Elevating Client Estate & Legacy Planning Conversations by Focusing on Holistic Issues around Family Health & Wellbeing

A Thought Leadership Event hosted by Hubbis and Pershing Singapore

Pershing Securities Singapore, a BNY Mellon company, partnered with Hubbis in early October to host a private conversation amongst a group of wealth management experts on upgrading and elevating conversations with private clients to focus more intently on matters that truly count in our lives. Pershing Securities Singapore was represented by their CEO, Mark Nelligan.

The platform for the discussion was Pershing’s body of work and thought leadership since the pandemic on legacy & succession planning, the great wealth transition in Asia, and on the firm’s work around inclusive wealth management and investment.

Pershing is a business-to-business provider of global financial solutions to advisors, asset managers, broker-dealers, family offices, fund managers, registered investment advisory firms and wealth managers. Pershing also acts as a clearing broker for partner financial organisations. Hubbis has worked extensively with Pershing in recent years, producing these reports from events and presentations and interviews.

Links to:

The Hubbis Post-Event Report on the Pathway to Inclusive Investment - https://pdf.hubbis.com/pdf/article/a-deeper-dive-the-pathway-to-inclusive-investment-why-women-s-investment-matters.pdf

The Hubbis Report on Wealth Transfer in Asia - https://pdf.hubbis.com/pdf/article/transferring-wealth-to-the-next-generations-making-the-most-of-the-opportunity.pdf

We were also pleased to have Feisal Alibhai join the October 4 discussion. He is the Founder and Integrative Head of Hong Kong headquartered Qineticare, which he reports is the world’s first family health office.

Feisal launched the business back in 2013 with a mission to empower wealthy private clients and families through an integrative wellbeing journey to live in harmony and create enduring impact. (See this link to the feature article Hubbis wrote on Qineticare: https://pdf.hubbis.com/pdf/article/qineticare-founder-feisal-alibhai-on-encouraging-a-truly-integrative-approach-to-health-wealth.pdf )

The topics for the event included, amongst others:

• As clients plan for their families’ futures, how can the wealth industry rise to the challenge of helping them move harmoniously on these journeys, so that their hopes and plans are aligned through the different members and different generations of their families?
• What is the importance of wellbeing in wealth, succession and legacy planning? Why should this be considered?
• Should wealth industry advisors also consider the physical, mental, and emotional health of their clients, and what advantages will that give to their clients and indeed to them as trusted advisors?
• How do you boost inclusiveness in the investment world, who should be better represented, and why is this a compelling opportunity for private banks and wealth managers?

The Discussion

Qineticare founder on the vital importance of a holistic approach to wealth & succession planning

The discussion opened with Feisal introducing himself and Qineticare. He offered guests a number of key pointers, reporting that Qineticare supports families from many countries, looking after their physical, mental, emotional, and their relational health. He explained we are on the cusp of the largest transition of wealth in the history of mankind, bringing enormous challenges around planning and governance. Without the right approach to communication and skilful planning, there will be immense turbulence within wealthy families regarding succession and legacy.

He explained Qineticare is in his view the world's first family health office. “Just like family offices manage wealth, we manage health and wellbeing for families, for family businesses and family offices,” he said. “The reality is that families might plan and structure, they might create family governance documents, constitutions, or a family council, but if they are not addressing the core issues, or the core elements of the family dynamics, those documents are just documents that do not really connect to the family and family members. But we take a multi-dimensional approach, so we look at the human being, the human system, and then the family system.”

“Most wealth management advisors are not geared up to have the detailed and necessary conversations with clients and their families,” he cautioned. “And the reality is that there exist huge gaps to bridge between the different generations, in order to avoid all the possible pitfalls and potential disputes ahead, as family businesses and wealth transitions to the second and third generations.”

Families are complex and across Asia there are many different cultures and challenges

A senior private banker offered her perspectives, highlighting the need to avoid friction over wills and succession. She said families are not easily inclined to have the required conversations within the different generations, in order to avoid current or future friction.

“In recent years, I have personally witnessed a handful of families fall apart over who gets what,” she said, warning that when it comes to disbursement of assets or family business succession, there can so often be conflicts between sons and daughters, and older and younger siblings. She warned that unless such issues are acknowledged and overcome early on, there is a major risk of family businesses and wealth simply fizzling out over time, struggling with disputes and a lack of cohesiveness.

Bridging the gaps between Asia’s multi-cultural environment and idiosyncrasies

She identified key nuances in the Asia region, for example China being largely one-child families, Hong Kong still handing control and wealth largely to the older son, Southeast Asia trying to spread the family largesse more equally, and Indonesia sometimes skipping the second generation and handing wealth and control to the grandchildren.

“The sons are often not deemed ‘good’ enough to take control by some, perhaps many, of these patriarchs; they don’t match up to their expectations, and interestingly the founders often have a kindlier, less demanding approach to the grandchildren,” she elucidated. “And sometimes there are no grandchildren yet, and the children are simply not considered good enough, or perhaps they are not even interested, in which case it might be time to take tough decisions and dispose of the businesses.”

She also noted that Asia will be dominated by the younger generations - the demographics in SE Asia are of the younger generations far outweighing the older generations. She said, for example, that in Malaysia, almost 70% of the population are aged 35 and below, and the Philippines, Indonesia, Thailand similar, perhaps even more so.

In today’s post-pandemic world, people’s focus and priorities have shifted significantly, opening the door to a more empathetic and sensitive approach to wealth and legacy structuring

“Wealth is about more than money, and legacy is about more than just having robust succession structures,” said another wealth advisor. “To achieve any type of a smooth transition, the next generations must be nurtured, educated and well prepared for the future. They need to be well-rounded individuals in harmony with themselves and the world around them.”

“We can then start to educate them about the succession plan and what it means to them and about how to manage money,” she elucidated. “Hence, I have devoted myself in recent years to helping clients through our family wellness programme. It is the missing piece, in my view. Our business model strives to look holistically across the issues of wealth preservation, succession planning, and family wellness.”

Bringing the family together, striving for harmony and building awareness

The same guest explained that in a typical situation, her firm’s family wellness programme might entail two elements. First, bringing all the family together, with team building exercises to enhance the harmony in relationships in the family. And the second part often involves individual coaching with each family member in all aspects of well-being, which could centre on their mindset, physical health, emotional growth, spiritual growth, or around relationships.

“For one family, for example, it was genuinely transformational, and helped us evolve a very complex succession planning project with lots of assets in different jurisdictions, and with the relationships intact,” she said. “When seeing the outcome, I knew I had found my purpose.”

Communication and trust and ‘we’ are central to the proposition, but the lack of those elements is why structures and legacy plans too often fail

Feisal agreed with the comments to that juncture, adding that it is important to keep the fires of personal motivation and drive well lit, however wealthy one might be.

“People should try to continually live with purpose, and that so often characterises those who have very long lives,” he said. “Look at Hong Kong, which actually has the world’s longest life expectancy. The family is always together at weekends for meals, it is no-negotiable. The purpose is clear – whatever age you are, you are in the family, part of the family, and that helps define a sense of belonging, community and purpose.”

He then offered some reference points for the challenges ahead, noting that the bulk of failures around legacy and succession planning result from poor communication and lack of trust.

“The reality is that whether we want to accept it or not that most of our time, energy and resources are being focused on areas which are not where the actual issues are, and that is the missing piece of the relationships, the ability to communicate, the ability to relate,” he observed. “It is vital for the patriarchs and matriarchs not to be ‘I’ all the time, but ‘we’. However, that is a challenge in Asia. I sit with many of the older generation in this region, and it is very ‘me’ and ‘my’, but we want this to become ‘we’ and ‘ours’, so there is true inclusion of family members and different generations.”

He extrapolated from those comments, adding that planning for the future of family businesses and wealth is not simply structures and documents; for this to be successful, he said a far more integrated and holistic approach needs to be adopted.

To properly identify the solutions ahead, one must see the differences in individuals, their backgrounds, and their family environments

Another guest observed that people’s approaches are shaped by their own experiences. He noted, for example, that some of the older generations in Asia grew up during the second world war and aftermath, while others might have experienced the independence of Singapore as a sovereign country, the threat of communism in Asia, the Vietnam war, the Korean crisis and so forth. All the way to the third and fourth generations, with their different experiences of the world, their (usually) far more globalised education and travel, and so forth.

The founders dictating the agendas will not bind the families together; control can be relinquished with communication and inclusiveness

A guest observed that in Thailand, the older founder generation tends to like to keep control for as long as possible, even nowadays. “Passing the baton of the family business and wealth is still rare today,” he remarked. “It is still quite common here that a lot of these first-generation builders feel that they need to do this literally until they drop.”

A fellow invitee agreed, noting that so often, the second generation can so often not prove to their fathers that they are ‘good enough’ to take the family business and wealth reins.

“Sometimes, we have to turn this round,” she said. “This means to have the second generation engaging the father and get him involved in that whole conversation and encourage a decision in his favour, while also making the founder feel as if he still retains some control. But it is not easy. And we also need to recognise that quite often the children or even grandchildren will not want to take on control of the business, and that can mean a totally different set of conversations.”

A fellow invitee remarked that in Asia, there is so often a lot of expectation, a lot of imposition, and a lot of judgment. And these differences of approach and expectations often lead the younger generations to want to go their own way, to build their own businesses, not staying in the family fold.

Independent thought and advice can be remarkably constructive for families struggling with these issues

Feisal then responded to a guest’s comment on the need for the independent voice, perhaps from a trusted advisor.

“Clients increasingly appreciate that the stakes are very high, and they appreciate that we have no conflict of interest, no hidden agenda in our advice, as we are not attached to the outcome,” he told the guests. “Actually, we have been asked by some of the founder type clients to take full control of the outcome, but we quickly explain that is not our mission. Our goal is to drive the conversations, open the doors to solutions that they as a family see right. And we have a multi-skilled team that is involved in each client’s case, with those experts specialised in different areas. But ultimately, it is the client who must make the right and positive choices, armed with our support in all these other areas.”

In wealth as well as health, detoxification is often vital to better health, longevity and improved happiness

Feisal also explained that families will often need to essential detox their relationships and clean up their relationships and communication in order to thrive themselves and to help the family businesses and/or wealth endure.

He cited one case of three siblings, each with different ideas for the business’ future, and able, after Qineticare’s guidance, to have more open and fluid communication, they have disinvested some businesses, and are in a much clearer situation looking to the future.

“They are no longer holding on to that legacy of having to stay together, that burden has lifted,” he said. “They feel happier and more connected actually now that the shackles they felt handed down from the patriarch and matriarch have been unlocked.”

Education and nurturing around money, wealth and values are also central to arriving at better outcomes

Financial education and reinforcement around the value of money and ‘values’ in general are vital components, another guest observed. Another expert agreed but noted that it is not the individual’s fault if they come from a wealthy background or have a privileged education.

In short, she indicated that their attitudes do not have to be ‘entitled’ as a result, if they can approach the key issues with maturity and openness.

“There is a missing piece in education in general,” said another invitee, “and that is why I have spent considerable time helping my children on life matters such as money, investments, savings and so forth, issues that are often greatly pushed to one side in a nice expat environment with everything at hand.”

Moreover, she explained that from a young age, her children knew that if it's something vital or that they need for school, the parents pay, and if it is a choice that they want, they're going to have to pay for it.

“And we have an agreement that I work hard to pay school fees and they work hard to justify that,” she said. “It is not that we say they must be the best, but that they should try their best. Finally, we strive to empower them to make their own choices.”

Money might not buy you love, but it can buy you time to learn and grow

Feisal offered some further insights, remarking that an advantage of wealth is to be able to learn about issues and ideas that others might not have the time or resources to enjoy. He said he was actually on a retreat in New Zealand even as he participated in this discussion.

“There are well-documented negatives to wealth, but the reality is wealth gives us the time and flexibility to enjoy greater freedom to choose, freedom to learn, freedom to obtain support, and the freedom to live some interesting and fabulous times,” he said. “But ultimately, it all comes down to personal responsibility and demonstrating to family members and community the ability to conduct oneself ethically and to uphold good values.”

Encouraging a more inclusive investment market is also important to the futures of families and the longevity of their wealth

Mark Nelligan of Pershing was then quizzed about a report put out by its investment management arm, BNY Mellon Investment Management, that focused on how to achieve a more inclusive investment world ahead, including how women in Asia are not only controlling more wealth but gradually becoming more confident in their relationships with wealth managers and at the same time increasing their investments. The report canvassed 8000 women and men and 100 asset managers who control nearly USD60 trillion of AUM.

He explained that women worldwide – and particularly in Asia – are under-represented in the investment world, but that this represents a great opportunity, and one that in the future will also help promote a more robust estate and legacy planning. Although progress is being made, there is still much to be achieved to build the confidence and connectivity required to attract what the survey estimated could be another USD3.2 trillion of investments from women worldwide.

The study shows there are three main barriers that deter women from investing. First, for many women around the world there is the income barrier. Secondly, women perceive that investing is inherently high risk and they might be putting their family’s stability in jeopardy as markets turn volatile and/or deeply negative. And third, there is a seeming lack of engagement by the investment industry.

Zooming into Singapore, he reported the survey found that 49% of women there are open to investing but are not actively looking to invest. The research showed that 52% of the women that do not invest think they are not wealthy enough to invest. And some 46% of women who do invest, say that it would influence their investment behaviour if they had better job security.

Nevertheless, an encouraging 62% of women in Singapore say that investing is attractive because it offers a better return than saving with low interest rates, showing a wider financial understanding.

Around 40% of women in Singapore feel that the marketing and advertising around investing is male-oriented or even specifically aimed at men, discouraging their participation.

“All of this creates a huge opportunity for the wealth industry to tap into ,” he told guests. “And linking closely to this discussion today, women are at the centre of family, as daughters, wives, mothers, grandmothers. A far greater involvement in the family’s investments will benefit them and their entire families.”

Women should also be more involved as leaders in the wealth management industry

Another guest agreed, noting that it would be useful, for example, to have more women as decision makers at the banks and wealth management institutions, as they would better understand the hesitation women often feel around investment decisions and commitments. “The industry also needs to understand the needs of women,” she said, “and this is not just the financial return, but around their goals, and aspirations. There is a shift to great involvement of women in business and finance in Asia, and the more role models there are, the more this trend will evolve.”

The final word went to another guest who observed that the finance industry had long been considered the preserve of males, but that ESG-centricity was helping to boost female participation.

He remarked that women tend to be more conservative in their approach to investments, and more risk averse, tending to shy away from complexity as well.

“Actually, we find that many UHNW clients prefer women as RMs, as they feel more accountable for the portfolios, more protective of their client’s wealth,” he reported. And women are proving themselves in Asia to be highly skilled in these areas, immensely knowledgeable, and also excellent communicators.” And he indicated they tend towards being more holistic in their view of client wealth and less driven by product and performance metrics of their bank or employer.