In turbulent times, ensuring resilience – for yourself, your family, your business and your legacy – in the face of unforeseen circumstances or risks requires a robust plan. How can wealth planning help you navigate disruption while protecting your wealth and your loved ones?
Stack the odds in your favour
A key weapon in your arsenal is diversification. Nowadays, individuals and families are more diversified in their assets and residences, and businesses are more diversified across geographies and business segments. Putting a future-focused, well-balanced plan in place and reviewing it regularly can help families build financial resilience, explains Jeremy Franks, Head of Wealth Planning and Advisory, EMEA, at HSBC Global Private Banking.
This might mean having different wealth structures for different family branches, or ring-fencing certain assets. Options are wide-ranging and could include setting up foundations, trusts, insurance wrappers or holding companies.
“Clients are increasingly aware of the importance of structuring assets efficiently and effectively to manage risk,” says Franks. “Relationship breakdowns and reputational, tax and geopolitical risks all need to be effectively managed. These factors can endanger family assets, and structuring those assets correctly, using appropriate mechanisms, can help minimise risk.
“The ability to separate ownership and control can be extremely helpful in this context. While you can’t control all factors, you can perhaps stack the odds more strongly in your favour to safeguard your assets for future generations.”
Complex families, complex needs
Wealth continuity and longevity are ever-present priorities for ultra-high-net-worth and high-net-worth families. Their advisers will be asking them questions such as: How do you plan to manage and utlilise your wealth for the rest of your lifetime? What are your plans for the next generation and beyond? What does the future of your family and the family business look like in 10, 50 or 100 years’ time? A wealth planner and family adviser can support and guide families as they try to figure out the answers to these questions.
“It’s important that every family builds resilience in their approach to risk management and contingency planning around their investments, primary operating business, as well as their unique family circumstances,” says Aik-Ping Ng, Head of Family Office Advisory, Asia Pacific, at HSBC Global Private Banking. “A good family adviser can help you design and implement policies and procedures around making decisions that best serve the needs of the family, especially among families with family members living in different parts of the world.”
Entrepreneurs and wealth creators who collectively build and manage successful businesses, too, may consider making joint decisions about their wealth and family legacy.
“Where a group of business partners have proven to be capable of building businesses together, what happens when they have a joint pot of liquid wealth?” says Ng. “A proper mechanism needs to be put in place to manage that wealth, and for some, it may mean setting up a multi-family office to do so.”
Wealth restructuring could have wider implications, so what do people need to think about before taking action?
“Proper tax planning is likely to be a significant consideration for some families. If you happen to be a tax resident of a country with complex and significant reporting requirements, you have to ensure you can meet your regulatory and compliance responsibilities,” explains Franks. “We also ask: Where and how are your assets held right now? What is the current snapshot of the family’s current wealth?”
Some assets may be core assets that the family will never sell; others may be shorter term in nature. A wealth planner will look at assets owned and their location, current and historic valuations, how they are being managed and what the family plans to do with them in order to create a suitable strategy. It’s crucial that this plan is tailored – there is no one-size-fits-all solution here.
“We try to find solutions that are most appropriate for our clients, and this is a very personalised process,” notes Franks. “It’s really critical, particularly where wealth is significant, and complex in the sense that family members are not necessarily in the same jurisdiction, or they don’t necessarily have the same objectives or values. Priorities can often differ between generations, as well as between family members within the same generation.”
Ng concurs: “Families can be complex, with complex needs. So how does a family actually come to consensus over how to manage and pass on that wealth? This is why a highly tailored approach is essential when it comes to wealth planning, particularly during times of disruption.”
With this in mind, wealth planners need to understand their clients and make constructive suggestions. “Our ethos is to invest time and get to know the clients and really understand the issues that keep them awake at night,” Franks says.
“As family advisers, we work alongside clients throughout their entire wealth journey to design the most appropriate solutions for the family to achieve the vision they have determined for their family and wealth,” Ng adds.
In the face of continued disruption, you may be revisiting your current portfolios, wealth structures and succession plans. We understand the challenges you face, and are well equipped to have in-depth discussions about your broader wealth planning considerations, wealth structuring and family needs, as well as the purpose of your wealth and family dynamics.
Get in touch with HSBC Global Private Banking today to find out how we can help.