Lee Wong is Head of Family Services, Asia at Lombard Odier. A lawyer by training, she is also a regular trainer for the Wealth Management Institute as well as Singapore Management University Academy for wealth planning and family offices.
The great wealth transfer is upon us. In the next decade, trillions of dollars will pass down a generation. Of the USD 18.3 trillion of collective wealth expected to be transferred, centi-millionaires — individuals with a net worth of at least USD 100 million in investable assets — will account for more than half of this amount. The ratio represented by this top wealth tier is even higher in Asia, at more than 60%. At USD 1.6 trillion, this is approximately equivalent to the GDP of South Korea in 2022. The rise and fall of this segment of dynastic wealth has the potential to cause seismic shifts in the global economy.
Wealth of this scale has the potential to do a lot of good or inflict a lot of harm, not just to the families in question but also to those around them. It is essential then that wielders of power over such massive wealth recognize their role as stewards and take a purpose-led approach to wealth management for their families to flourish and persist across generations.
It would be naïve to think it is possible to keep a family together with money alone. Without a unified vision of the future that a family desires to create together and their mission to make it happen, it would be difficult to inspire commitment, create continuity, and build cohesion across branches and different generations as the family constellation grows. When a family is able to articulate their vision of a better tomorrow for themselves and society at large, they have a purpose to strive towards.
How should a family define their purpose? To answer the question, one inevitably needs to dig deep into their family value system — what defines us as a family? What do we stand for? How would we like to be remembered? Clarity on their philosophy on wealth and issues around social responsibility will help centi-millionaire families to align to a code of conduct and core beliefs that form the basis of their interaction with each other as well as their communities.
Stories of ugly family disputes are aplenty. Some have even been made into movies, such as Ridley Scott’s 2021 “House of Gucci”. At the heart of most family disputes are mismanaged expectations, disgruntlement, and resentment resulting from perceptions of being unfairly treated or disrespected. Emotions can run very high when families fight over money, especially when that money is over USD 100 million. What is often overlooked is how family members associate their access to money to their worth and place in the family. The key to avoiding such catastrophe is clear and transparent rules of engagement around shared family wealth that are built upon the foundation of an aligned value system.
Let us face it, conflicts exist in all families. Disagreeing with others — even loved ones — is part and parcel of all types of close relationships. The way families handle conflict is what is important. A safe space where open and honest communication is allowed to take place, where diverse opinions are heard and acknowledged, and where differences are worked on with respect is crucial. Such conflict management will put centi-millionaire families in good stead to fortify bonds and emerge stronger.
Pulling our gaze away from centi-millionaire families to their communities, in 2015, the UN member states agreed upon the 17 Sustainable Development Goals (SDGs), which aim to end poverty and hunger, fight inequality and injustice, and ensure the lasting protection of our planet and its natural resources by 2030. Today, we are less than 10 years away from 2030 but what is the state of our world? Our planet is paying the dues of an economic model that is wasteful, idle, lop-sided, and dirty. In recent years, we have been plagued by heat waves, floods, and wildfires that destroyed infrastructures and caused the loss of lives and biodiversity. Private capital has an important part to play in supporting the transition to a more circular, lean, inclusive, and clean economy.
To solve any one of the SDGs is arguably audacious. What else is better placed to be audacious than private capital that has the capacity to be nimble, long-sighted, and patient? To quote billionaire philanthropist Bill Gates, “[W]ith great wealth comes great responsibility, a responsibility to give back to society and a responsibility to see that those resources are put to work in the best possible way to help those most in need.” A family pact to take on an audacious mission is a great way to unify the family and strengthen its bonds. It would be a mistake though to assume that there can only be one way to express impact.
Alignment built on common purpose and values allows centi-millionaire families the freedom of imagination for implementation and permits flexibility to cater to the aspirations of individual family members who may hold different perspectives. Focus on social capital, family capital, or financial capital does not need to be mutually exclusive. Impact can be expressed in multiple ways — there is nothing stopping centi-millionaire families from concurrently transforming their family business to become carbon neutral, taking an impact-first approach to managing their family wealth, and driving catalytic change through philanthropy.
A family that is united by its mission and vision is a family of stewards who carry a sense of responsibility around wealth that looks to future generations. By being diverse but undivided, such a family not only honors the unique qualities and attributes of individual members, but it also harnesses their united strength as a powerful force for good.