For nearly 80 years, HSBC Trustee has been helping families preserve wealth and legacy
Asia-Pacific set for an intergenerational wealth transfer estimated at US$5.8 trillion, but HSBC report finds many families lack a succession plan
As Asian economies continue their upward trajectory, the needs of high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals for effective intergenerational wealth transfer are also growing.
According to a recent report by the consulting firm McKinsey, an estimated US$5.8 trillion is expected to be transferred to the next generations in the Asia-Pacific region by 2030. However, the 2024 HSBC Global Entrepreneurial Wealth Report reveals that 66 per cent of respondents from Hong Kong do not have a wealth transfer plan, while 64 per cent have yet to create a succession plan for their businesses.
“The percentage of Hong Kong entrepreneurs without a business succession plan is significantly higher than the global average of 52 per cent,” says Christina Tung, HSBC Global Private Banking’s head of trust and fiduciary services for North Asia. “On top of that,” she adds, “more than one in three Hong Kong entrepreneurs are planning an exit in the next five years, compared to a global average of 23 per cent. There is an urgency for these families to plan for the transfer systematically and structurally.”
Wealth transfer planning for the modern family
Given the complexities of intergenerational wealth transfer in a contemporary global context, financial planning has moved beyond estate administration, custodian arrangements and trust structures for tax planning.
“Modern trusts require robust professional trustees who work alongside families, professional advisers and private banking relationship managers to navigate legal and regulatory requirements,” says Brent York, global head of trust and fiduciary services at HSBC Global Private Banking. “The bank’s ambition,” he adds, “is to be the world’s leading wealth manager and global private bank for Asian and international clients and entrepreneurs.”
HSBC is already one of the largest trustees in the market with a global network of more than 300 employees, including lawyers, accountants and qualified trust specialists. It stands out as one of the few major bank-owned trustees operating in an industry marked by consolidation. It also differentiates itself from many competitors that typically manage only financial assets within straightforward, standardised structures.
With US$240 billion assets under management and a proven track record over nearly 80 years, HSBC’s team is well-positioned to help wealthy families put effective and structured succession plans in place.
“We are seeing many families that span three or more generations and are located across the globe,” York says. “At the same time, businesses and investments are more international. So, creating a legacy and ensuring the family wealth is passed on to multiple generations is of great importance to the matriarchs and patriarchs of these families.
“Our dedicated trust relationship management teams, strategically located in Hong Kong, Singapore, Jersey and the US, are exclusively assigned to each client,” York continues. “HSBC’s personalised approach to helping families successfully transfer their legacy to the next generations ensures global and country-specific solutions that cater to their diverse needs.
“Leveraging our extensive network of onshore and offshore global private banking teams, the connectivity and breadth and depth of services we can provide across Asia, Europe, the Middle East and the US are pivotal in supporting our clients with increasingly complex multi-jurisdictional needs that span both personal and business dimensions.”
One of the top priorities in protecting wealth and values for these multigenerational families is establishing a governance structure to ensure that fortunes pass smoothly and amicably to the next generation, avoiding the “shirtsleeves to shirtsleeves in three generations trap”.
“Many families are grappling with questions such as who will manage the family wealth, how to avoid family conflict, what checks and balances should be put in place, and how to sustain their philanthropic ambitions, along with the issue of how and when wealth should be distributed,” York says. “Given what’s at stake, families need trusted professionals to help them with not only the legal and tax aspects of succession, but also the ongoing management, governance and oversight of the family wealth.”
Multigenerational wealth management expertise
HSBC has been serving the needs of families for generations, supporting them through various stages with services ranging from investment matters and liquidity events to insurance protection and philanthropic goals. In the case of one distinguished family, HSBC first established a relationship with it 138 years ago and then has acted as its trustee for the past 73 years.
Established in 1946, HSBC Trustee has been acting as a trustee for four or more generations of clients. Integral to HSBC Global Private Banking, HSBC Trust and Fiduciary Services serves as a core in-house trust platform. With a strategic focus on multigenerational wealth across multiple jurisdictions, it adopts a personal approach, working hand in hand with clients to develop and safeguard their legacy business while taking care of their family members around the world.
“We specialise in advising, designing and implementing bespoke trust and fiduciary solutions for clients across jurisdictions,” York says. “Our services include holding a wide range of assets, such as financials, real estate, private equities and trophy assets, within structures that are designed to span generations. For certain clients,” he adds, “we are uniquely positioned to help with wealth and family business succession planning.”
In addition to ensuring smooth wealth or business transitions, HSBC’s trust relationship team can assist in planning for a wide range of needs, from day-to-day living and medical expenses to education costs. This enables loved ones to maintain the lifestyle and standard of care they are used to, without the burden being placed on individual family members.
“Where a settlor passes away leaving minor beneficiaries, for example, we can help settle school fees, flight tickets and maintenance to ensure the children and spouse are worry free,” Tung says.
“We can also set up trusts for special-needs children to ensure their care in cases where there are no surviving guardians, and to look after elderly family members who may experience deteriorating health and capacity issues.”
Supporting family values
Having achieved success, many HNW and UHNW families want to give back to society and build a legacy that reflects their principles and beliefs.
“Many of our clients have reached a point where they wish to create meaningful social impact through charitable giving, preserving their shared values and legacy,” Tung says. “HSBC stands apart as the largest trustee company in Hong Kong providing end-to-end philanthropic services under one roof, enabling clients to focus on their charitable vision while we handle the execution. We are one of the very few bank-owned trustees in Hong Kong able to establish a tax-exempt charitable trust on behalf of our clients.”
Tung cites the case of one of HSBC’s private trust clients who had made occasional charitable donations but aspired to create a structured and impactful philanthropic strategy.
“Through detailed consultation, our team identified his passion for animal welfare causes. We conducted thorough due diligence on various animal welfare organisations and helped him establish a systematic giving framework. We now provide regular impact assessment reviews, ensuring his philanthropy work creates meaningful change in animal protection and welfare initiatives,” Tung says.
Eye on the long-term horizon
HSBC’s report finds that more than 70 per cent of Hong Kong entrepreneurs want to preserve and transfer their wealth to the next generation but are underprepared. While that underscores the importance of professional succession planning, it also suggests the demand for family offices in Hong Kong is set to grow, thereby strengthening the city’s position as one of the top financial centres in the world.
This also translates to significant potential for further growth in HSBC’s trust and fiduciary services. “Given HSBC’s 160-year heritage in Asia, our bank is aware of the important role family businesses play in creating wealth, and the challenge of finding the right strategy to solidify the family business and support the longevity of family wealth,” Tung says.
But the best is yet to come, York says. “Building, preserving and passing on a meaningful legacy involves much more than investments. What excites me is seeing effective succession plans being prioritised and executed, which is happening more frequently as more families adopt trusts, foundations and other wealth structures to manage their family assets.”
Disclaimer from HSBC:
The information contained in this article has not been reviewed in the light of your individual circumstances and is for information purposes only. It does not purport to provide legal, taxation or other advice and should not be taken as such. No client or other reader should act or refrain from acting on the basis of the content of this article without seeking specific professional advice. Issued by The Hongkong and Shanghai Banking Corporation Limited and HSBC Trustee (Hong Kong) Limited.