Asia Is Getting Richer But Families Often Aren't Prepared For Wealth Transfer - Study

Tom Burroughes

24 November 2017

Asia is seeing a rapid rise in individuals’ wealth but it appears that fewer than a third (31 per cent) of its “global families” have planned how to transfer assets, according to a study of trends by , the consultancy.

Even so, understanding the purpose of wealth is central for such families and more than two-thirds of them have talked with benefactors before receiving a wealth transfer and 57 per cent of them said they were told of how inherited wealth should be deployed.

Confidence in the wealth transfer process appears to be a significant issue: some 70 per cent of those without a transfer plan lack confidence in their children’s ability to grow and protect assets, the report, called Asia-Pacific Wealth Transfer Report, found.

The issues of planning around wealth transfer are likely to become more urgent as the generation of asset-holders retires and looks to pass on money. At stake are large sums: Capgemini, in its 2017 World Wealth Report for 2017, for example, said that there were 5.5 million high net worth Asian citizens in 2016, holding total wealth of $18.8 trillion. Asia-Pacific recorded robust HNWI population and wealth growth rates (7.4% and 8.2%, respectively) but the growth slowed down compared to last few years.

The RBC/Scorpio report said: “Asia’s global families are taking important steps to equip the next generation with the values and financial knowledge they need to manage in the future; however, they are struggling when it comes to the process of putting wealth transfer plans in place."

In defining Asia’s “global families”, the RBC/Scorpio report says they are “transitioning borders through employment, property acquisition, education or permanent relocation. They share a connection with Asia as either their region of origin or adopted home”.

Fieldwork for the report was carried out between April and August 2017, surveying a total of 425 respondents in Hong Kong, mainland China, Singapore, Indonesia and Malaysia, with an average amount of investible wealth of $5.15 billion.

Among specific findings, the report showed that 63 per cent of respondents are more likely to manage their own money to improve financial understanding in Asia, versus 41 per cent of their Western counterparts doing so. When asked which areas of financial management they most value, 54 per cent of respondents give the case of investment strategy, and 46 per cent of those in the West say yes to that point. In North America and the UK, the most valued knowledge area is budgeting, suggesting that protecting rather than growing wealth is most valued.

Asian families start their financial learning relatively earlier in life than in other regions. For example, the average age to commence learning in Asia is 25, but 27 in the West.

The study shows wide variety across the region in terms of how comfortable families are in sharing wealth transfer details with children. In mainland China, 54 per cent said they are fine with sharing all details, while the figure is as low as 21 per cent in Malaysia. (In Taiwan the figure is 50 per cent, in Hong Kong, 38 per cent, in Singapore, 29 per cent and Indonesia, it is 28 per cent.)

Some 51 per cent of respondents in Asia intend to gradually gift assets, far ahead of North America and the UK, where the result is 29 per cent.