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A private wealth transfer worth $30 trillion between baby
boomers and the current generation is imminent, but with ample
professional advice there is no cause for undue stress, a
Jersey-based report assures.
The recent report, Flourishing Futures: Making Succession a
Success, by Jersey Finance demystifies the challenges around
this much-talked phenomenon, with an insight into real
succession-related problems HNWs face through a series of case
studies provided by law firm Bedell Cristin. Presented as a
10-point guide for trustees, families and advisers, the report
draws from Jersey’s experience as an international finance
centre (IFC) holding over £400 billion worth of private
wealth in trusts over a 50-year period.
‘[It’s an] evolution, not revolution,’ the
report describes the succession planning attitude trustees need to
adapt to ensure a smooth transition of wealth. From identifying the
values of the wealth founding family to analysing the impact a
nuptial agreement might have on the transfer, HNWs and their
advisers worldwide need a comprehensive plan to accommodate the
intergenerational transaction, it says. A case study within the
report shows how Bedell Cristin had used these suggestions to help
the new generation of a family whose founders survived a civil war
in the 1900s, transfer the wealth into a Jersey foundation to
provide aid for civil war refugees.
‘Jersey is widely regarded as one of the biggest trust
centres in the world – there is a responsibility and
obligation on us,’ Jersey Finance CEO Geoff Cook tells
Spear’s about the rationale behind the study. 'We are
stewarding so much value to create the platforms and the
capabilities that allow HNWs to transfer or deploy their wealth in
a way that they wish to’.
The recommendations in the guide reflect the many complexities
HNW families from all corners of the globe, particularly those from
the Middle East and Asia, where wealth accrual is so
‘phenomenal’ that for many this will be the first
transfer after over 30 years. But only a quarter of these families
have a strategy in place, Cook says.
‘I don’t think you can start too early,’ he
says of having a transfer plan, which he says should be the result
of an in-depth conversation between founders and the next
generation of proprietors. ‘We would advise, for the
high-net-worth individual, that it’s an important thing,
because generational planning can take quite a long
time.’
One of the main challenges HNWs and advisers face in succession
planning is the sheer difference in attitudes between the old and
the young, with the latter not having quite the loyalty the former
might have to their respective trusted advisers. ‘The younger
generation are a little bit more transactional,’ Cook notes,
‘they are a little more independent-thinking and they want
information available at their fingertips at any place, any time
and through any kind of medium’.
This is because client knowledge is becoming increasingly
crucial, he stresses, adding that there is a case now more than
ever for an understanding of how the family structures, legal
setting, wishes, future priorities and culture of each HNW client
will influence their style of intergenerational transfer.
‘Service demands are changing – it’s very
important that financial centres and the private wealth advisers in
them aren’t complacent,’ Cook warns. ‘You can
become out of date, or even irrelevant.’
The report also urges for greater innovation in the private
wealth space, where Jersey has been offering services as an IFC
with ‘a multichannel approach’ – using the
expertise of more than 13,300 ‘highly-skilled’ and
experienced professionals. This new outlook to client service is
part of a greater ‘lateral’ discussion around wealth
that is going on globally, Cook concludes. ‘”With great
wealth comes great responsibility” is a much more prevalent
attitude now.’
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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