The Importance of Optimising Wealth & Estate Planning in a Post-Covid World

John Williamson is Chairman & Managing Director of Generations Limited, a bespoke consulting and management services provider for family offices, entrepreneurs and wealthy executives. Hubbis ‘met’ with him recently to discuss his view of key issues pertaining to wealth planning and structuring, and family succession and how those endeavours have been impacted and often fast-tracked by the ongoing pandemic.

Williamson opens the conversation by explaining that his Hong Kong-based firm, Generations, which he founded, offers high-end consulting for wealthy families, family offices, and HNWIs, including providing expert advice on private business and family office operations.

Professional guidance required

He explains that the firm offers professional guidance on governance, succession planning, and internal and external communication for family offices and wealthy private clients, and reports that the firm also helps families establish their own family offices. He adds that Generations also helps HNW individuals create the appropriate legal structures and the necessary infrastructure to operate as investment managers for their own wealth.

Balancing the books, looking to the future

“Our aim is to balance the imperative to build wealth through the generations, with the income needs and personal ambitions of the current generation,” he reports. “Achieving an appropriate balance requires a clear long-term vision, based on a detailed understanding of the requirements and targets of our clients. Leveraging our considerable experience and expertise, we provide a breadth of services to develop and consolidate these goals into agreed strategies, as well as assisting with the execution, implementation and ongoing monitoring thereof.”

The Generations ecosystem

He adds that the firm does not tackle all the related challenges but instead has created an ecosystem around the firm, working with selected best-in-class professional associates and specialist consultants to ensure the firm can provide the most appropriate resources in any given situation, thereby minimising costs and maximising the value they offer.

Williamson zooms in on the world of succession planning, something that he says is well known to be problematic when the founders like to retain too much control over the businesses and perhaps the family finances.

“Our mission is to help identify and analyse the best options, then help guide the family towards a decision on who might succeed them, and how to plan properly for the future,” he reports. “I can say it is not as easy as it sounds, particularly perhaps in Asia where the older generations tend to like to hold on to control.”

Finding the right solutions

Within the whole field of succession planning, Generations might be called upon to help families find external management for the family businesses, perhaps on an interim or maybe a longer-term basis, or they might perhaps help the process of identifying from within the family those individuals who could take the reins immediately or in the foreseeable future.

The obvious mistakes

“An obvious mistake many families make, especially in Asia, is to start from the premise that the next generation should or would follow their parents into the family business,” he reports. “This is understandable, as the founders have created and nurtured the business with immense time and energy commitment and many sacrifices. But as often as not, you find that there is quite a bit of a gulf in expectation and preferences between the parents and the children. While the founder generation has been very business focused, the younger generations have a wider vision of their future.”

He adds that while there are many cases where there is at least one member of the family capable and keen to take control of the businesses, he has seen more situations where the younger generations have little or no interest in doing so.

Some founders also think that their lives have been so tough that they prefer their offspring not to endure similar pressures. On the other hand, he explains that some founders believe the discipline and tough challenges earlier on often focus the minds better and produce a more successful person and fulfilling life, and therefore encourage their offspring to take control of the company reins.

Horses for courses…

“The reality is there is no one formula that can be applied,” he says, “and the truth across many jurisdictions is that there are indeed few families that succeed in engineering a successful transition beyond the third generation, as these are difficult challenges for the families.”

Williamson tackles the tricky question of how to obtain advice and from which types of professionals. He observes that some advisors are more transactional focused and some more relationship-focused.

Objective, bespoke advice required

“It is vital for these families to seek objective and dispassionate advice from those not financially motivated by the outcome of their investment and other decisions,” he observes. “Moreover, meaningful advice is usually highly dependent on the advisor knowing the individuals and family really well, from someone who understands the family dynamics, and the aspirations of the different generations. There is no shortage of textbook solutions as to how you should manage the affairs of a very wealthy family, but as I said, each family, in reality, is different; there are no definitive solutions to be found in textbooks.”

Seeking gravitas

Accordingly, he explains that it is essential for clients to take the time to find experts with what he calls sufficient gravitas.

“A good financial advisor will be very bottom-line driven, whereas a good advisor in terms of family dynamics and family governance and succession will be taking a very different and a much more holistic view.”

Williamson zooms in on the longer-term impact of the pandemic on many clients’ plans as well as on the future of the wealth management industry, observing that a key priority for the industry right now is to help clients navigate through the significant financial implications that Covid-19 will have on their financial goals.

A new world dawns

“Globally, there will be a very large tax bill to cover the enormous cost of dealing with Covid-19, so clients need to consider the consequences that higher taxation will very likely have on their lifetime plans,” he observes. “It appears that the mutations and variants of this virus are such that the efforts to contain it will have to continue for some considerable time yet. The true financial implications of Covid-19 have therefore not been seen, have not yet hit home, but in time, they surely will. Inevitably, there will be a need for revised intergenerational wealth planning, re-thinking of the adequacy of financial arrangements for retirement and recognition of the likelihood of higher inheritance tax liabilities in many jurisdictions.”

Reflecting on the future

He observes that, not surprisingly, many people have become more pragmatic and balanced about both their financial ambitions and their personal aspirations. “Some of our clients, particularly those who have been directly affected, are choosing to step back and re-think what they want to do with their lives,” he reports. “Others are already taking action.”

He comments that the definition of wealth in the ‘olden days’ was more along the line of ‘well-being’, and reports that there is nowadays a growing emphasis amongst many families on thinking more holistically about wealth and well-being management.

Connecting wealth and well-being

“In many ways, it is surprising that it has taken recent events to bring the connection between successful wealth management and personal well-being into sharper focus,” he says. “Increasingly, wealth management experts who have the ability to provide meaningful insights, support and access to reliable expertise in the non-financial aspects of well-being are likely to be in greater demand from clients who are now more self-aware and conscious of their broader personal and family needs.”

Stresses and strains galore

He also observes that the pandemic had raised many mental health issues and notes that in wealthy families, there are often many tensions amongst different members and generations. “There are of course many different pressures and stresses,” he says. “For example, first-generation spouses often feel neglected as their partners are immersed in building a successful business, then second generations can feel inadequate if, not surprisingly, they are unable to replicate the outstanding success of the founder generation, and third-generation ‘trust fund’ offspring often have limited understanding of the realities of the world they grow up in.”

Solicit good advice, and early!

He observes that those successful and wealthy families who have managed to retain and grow their wealth beyond the third generation have usually been both prescient and thoughtful, and courageous enough at an early stage to engage the help of non-financial experts to provide guidance and support to the family members in both group and individual situations.

“Particularly in the West, the connection between wealth and well-being is becoming better understood and more appreciated,” he says. “In Asia, for a number of reasons, many families remain somewhat circumspect about sharing their financial and estate planning information with those outside the immediate family circle, and therefore the notion of openly discussing and assessing the ‘well-being’ side of the family balance sheet would even today have most members running for cover. In short, I believe it is time to adopt a more comprehensive and open approach to wealth and well-being. And we are indeed seeing that take place.”

Hong Kong – a good base for the future

Generations is based in Hong Kong, a jurisdiction whose longevity Williamson believes is well assured, at least for the foreseeable future. He closes the conversation commenting that Hong Kong has many advantages to offer, in terms of being a free-flowing financial centre, having an established and trusted legal system, offering real depth of expertise, an ideal physical location, and with more and more mainland Chinese aspiring to have a residence there.

“Moreover, beyond Hong Kong’s immediate shores, the development and integration of the Greater Bay Area mean Hong Kong is increasingly part of a much bigger economic region, with increasing connectivity, leading to ever more opportunities for both corporates as well as for individuals resident in Hong Kong,” he concludes.

Getting Personal with John Williamson

John Williamson is Chairman & Managing Director of Generations Limited, a bespoke Hong Kong-based consulting and management services provider for family offices, entrepreneurs and executives that he founded in 2018. Previously, he was Senior Managing Director and Chief Financial Officer of Search Investment Group, the private investment company of Robert W. Miller and his family, which he had joined in 2007. He was a member of the Group’s Investment and Audit Committees and CEO of SAIL Advisors, the Group’s Fund of Hedge Funds business until leaving the firm in 2018.

Prior to joining Search Investment Group, John was a Managing Director and Head of Infrastructure at Morgan Stanley Asia. His responsibilities included infrastructure support for all of the firm's business activities in Asia. He was also Chairman of Morgan Stanley's Asia Operational Risk Committee and a member of its Asia Executive Committee. And before joining Morgan Stanley in 1998, he was Chief Operating Officer of NatWest Securities Asia Holdings Limited, a position he had held since 1994.

He began his career in the securities industry in Edinburgh at stockbrokers Wood MacKenzie & Co. Ltd. in 1983.

Today, he is also Non-Executive Chairman of the UK Tote Group and an independent Non-Executive Director of Pacific Basin Shipping Limited and Provident Acquisition Corporation. From 2008 until 2021, John served as an Independent Non-Executive Director of Hong Kong Exchanges & Clearing Limited, and on retiring from that role in April this year, he was appointed as a Senior Advisor to the HKEX Board. He is also a Senior Fellow of the Hong Kong Securities Institute and a Fellow of the Chartered Institute for Securities & Investment (UK).

John has also served on a number of industry committees and was a director of the Hong Kong Securities Institute from 2006 to 2009. He was a member of the Family Office Working Group established by the Financial Services Development Council of Hong Kong SAR and is a member of the Collaboration for Family Flourishing.

He grew up in Edinburgh and received a degree in accounting and computer science from Heriot-Watt University, Edinburgh in 1980, and then qualified as a Chartered Accountant in 1983. John was married for 30 years and has three grown-up children who are now all in their thirties. They all live in London, and he has six grandchildren.

Spare time in Hong Kong is spent with weekly tennis lessons, weekly golf lessons and more recently, weekly wake surfing lessons at Tai Tam and South Bay. “Four lessons so far and I am pleased to say I can already stand up, at least briefly!” he reports enthusiastically.

He also has a black belt at judo and professes to be “reasonably good” at horse riding, hence the connection to the UK Tote Group, and also his close involvement with the Hong Kong Jockey Club.

He explains that the UK Tote Group is a business set up in 1928 by Sir Winston Churchill, in part to counter the illegal gambling in the UK, but equally importantly to also raise revenue to support horseracing. It was then privatised in 2011, and in October 2019 was acquired by a group of private investors that comprises of people who have a keen passion for owning and breeding racehorses.

“The Tote operates like the Hong Kong Jockey Club as a pooled betting provider rather than as a fixed-odds bookmaker,” he reports. “We are now in the process of revitalising and developing the business and as a result work closely with a number of different domestic and international organisations including the Jockey Club in the UK, which is the largest commercial group in Britain’s second-biggest spectator sport and the Hong Kong Jockey Club, which is a world leader in horse racing and responsible sports wagering and one of the world’s top ten charity donors. Together, we seek to increase the pool of liquidity that people can tap into and the returns the Tote can make to racing in the UK.”

John himself recovered from a serious bout of Covid-19 about a year ago, and accordingly speaks from personal experience when he reports just how many people have been taking time to step back and reassess their own priorities.

“As people have been forced to adapt to this new reality and change their lifestyles and spend more time at home, away from their usual travels and pastimes, it has been challenging for many and also a positive experience for many others,” he comments. “From the perspective of our business, it has certainly encouraged a far more proactive approach to these family, business and personal issues. And on a personal level, having had Covid-19, I can totally empathise with that.”