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Cultivating Next Gen leaders
FANCY a ''Frontier Conference'' in Silicon Valley where your teen or young adult son or daughter can be immersed in disruptive technology?
Or a chance to listen to and mingle with Nico Rosberg, a former Formula One race driver who is now a tech entrepreneur. These are some highlights of the Next Generation (Next Gen) programmes of Citi and UBS, respectively, which give just a peek into the myriad ways in which private banks are cultivating the children of their wealthy clients.
Next Gen programmes have been a feature of the private banking landscape for more than a decade. While a bank may typically have just one programme a year, with around 30 participants, some banks now roll out multiple events a year. Such programmes are not directly revenue generating, but they are seen as a necessary feature of a comprehensive service offering. This is particularly so as a younger generation of clients may not necessarily stay loyal to their parents' bankers.
Their efforts have come none too soon. Asia-Pacific is at the cusp of the largest wealth transfer between generations globally. UBS' Billionaires Report 2016 estimated that 460 billionaires in the region are expected to pass US$2.1 trillion in wealth to the next generation over the next 20 years, an amount equivalent to India's GDP in 2015.
There are common threads running through banks' programmes. These include sessions on entrepreneurship, portfolio management, philanthropy, and increasingly, impact investments and sustainable investing which are themes of great interest to millennials.
Citi Private Bank has been running Next Gen programmes since 2002 for children of its ultra high net worth clients (net worth at least US$25 million). The bank refreshed its programme in 2017, in an effort to cater to a wide spectrum of needs.
Says Money K, Citi global next generation managing director: ''The next generation is not a single, homogenous segment. They are in their 20s, 30s, 40s... and even in their 60s. In many countries and cultures, there are still 60-somethings who are yet to inherit the family business or wealth.''
He said families have three key concerns: preparing the next generation for succession; future-proofing and sustaining the family business in an era of globalisation and disruptive technologies, and sustaining the family legacy.
There are now four key programmes: The Frontiers Conference to introduce the younger generation of clients to disruptive technologies. This is hosted in Silicon Valley and response has been overwhelming. There is also the Foundations Conference on issues such as corporate finance, legacy planning and entrepreneurship; the Empowering Leaders Programme for more matured heirs; and Business Family Summit.
UBS has been running Next Gen programmes for 15 years. Its flagship programme is the Next Generation Foundation, where scions aged 20 to 27 gather over six days to ''discover and enhance'' their impact as entrepreneurial team leaders. Mr Rosberg was a speaker this year. Jan Boes, UBS client strategy officer UHNW Apac, says: ''We foresee that tomorrow's client base will be more diverse, entrepreneurial, global and younger.''
The bank has a number of other initiatives that build Next Gen communities. One is the UBS 20/20 Social Impact Leaders Group, which brings together young leaders who are passionate about philanthropy, social investments and creating positive social change. The group meets quarterly and some have set up businesses with a focus on sustainable investing.
There is also the Second Generation Organisation, a circle of Next Gen leaders from some of the most successful business families in Asia.
Credit Suisse aims to provide not just a one-off experience, but a ''continuing journey'' from education on entrepreneurship while the scions are at school age, to preparing them to inherit the family business and helping with wealth transfer and legacy planning.
The bank's Young Investor Program (YIP) is run in partnership with professors of the University of St Gallen. More than 1300 participants from all regions have taken part in the week-long programme to date, and have formed an alumni, Young Investor Organisation, which meets annually in different regions. YIP has an Asian edition which is attended by about 40 participants annually since 2011. There is also a biennial Family Ties Program, which brings together the parent and scion from the same family to explore issues of relevance for both generations.
At Bank of Singapore, the latest edition of its Next Gen programme was held in Hong Kong, attended by about 30 scions of clients across its core markets. The event included a one-day trip to Shenzhen, where participants visited tech giants such as Tencent and Huawei and got insights into future tech trends.
Derrick Tan, BOS global market head (Greater China and North Asia), says: ''Beyond academic and practical training, we also want to reinforce the value of hard work, integrity, teamwork and relationships - Asian values that clients would want their children to be mindful of when they eventually inherit their parents' wealth or take over the family business.''
DBS Private Bank runs a Future Leaders programme for about 30 of clients' children annually, which is typically ''heavily oversubscribed''. A similar programme is also run for Treasures clients.
Entrepreneurship is a recurring theme; a full day is devoted to issues around building a business from the idea stage. Entrepreneurs and business leaders are roped in as speakers. There are also talks on environmental issues and social impact, which are issues of passion among millennials. The 2018 edition in August carries the theme Families and Sustainability, and includes success stories of families who managed their succession well.
''We believe the attendees of our programme are truly the ''future leaders'' of tomorrow. They will be our future clients and today they are preparing to take over the family business, start their own business or begin their professional careers,'' says Peter Triggs, DBS Private Bank wealth planning senior adviser. W