Understanding Asian´s Emerging Wealth Management Landscape

According to a Deutsche Bank study, the Asia-Pacific (APAC) region accounts for around 42% of global wealth. With a significant portion of this wealth set to come under younger ownership, private client relationship managers must rise to a wide variety of challenges. In addition to handling the more traditional aspects of wealth management, they must navigate digital transformation, an increasing global emphasis on sustainability, and educational demands from a new generation of clients. 

Asian wealth inheritors want more than simple transactional support. They seek deep, long-term connections with advisors who understand their global ambitions and digital mindsets. Wealth managers must offer investment avenues that align with a new set of priorities around, for example, green and digital assets. 

Grandchildren Educated Abroad

Due to unique cultural and socio-economic factors, intergenerational wealth transfer is a complex topic in Asia. Many Asian ultra high net worth individuals are business founders with multi-generational households and extended family members educated or resident in other geographical regions. 

These successful Asian entrepreneurs, particularly in India and China, are now deciding how to pass down the substantial wealth they have created. They often believe it makes sense to pass it on during their lifetimes but nevertheless hesitate to do so, feeling that assets are better secured in their own hands. In total, assets worth an estimated US $2.5 trillion are expected to be transferred by 2030.

Yong Sheng Hon, a private client and tax partner of the global law firm Withers, says: “We work with some third-generation families where the grandchildren have been educated in the US and Europe and come back with a lot of ideas about ESG, venture capital, and so on. For the parents and grandparents, putting a sum into a family office is like creating another university course where they can figure out how to make money.”

ESG and Digital Investment Platforms

According to a survey conducted by the Global Sustainable Investment Alliance, financial advisors from Australia found that 86% of millennials indicated interest in sustainable investing and are twice as likely to invest in companies targeting social or environmental goals. This younger generation is also digitally native, with 87% of them viewing digital platforms as a crucial channel for engagement with their wealth managers.

Growing demand from wealthy young Asians for personalised financial services, in-house expertise, competitive fees, and efficient performance is prompting their advisors to leverage digital wealth platforms. Such solutions enhance advisors’ capabilities in assessing and recommending diverse investment opportunities in, for example, emerging technologies, clean energy, and cryptocurrencies. 

Along with the opportunities arising from this increased interest in alternative investment, however, come challenges. Many private banks and traditional wealth firms are waiting for tighter regulatory frameworks around new asset classes before addressing them with formal offerings. 

Family Offices, Trusts, and Foundations

Many wealthy Asian families aim to involve younger generations in managing wealth early so as to help smooth ownership transfers later on. With their younger members increasingly scattered around the globe, a growing number of these families are seeking legal structures suitable for regulatory environments spanning multiple jurisdictions.

Accordingly, a family office’s ability to provide flexible and tailored wealth management solutions has made it a popular set up for ultra high net worth Asian family leaders. Asian family offices are typically run by a board comprising carefully selected family members and professionals. Trusts and philanthropic foundations, often with parents on investment committees, are also favoured structures for helping younger family members launch ventures with oversight from experienced relatives.