Money is root cause of disputes
Wealth and money have caused conflict in more than half of affluent families in Hong Kong. That is the conclusion of a report released by British investment bank Barclays.
Inheritance and succession are major factors in causing problems resulting in family disputes. The report reveals that 40 per cent of the world's wealthy have had disputes with their families.
Hong Kong respondents who have higher levels of wealth, especially those with more than HK$100 million or those who have inherited their wealth, are more likely to have experienced such conflict. However, those with higher incomes are less likely to clash with their families.
About 55 per cent of people earning a salary of less than HK$1.2 million say they have experienced arguments and conflict due to family wealth, compared with only 27 per cent of those earning more than HK$6 million.
About 70 per cent of Hong Kong's high-net-worth individuals (HNWIs) value the importance of seeking professional advice when it comes to inheritance planning. But despite this view, more than half say they do not have a will or testament in place. Globally, 60 per cent of respondents say it is important to get professional advice when deciding on an inheritance plan for their children and stepchildren. Seven out of 10 respondents in Hong Kong agree with this sentiment and expressed the need for expert advice to guide them through the decision-making process.
The 'Transfer of Trust: Wealth and Succession in a Changing World' report is based on a global survey of more than 2,000 HNWIs. It provides an in-depth analysis into wealthy individuals' attitudes towards wealth transfer and succession planning, while offering insights into what the future holds for the next generation. It also looks at how wealth can be the cause of many problems, leading to distrust and conflict.
The report also found people in Hong Kong are most likely to make financial decisions independently from their families.
The report reveals that Hong Kong has the highest proportion of HNWIs who are in charge of their family's financial decisions without input from other family members, such as parents, but only 41 per cent of Hong Kong respondents share similar values to their parents.
Few believe it is important to follow the same career and business route as their parents. Only 31 per cent of Hong Kong respondents expect the next generation to follow their own career footsteps, compared with an Asia-Pacific average of 41 per cent.
Thelma Kwan, head of wealth advisory at Barclays Wealth Asia-Pacific, says: 'This report provides an in-depth study into the attitudes of high-net-worth individuals towards succession planning. It is clear that with wealth comes an increasing complexity of choice and, in some cases, this can result in concerns about trust and conflict when considering the intergenerational transfer of wealth. Understanding options for succession planning in advance and seeking professional advice can help address these fears and provide confidence that your wealth will be wisely managed in the future.'
Although there are potential tensions associated with succession and wealth, the report found that, in global terms, those who are wealthy remain committed to passing on their assets to the next generation. In Hong Kong, only 5 per cent believe this should not be the case.
The report found that 65 per cent believe wealth should be divided equally among their children. The majority believe the decision on how to split their wealth is based on their children's financial needs and willingness and ability to take over their businesses, with gender and birth order being least important in the decision.
Wealthy respondents were also asked about worries and major challenges that will face future generations and ways to prepare for future success.
Economic turbulence was cited as one of the biggest challenges faced by the next generation, along with anxiety over the future of the economy.
The second most cited concern in Hong Kong is employment opportunities.
These concerns are consistent with the global survey, which reflects the financial and economic problems faced by many countries today.
As a way of preparing for the future, Hong Kong respondents say education in information technology, social sciences and languages is more important than art or philosophy studies.