensitive and mindful of the enormous cultural upheaval some families are experiencing.

While the Julius Baer wealth report highlighted the desires of high-net-worth families when tackling wealth transfer, it did not address the real challenges of the significant cultural changes that are occurring in other Asian families.

Perhaps this is a reflection of an industry that identifies the needs of the HNW population but does not fully appreciate the solutions they require.

Nevertheless, with populations ageing, generational wealth transfer is likely to become more of a focal point for the industry in the near future.