Asia’s great wealth transfer is also a business transition

WHEN I ask my clients representing Asia’s richest families where their wealth came from, the answer is almost always the same: a business.

Close to two-thirds of HSBC’s private banking clients in Singapore are entrepreneurs, and among the balance of a third, most are one generation removed from a founder.

Much of Asia’s wealth remains tied to the businesses that created it, often through significant holdings in private companies. That single fact explains much of what is reshaping wealth management in Asia.

Entrepreneurial wealth behaves differently from the inherited fortunes around which the industry’s traditional model was built. It is often illiquid, concentrated and inseparable from questions of business ownership, capital and succession.

Increasingly, private banking relationships begin long before a liquidity event, supporting entrepreneurs while wealth is still being created rather than only after it has been realised.

For us, that often means bringing together expertise across corporate and institutional banking and private bank to help clients grow their businesses while planning for the future of their wealth and families.

Founders are often asset-rich but cash-light, with most of their wealth locked in illiquid shares while family needs continue regardless. Demand for financing against private holdings and for succession planning before a liquidity event has grown accordingly.

Succession is no longer just an estate planning exercise, but a business question: who runs a company, who owns it, and whether those should be the same people.

A transfer without a playbook

The scale of what is coming sharpens the point. Asia’s great wealth transfer is unlike Europe, where families in their fifth or sixth generation have institutionalised the habits of succession.

SEE ALSO

Taiwan’s ultra-wealthy turn to Singapore for succession, regional expansion

How Asia’s next generation is rewriting legacy through entrepreneurship

Much of the region’s wealth was created only in the past few decades. This means many founders are navigating succession for the first time. There is no inherited playbook.

The transfer is doubly complicated because it is rarely just generational. The underlying businesses are themselves in transition, from traditional industries towards the new economy.

Families are handing over the wheel while changing the engine, and the two projects cannot be sequenced neatly, since decisions about ownership shape what the business can become, and decisions about the business shape what there is to inherit.

The next generation does not only inherit wealth; it also inherits the responsibility to steward both the business and the family legacy.

Institutions that have administered family wealth across generations draw a consistent lesson from that experience.

Our trust business, marking its 80th anniversary this year, has seen this play out across generations of families: The legal structure is only the starting point.

A trust is hardware. Governance – the values, decision rights and rules that determine who may join the business and how those who step back are treated fairly – is the software. Families that invest only in the hardware usually discover its limits at the worst possible moment.

Why Singapore

Singapore sits at the centre of this nexus between family and business, and not by accident.

HSBC’s Global Entrepreneurial Wealth Report last year found Singapore to be the most attractive hub in the world for business owners, with 15 per cent of entrepreneurs surveyed globally planning to move wealth here and more than one in 10 considering relocating themselves.

The single family office population has passed 2,000. The composition of flows has changed. Money booked in Singapore once came mainly from South-east Asia. It now arrives from India, Greater China, the Middle East and Europe as well, drawn by families whose businesses, assets and lives already span multiple jurisdictions.

What these families seek is not simply a stable jurisdiction, but connectivity to global markets, expertise and opportunity.

Increasingly, entrepreneurs expect their private bank not only to manage capital, but also to help create opportunity. That is where a truly international bank has an advantage.

That expectation is especially evident among the next generation, which increasingly values networks, innovation and access to private markets alongside portfolio management.

Preparing future family leaders therefore requires more than investment advice; it means helping them develop the judgment, governance skills and networks needed to steward businesses and family wealth.

Leading private banks are also responding by expanding access to institutional-quality private market opportunities and innovation ecosystems that were once difficult for individuals to reach.

We have established a platform to enable eligible private banking clients in Hong Kong to invest alongside institutional clients in selected technology and startup companies, co-investments and venture capital funds. Singapore clients may expect to gain similar access later this year.

Asia’s great wealth transfer is about far more than passing on assets. It is about passing on businesses, responsibility and ambition.

The institutions that recognise this – and support entrepreneurs while wealth is still being created – will earn not only the next generation of Asia’s wealth, but also its trust.

The writer is head of private bank, South Asia, HSBC