Ser-Keng Ang of Singapore Management University talks about some of the key issues and considerations for relationship managers when advising their clients and wider families on wealth transfer.
Date: July 2010
Tags: Wealth transfer, Succession planning, Next generation,
As the next generation of Asia’s wealthy families assumes control from the first-generation founders, Ser-Keng Ang said in an interview that this will create various issues for private bankers and relationship managers (RMs) to consider.
For example, he said, the role of a private banker who has been servicing a patriarch (and business owner) shouldn’t be to promise that he can deliver greater performance than the client’s business. Instead, the RM’s role will more than likely be wealth preservation, with a view to protecting it for the next generation.
However, with the passing of the first generation, the younger generation tends to be better educated and trained, as well as more exposed and generally savvier.
There is also sometimes a dilution of wealth, explained Ang, which arises from situations where parents might have more than one child and choose to split their wealth equally among each one.
With dilution can come an attitude of risk taking, therefore, given the need to increase the level of wealth.
This means RMs should be aware that their role for the next generation will likely be different, said Ang.
Staying relevant to families and the next generation
According to Ang, the way that RMs can stay relevant to the families of their clients relates to the contact they have with them.
Earlier rather than later, he said RMs should try to nurture the next generation – even when they are still teenagers – to get to know them and their way of thinking, and understand what they are looking for from their lives.
Getting involved in various aspects of the growth of a client’s child is a concrete way for RMs to ensure they can stick with a family, advised Ang.
In fact, he explained, in many cases successful RMs can know the child’s thinking and ambitions better than the parents, given that RMs can become trusted advisers. This means RMs can therefore give impartial advice on the children should be doing.
Pitfalls
According to Ang, a key pitfall for RMs to avoid is being driven too much by what the client wants rather than what the client needs.
For next-generation clients who might have become risk-takers, for example, even if they are well-educated, RMs might not think certain products or investments are appropriate.
It is then the role of RMs to show their value-add and explain why the product or investment isn’t suitable, said Ang.
