Where do ultra-high networth individuals put their money?

If you’re one of those people who think that talking about money is crass, you can heave a sigh of relief that the good people at UBS have taken matters out of your hands and published their Global Family Office Report 2019. The sixth edition of this report provides comprehensive insight into performance, investments and structural issues of some of the world’s wealthiest families. A total of 360 family offices participated in this survey, with an average family wealth of US$1.2 billion. (Just so you know, UBS recommends family offices for families with wealth of at least US$150 million.) For more interesting tidbits from the report, read on.

7 out of 10 say that their total family wealth is rising.

45 is the average age at which a next generation member takes control of the family business.

By the year 2020, 91% of family offices believe US and China relations will have major economic implications.

63% believe that Brexit will be negative for the UK as an investment destination over the long term.

55% believe that we will enter a recession by 2020.

 

(Related: John Cheng, director of Cheng Yew Heng Candy Factory, imparts advice to fellow family business successors)

 

Top 3 operating business sectors

Finance and insurance (21%)

Manufacturing (16%)

Real estate (14%)

 

Top 3 industries of direct investment

Technology (49%)

Real estate and rental/leasing (42%)

Finance and insurance (30%)

 

Investment allocations for Asia-Pacific family offices

28% equities

16% private equity

17% real estate

20% fixed income

2.9% hedge funds

16% other

 

Investment strategies for Asia-Pacific family offices

19% growth

57% balanced

23% preservation

 

Growth chart

 

Families in Asia are shifting towards greater wealth preservation. At present, 23% of Asia-Pacific-based family offices are pursuing a preservationist investment strategy, up from 7.7% last year.

Families are starting to concern themselves more greatly with safeguarding their wealth, rather than focusing on higher risk growth-based investing.

 

(Related: Morgan Yeo of Roger&Sons on future-proofing his family’s carpentry business)

 

Live Long & Prosper

Singaporeans are living longer and they’re also getting wealthier – and insurance providers are increasing their product offerings to take care of their financial needs.

Insurance companies have entered the territory of banks, introducing new products to protect the wealth of a steadily growing number of high net worth individuals. Prudential defines high net worth customers as those who have over S$5 million in sum assured, and according to their research, Singapore is home to 184,000 millionaires, with this number set to hit 240,000 by 2023. Really, who can blame them for wanting a slice of the banks’ pie?

It’s more than just about wealth creation for this potential market – or for themselves. Prudential was seeing a worrying trend where only one in five high net worth families in Singapore had plans in place for the smooth transfer of wealth between generations. Their wealth was often locked up in homes or businesses, so they had no liquidity. They were also not adequately protected from personal, financial and business risks.

These insights led Prudential to craft an advice-and-service-led offering called Opus By Prudential. A team of 65 specially-trained private wealth consultants helps clients identify their needs, and provides advice on wealth management and legacy planning.

Opus by Prudential

At Opus, each customer is given their own servicing team to streamline and personalise the process.

Each Opus client has his or her own dedicated underwriter, case manager, and policy and claims team, for prompt, personalised service. Perks also include access to a VIP medical panel, and invitations to exclusive networking and lifestyle events.

AXA Insurance has a similar proposition called AXA Imperial Collection, which is a range of tailormade legacy, wealth, lifestyle and global medical solutions aimed at high net worth individuals. Coverage extends to private art, collectibles, jewellery, yachts, and luxury and performance cars. An entire suite of luxury concierge services are also available to clients 24/7 – they even have an AI-enhanced digital app that can make recommendations or book taxis.

Now that insurance providers are extending their expertise well beyond traditional protection, savings and retirement solutions to include wealth management and legacy planning, they are set to win the hearts of elite clients – and the generations who succeed them.

(Related: Spring Court: How Singapore’s oldest family-run Chinese restaurant found success across three generations)

Photo by Samson on Unsplash

This article is originally published on The Peak Singapore.

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