Banking, Entrepreneurialism, and the Next Generation of Wealth Holders 2020

For immediate release:

Next Gens driving evolution in family wealth management in Asia-Pacific

 

BNP Paribas Wealth Management and Campden Wealth today released Banking, Entrepreneurialism, and the Next Generation of Wealth Holders.  The report examines the next generation of ultra-high net worth individuals in Asia-Pacific: their education, professional experience, engagement with family businesses and investments, and expectations of banks.

 

About the survey

 

The following are some of the key findings from the report, which surveyed 92 Next Gen wealth holders in Asia-Pacific between July and December 2019.  Additional data was collected in May 2020 to get some indication of the effects of COVID-19. The average age of the Next Gens is 38 years, and the mean net worth of the families represented – including their original operating businesses – is US$640 million.

 

“In Asia, the family firm continues to be one of the dominant forms of company ownership,” said Arnaud Tellier, CEO of BNP Paribas Wealth Management Asia Pacific. “The next generation is now taking the reins and shaping the developments in the private market ecosystem. As one of Asia’s leading private banks, we must understand these future leaders.” 

 

Dr Rebecca Gooch, Director of Research for Campden Wealth, said the survey helped to uncover exactly how this generation is different from the last, and what their intentions are: “Are they going to be mere wealth holders, or wealth creators, too? For private banks, this is one of the many questions that will determine their value to clients in years to come.” 

 

Key findings

 

Next Gens are educated and experienced in finance, but keen to learn from their parents

 

Nearly half of the Next Gens surveyed are educated beyond Bachelor’s level (48%), and often in finance-related subjects (33%). Nearly half have also obtained work experience in finance (48%). Sixty-eight percent believe that they have greater knowledge of financial markets than their parents.

 

However, younger Next Gens are only looking to spend three or four years working in finance before joining the family enterprise.  There is palpable admiration amongst Next Gens for their parents’ business accomplishments, and they are keen to pick up operational skills directly from their parents. Study interviewees said:

 

Typically, Next Gens don’t want to be stuck at the banking level’, and “Mainly, I learned about finance and investment from my dad, and from actually running the family business. I think that element is common [amongst Next Gens].”

 

Technical and operational skills, a potent combination

 

The bulk of the respondents are involved in both operating their family business and investing their family wealth (45%). They are able to contribute through their understanding of incentives within financial institutions and the potential conflicts of interest; their technical understanding of products; their ability to integrate technology, and their global networks.

 

Over three-fifths identify as business owners (62%), and notable proportions have diversified away from their family’s core industry – most commonly manufacturing – and moved into asset management / alternative investments (24%) and technology (15%).

 

Improvements sought in governance, diversification, and professional management

 

Looking to the future, Next Gens believe that improvements in family wealth management can be made by implementing governance frameworks (37%), diversifying holdings (36%), and relying on professional managers (33%).

 

“Next generation ultra-wealth holders are bringing their unique vision to wealth management and banking in Asia. Being highly educated, entrepreneurial, and financially savvy, they are adopting new approaches to grow their family fortunes,” said Dr. Gooch. 

 

“This includes further professionalising their wealth management structures/family offices, and angling for further investment diversification, particularly within private markets and sustainable investment. They are also harnessing new technology and global networks to outpace the competition, and assessing how to utilize the power of banks to finance their operations and acquisitions.”

 

Balanced portfolios, with real estate ranking top.  Investment focus shifting from public to private markets

 

The average family represented in the study allocated similar shares of its portfolio to private and public investments, with real estate, the top asset class, accounting for 20%, followed by liquid fixed income and liquid equities (17% each).  Compared with families with under US$250 million, families with US$250 million+ allocate, on average, about 9% more of their portfolios to illiquid assets (including private debt, private equity, real estate, and art).

 

The investment focus is shifting away from public markets, with strong interest amongst Next Gens in private equity and venture capital, and in direct investments, in particular. One study interviewee said:

 

Naturally, I meet more young people than my parents do; hang out with them, and come across start-ups.  I find it a lot more exciting, and I love to get to know the teams from very early stage.

 

High level of engagement in sustainable / impact investing

 

Roughly one half of Next Gens are engaged in sustainable (51%) and impact (48%) investing.  But Next Gens want more clarity and proven opportunities in their specific sectors.  Mainly – and reiterating their inclination for direct engagement – Next Gens are interested in making their own businesses more sustainable, impactful, and responsible, without unduly affecting their bottom lines.  They are looking for counsel – not to be sold products.  For many, COVID-19 is likely to result in growth in socially and environmentally conscious investments.

 

Next Gens are looking to rationalise banking relationships

 

Financial service providers face a challenging future.  Next Gens are loyal and grateful to banks that have supported their family enterprises: the top criterion in selecting a bank is the family’s relationship with it (42%). But this is only the starting point. Next Gens will carry out a rationalisation of banking relationships – going from working, on average, with 7-9, down to 4-6 banks.  Ultimately, they select banks based on their specific edge.

 

Banks will need to offer a full range of services. Next Gens want strategic reviews of acquisition targets (35%) and M&A advisory (17%). The majority use / plan to use banks to arrange or directly finance acquisitions (67%) and finance business operations (78%). Next Gens want proactive forecasts (81%) and to be treated like institutional clients (80%).

 

Banks will further need to build up research and connection platforms and private investment capabilities, explains Mr Tellier of BNP Paribas, and reengineer operating platforms to better serve the goals of Next Gens. “Next Gens want to see more in terms of product development, accessibility, affordability, and transparency. They want some of the heavy lifting to have been done,” Mr Tellier said. “In the coming years, we will have to hire technically proficient advisers and continue to attract and retain bankers for the long-term. They will be required to move beyond sales-orientation and adopt a more consultative approach.”  

 

 

For media enquiries, please contact

 

 

Kristen Carter

Pamela Chew 

Brand & Communications, APAC

Brand & Communications, Southeast Asia

Email: kristen.carter@asia.bnpparibas.com  

Email: pamela.chew@asia.bnpparibas.com  

Tel: (852) 2909 8821

 

Nick Hayward

Executive Director APAC, Campden Wealth

Email: nickhayward@campdenwealth.com

 

 

Tel: (65) 6210 1291

 

 

About BNP Paribas in Asia Pacific www.apac.bnpparibas

 

In Asia Pacific, BNP Paribas is one of the best-positioned international financial institutions with an uninterrupted presence since 1860. Currently with over 18,000 employees* and a presence in 13 markets, BNP Paribas provides corporates, institutional and private investors with product and service solutions tailored to their specific needs. It offers a wide range of financial services covering corporate & institutional banking, wealth management, asset management, insurance, as well as retail banking and consumer financing through strategic partnerships. 

 

Worldwide, BNP Paribas has a presence in 72 markets with more than 202,000 employees. It has key positions in its three main activities: Domestic Markets and International Financial Services (whose retail-banking networks and financial services are covered by Retail Banking & Services) and Corporate & Institutional Banking, which serves two client franchises: corporate clients and institutional investors. Asia Pacific is a key strategic region for BNP Paribas and it continues to develop its franchise in the region.  

* excluding partnerships

 

 

About BNP Paribas Wealth Management https://wealthmanagement.bnpparibas/en.html

 

BNP Paribas Wealth Management is a leading global private bank and the largest private bank in the Eurozone. Present in three hubs in Europe, Asia and the United States, it employs over 7,000 professionals who support private investors in protecting, growing and passing on their assets, bringing long-term value to themselves, their families and society. The bank has €377 billion worth of assets under management as at 30 June 2020 and was recently named “Best Private Bank in the World” in Europe, in Hong Kong and in US West. 

 

 

About Campden Wealth www.campdenwealth.com

 

Campden Wealth is a family-owned, global membership organisation providing education, connectivity, research and networking opportunities to families of significant wealth, supporting their critical decisions, helping to achieve enduring success for their enterprises and family offices, and preserving their family legacy.

 

Campden Research supplies market insight on key sector issues for its client community and their advisers and suppliers. Through in-depth studies and comprehensive methodologies, Campden Research provides unique proprietary data and analysis based on primary sources.

 

Campden Wealth owns the Institute for Private Investors (IPI), the pre-eminent membership network for private investors in the United States founded in 1991, and the Campden Club, a global membership network for families and family office executives. Campden further enhanced its international reach with the establishment of Campden Family Connect PVT. Ltd., a joint venture with the Patni family in Mumbai in 2015.