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ALMOST every culture has its version of the adage "rags to riches in three generations". Experts believe the next few years will witness the largest ever transfer of wealth from one generation to the next.
A study of billionaires by UBS and PwC reckons that the collective fortune to be transferred among today's billionaires is in the region of US$2 trillion. An earlier study by Accenture has an even larger estimate - and for the US market alone. It reckons that some US$30 trillion in financial and non-financial assets is poised to be transferred from Baby Boomers in the US - those born between 1946 and 1964 - to their heirs over the next three to four decades.
For those with substantial wealth, planning for a transfer that ensures not only an equitable distribution for future generations, but also the protection of core values and wealth itself, becomes crucial. As UBS and PwC pointed out in their study, billionaire wealth is often shortlived. Of the fortunes that have fallen below the billiondollar mark, 90 per cent did so within the first and second generation. More than 70 per cent have not remained intact beyond the first generation, and for 20 per cent, the wealth was gone by the end of the second generation.
In this edition of Ultra Wealth, we speak to experts about how wealthy families may approach this issue which can be difficult and complex. In the Trusted Adviser column, we speak to HSBC's Bernard Rennell who says it is important to think strategically about the ownership of a family business, and to keep this separate from strategic thinking about the assets themselves.
In our Roundtable, we have pulled together experts to share their views on what issues families commonly overlook and some principles of good practice for planning.
In our Spotlight profile, G S Sareen, founder of Omni United tyre manufacturer and distributor, shares his approach. His two sons will retain ownership of company shares. As for a potential role in management, it will all depend on their qualifications.
To Mr Sareen wealth is not just physical assets. The more important aspect, he says, is experience. "Monetary wealth gives you gunpowder to fight a physical battle the next day. Non-monetary wealth gives you experience to fight the battle. You need to be wise to figure out where the world is going."
This edition's Spotlight profile is a wide-ranging one. Mr Sareen shares his philosophy that forms his approach to life and business. Some things, he says, are not negotiable and these values drive Omni's direction. One commitment is to philanthropy and social responsibility. The firm, for instance, has partnered the Breast Cancer Research Foundation where it donates 25 US cents for every Radar tyre it sells. Radar is its primary brand. He eschews the notion, too, that one should seek to win at all costs. "There are certain things you don't do, not at all costs," he declares.
Meanwhile this edition offers timely insights into markets, as always. Tuan Huynh of Deutsche Bank Wealth Management offers perspectives on Europe where elections take place this year in Germany, France and possibly Italy. There are positive underpinnings - economic growth has strengthened; equity markets have trended up and a weaker euro provides a tailwind.
Credit Suisse's Rajesh Manwani looks into the keen interest that wealthy clients have shown in private markets. Private equity in particular has consistently outperformed public markets.
In our Philanthropy column, Robert Kee who runs the Operation Hope Foundation shares insights into how donors can ensure that their donations go the extra mile - by weeding out corruption. Mr Kee, who runs orphanages and training centres in Cambodia and Thailand for nearly two decades, has a wealth of experience in how to eke out efficiency in societies where corruption is almost a way of life.
In Real Estate, Knight Frank's Nicholas Holt takes a look at the global cities which have the highest concentration of wealth and the corresponding property values, offering a view on which markets could outperform.
And, in the Ultra Wealth column, Tara Loader Wilkinson speaks to Adrian Cheng, scion of Chow Tai Fook Holdings, a multibillion-dollar conglomerate. Mr Cheng is fired up about cross-cultural exchange and has set up K11 Art Foundation to promote Chinese art and incubate emerging Chinese artists.
We wish you a rewarding investment journey.