Keeping it all in the family
While not all parents insist that their offspring should take over the family business, many high-net-worth individuals are asking their children to learn about wealth management.
And this type of training has to start early. Wealth managers, such as JP Morgan Private Bank, are offering free programmes to their clients' children on wealth management-related issues.
A group of students and graduates in their late teens and early 20s recently took part in a three-week summer programme organised by JP Morgan Private Bank in Hong Kong.
'I think most people our age are more worried about making money,' says a recent graduate who does not want to be named. 'We possess the get-rich mentality.'
Other participants say that they do not have a good sense of what wealth management and private banks are about.
'A lot of us are about making quick money,' says the graduate, whose family business is in real estate. 'We tend to want instant gratification. I do believe it is important to look into the future and plan accordingly.'
Hong Kong-based Kam Shing-kwang, market manager at JP Morgan Private Bank, says participants are expected to manage their family businesses and wealth at some point.
Only 10 to 13 per cent of businesses started by a founder-entrepreneur make it past the second generation. However, more importantly, parents like their children to learn about the value of money.
'Parents regard education as an important issue,' she says. 'Apart from the technical knowledge on investments, they want their children to be compassionate and consider giving back to society - just like they are doing themselves in the area of philanthropy.'
Another participant sees the programme as an alternative to an internship.
'I decided to take part in this programme because I knew I would be exposed to a broad-based curriculum from which I would learn more than I would have with a regular internship,' says the participant, who is studying in the United States and does not want to be named.
'Apart from gaining a better understanding of private banking, I learned the importance of people skills and, clich?d as it may sound, working as a team. Private banking is as much about how you can deal with people diplomatically as it is of the knowledge you possess about investment and finance.'
The programme includes sessions on how the financial services industry works, what private banking is about and what it takes to work as a wealth manager.
Alternative investments, such as buying art and wine, are also covered.
Participants attend seminars covering the basics on stock trading, Bloomberg terminal training, portfolio construction, the value of diversification and risk management, and mutual fund asset allocation.
The programme also offers a taste of what an adviser does by giving tips to participants on pitching an investment idea.
Some participants say the programme gives them good insight into what it is really like working in the financial services industry - a career path that is appealing to many students and graduates.
'Most people see private banking as an attractive career path if they haven't figured out exactly what type of work they want to get into in the long run,' the US student says.
Family values are another important issue addressed during the three-week programme. 'Although it may seem obvious, I think a lot of us lose sight of the importance of finding a balance between business and family,' the US student says.
'If anything, the programme serves to make sure that we realise that the success of any family-run company extends beyond the business itself. We were reminded time and again that there also exists the need to protect personal relationships, ensuring that the family maintains strong ties.'
Participants come from all over the world, including Hong Kong, Taiwan, the US, Latin America and Southeast Asia.
Participants from overseas say coming to Hong Kong to attend the programme is a great opportunity to get to know the mainland.
A participant from Mexico says: 'When the opportunity was presented to me, I thought it would be a great chance to get acquainted with finance in Asia. After hearing so much about the region's economic growth, I found three weeks in Hong Kong very appealing.
'I expected to get a better understanding of China as a country and to learn how business is conducted in different parts of the world. I also thought that many of the subjects touched during the programme would be very useful in the years to come,' she says.
One thing the participants have in common is that they are expected to inherit their parents' businesses or estates, hence they are expected to understand the intricacy of family dynamics.
To prepare the next generation to handle fiscal and social responsibility, participants are given presentations on what it takes if they do decide to join the family business, issues related to wealth preservation and transfer, and philanthropy.
The participants say that the programme offers excellent networking opportunities.
More than 100 participants, representing 20 nationalities from around the world, took part. The programme was divided into three sessions with 30-plus participants.
'I met some great people on the programme. All lessons aside, I think the greatest part about this programme was the ability to gather an international base of individuals who come from similar backgrounds,' says the US graduate.