Succession Planning Secrets Of Ultra Wealthy Families
13th December 2016 Tara Loader Wilkinson
Ultra affluent Asians are increasingly looking to give their wealth a purpose by investing in beneficial causes and leaving a legacy for future generations.
Lynn Fung, the daughter of multi-millionaire Hong Kong tycoon Peter Fung, has been surrounded by beautiful antiques for as long as she can remember. Her father would not bring home fancy toys or new gadgets; he preferred to invest in timeless pieces from the Ming and Qing dynasties.
Even as a child, she realised the value of these historical artefacts that she lived with, sat on and slept in.
“As a child I would worry about breaking them,” she recalls. “I remember I had an antique school desk at home, and one day, working on a crafts project, I used a pen knife to cut a piece of cardboard. It was only as I was pressing down on the knife and dragging it across my desk that I panicked and remembered that I didn’t put anything underneath, and there was a huge, deep scratch across the surface. And of course, while my father wasn’t happy about it, this was also where I learned an important lesson.”
Since the desk incident, Lynn did a much better job of looking after the antiques in her home. So much so that this year her 68-year-old father, who made his fortune as a banker and later through an investment firm, appointed her to manage his new Liang Yi museum this year. The museum is Hong Kong’s largest private museum and contains some 400-odd pieces of his collection.
It was Lynn’s passion for antiques, inherited from her father, that made her the ideal custodian of the 20,000 square foot private museum, which opened earlier this year on the buzzing neighbourhood of Hollywood Road.
Having grown up with antiques, Lynn has curated the collection to feel 'lived-in', she says.
“My father taught me these pieces of furniture are meant to be lived with and used. That is why when you enter the museum, you will see that we have an open-access policy, meaning that we encourage our visitors to touch, feel, stroke and really get up close and personal with our furniture. If we were to keep them behind glass and barriers like precious pieces of art, it would be that much more difficult for people to appreciate them,” she says.
Ever since the opening in March, Lynn has taken Liang Yi beyond merely museum status. Her emphasis has been on the educational aspect above all, launching Liang Yi Talks, a monthly educational series of seminars which are free to the public. The idea is to highlight different aspects of Asian culture and heritage, and create a forum where ideas can be discussed, and a good debate or two can be enjoyed.
When Lynn and her sister eventually inherit the collection from their father, what will they do? The plan is to keep the museum just as it is and continue their father’s legacy.
“Since our museum is here for the long-term, we hope to continue showcasing and exhibiting the collection in Hong Kong, as well as loaning them to museums overseas to encourage more interest and academic research in this part of our cultural heritage,” she explains.
The Fung family encapsulates the theory that today, what matters most to ultra high net worth (UHNW) families in the 21st century, is giving their wealth a purpose. Of course, Peter Fung could have spent his money on expensive property, flashy cars or super-yachts, but he wanted to create something which would leave a beneficial mark on the face of the planet, after he was gone, that his children could maintain and cultivate and pass down to future generations.
While first generation entrepreneurs may seek to show off their assets through shows of ostentatious wealth, or to accumulate greater wealth through reinvesting into their business, for today’s high net worth Asian families, successful transition is what is keeping them up at night.
Last month, law firm Withers published research from interviews with a pool of high net worth families from all over the world, which supported this view.
“For wealthy families across the world, we found that simply having large amounts of money to invest is not enough to provide purpose and cohesion to the broader family group,” said Withers Partner, Katie Graves. “Having come to realise this, wealthy families are responding by putting their wealth into effect to yield positive changes in their communities.”
Of course wealthy families from different continents are at different points in the wealth cycle. While North American and European families have experienced multi-generational shifts between operational business to financial family structures, in Asia this is just beginning. And when change happens quickly, family relationships are brought under intense pressure particularly when selling out of an active business ownership to to an investment-based footing, or vice versa.
The next generation is about to see the largest global transfer of wealth in history, and Asia is leading the fray. Although the US and Europe grew UHNW wealth faster than Asia last year, Wealth-X forecasts that Asia will generate more UHNW individuals and wealth than both regions, in the next five years. At the current growth rate, Asia’s UHNW wealth will eclipse that of Europe’s in 2017 and the US in 2024.
This is why creating bonds over a shared purpose is particularly important in this part of the world, pointed out Cath Tillotson, managing partner at research firm Scorpio Partnership.
“Maintaining commonly-held reasons for working together as a family is a continual process and crucial to the survival of the family unit,” she said.
“Whether selling a business, setting up a foundation or passing control of wealth, families should ask themselves, ‘why are we doing this?’ at each transitional stage to find the common objective that keep them and the family wealth intact.”
Reproduced with permission from Wealth-X. For more information please visit www.wealthx.com