The great wealth transfer

06 March 2023

The Great Wealth Transfer - As a large proportion of the worlds wealth starts to shift to the next generation, what does this mean for wealth management? 

Dominique Burnett, Director at Fairway has worked in the Trust sector for over 20 years, with previous roles within the trust arms of well-known accounting and tax advisory firms, an owner-managed trust group based in the Asia Pacific region, as well as holding the role of director at a Family Office. She recently spoke with BL Global regarding the Great Wealth Transfer. 

"Inter-generational transfer of wealth is not a simple matter of moving asset ownership down the family tree: fiduciary service providers need to take a holistic approach to keep up with next generation requirements, looking to their own infrastructure and even culture.

ESG is a fundamental pillar of any next generation investment strategy; we find the focus has very much shifted towards ethical investing. Fairway are seeing an increased number of clients looking specifically for ESG strategic portfolios when they establish asset holding structures.  Wealth managers can attract business by implementing their own ESG strategies, setting an example in the way they conduct business. Technology is another key element in this approach. The next generation are very tech savvy and are used to ultra-efficient processes. When a client can open a bank account by clicking on an app, it creates an expectation that other financial services can be accessed as quickly and simply. Organisations will need to provide excellent client service and invest heavily in technology that can provide enhanced onboarding, data management and reporting capability. We are already seeing some investment managers providing an outsourced CIO service, which perhaps was unthinkable 10 years ago.

Having the correct advisors in place is crucial to the successful transfer of wealth. Organisations that can provide a multi-faceted approach will be best placed to attract large family offices. To look at the Middle East as a region, there are large numbers of family-owned businesses that are ill-prepared for the transfer of wealth, with no clear succession plan put in place. Compounding this are forced heirship and shariah principles, meaning that service providers need to use legislative changes to their advantage and be nimble in their approach.

Fairway believes that the working relationship between trusted advisors and service providers needs to be aligned as early as possible, to capitalise on those structuring opportunities. Trust companies will play a major role in the smooth transfer of wealth between generations and it is important that robust and legally enforceable structures are used as part of the solution, so that there is a clear and concise plan ahead of any inheritance or gift."

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