March 2, 2021

I.H.T. Special Report: Net Worth: Learning to Manage the Family Wealth

Mr. Meneses, 30, is an executive of the family-owned Meneses Group of Companies, which manufacture and distribute pharmaceutical, cosmetic and veterinary products in the Philippines.

His parents, who are still involved in the business though not in day-to-day management, had been encouraging him for years to attend HSBC Private Bank’s Legacy Program, a four-day event that teaches participants the responsibilities of managing family wealth.

Mr. Meneses resisted, saying that he had too much to do and that his days could be better spent learning on the job.

“I changed my tune when I attended this May,” Mr. Meneses said. The analytical skills he learned during the program — which included sessions on family business succession and governance, investment principles and dynamics, family philanthropy and foundations — have already proved “invaluable over the past few months,” he said.

Several private banks, including UBS, Citigroup and Barclays, now run tailored programs for the children of their high-net-worth clients. The banks report that attendance has been growing among ultra-high-net-worth Asian clients, those with investable assets in the bank of over $50 million.

In early July, Credit Suisse held in Singapore a five-day “Legacy Program: Perspectives for the Next Generation” with about 30 participants aged 20 to 30 from across the region. The bank said demand from clients prompted them to run a second Mandarin-language version of the program in August.

Standard Chartered ran an intensive six-week Summer Business School, also in Singapore, where students, typically from 20 to 30 years old, were given real-life business strategy projects to work on while also having access to the bank’s senior strategists for coaching and mentoring sessions.

Donna Leong, managing director of family wealth advisory in Asia at HSBC Private Bank, said that with many client families dealing with issues relating to generational transition, programs like these provide “the groundwork for ensuring that the legacies of the families are not only preserved but are adapted to future generations.”

“We believe by helping families cope with the issues, which are almost always laden with emotion, they have a better chance of ‘staying together’ in whatever form that means for each family,” Ms. Leong said. “It is easier for the bank to work with a family that is together than apart.”

Mr. Meneses agreed. “The main thing that I took home was the importance of planning ahead and preparing for transitions,” he said. Understanding the rationale for such planning, he added, will make “things very easy and smooth for our family enterprise.”

While the banks’ “training camps” in Asia are similar to those they operate in Europe and the United States, the programs are tweaked to reflect cultural differences and regional contexts. Topics covered focus on practical areas especially pertinent to running a family business in the Asian context.

“Many of our clients are first- or second-generation business owners or entrepreneurs,” said Shayne Nelson, chief executive and global head of Standard Chartered Private Bank. “In many cases, their children will inherit the businesses. As a result, one of their primary concerns is the financial education and future of their children.

Ng Cheng Xun, a 25-year-old investment banker who attended Credit Suisse’s legacy program, said he especially liked the hands-on experience provided. During a trading simulation session, he traded fictional stocks in a fictional market.

“Although I approached the exercise with the mentality of ‘buying low and selling high,’ I realized that executing such a strategy was not as easy as it sounds,” he said. “I learned that trading is a very fast-paced activity, and that I have to think and react quickly and be decisive in every trade I made.”

Ms. Leong said she believed the participants in her bank’s program left it with a different outlook and approach to some of the issues they had previously struggled with.

“They often come away with a new network of friends and business contacts,” she said. “The program offers a safe forum, comprised of others who are of the same age range and who share common problems and generational issues. The opportunity to connect with others is often the most valuable part of the program.”

Mr. Ng concurred. “I think the social aspect is a very important element for us especially since all of us are young adults looking to expand our social network,” he said, noting that the group still kept in touch through their Facebook group.

“We all enjoyed the company we had, and we grew from acquaintances to close friends in less than a week,” he said.

Article source: http://www.nytimes.com/2011/09/07/business/global/learning-to-manage-the-family-wealth.html?partner=rss&emc=rss

Speak Your Mind