Singapore ultra-rich families can learn from Swiss and Germans: UBS Wealth

Singapore ultra-rich families can learn from Swiss and Germans: UBS Wealth

The ultra rich in Protestant Switzerland and Germany may provide clues to how their Asian counterparts, especially those in Singapore, can preserve wealth across generations and ultimately how it trickles down to the rest of the economy.

UBS Wealth Management head of family advisory Eric Landolt said that the most crucial factor in avoiding the dilution of wealth is to be results oriented, and the Swiss and Germans are very good at this.

"Typically these families are very, very strict when they look at ownership, and that comes from a very cultural background, from a very Protestant kind of background.

They would be very strict in terms of maybe not being so equal, but how do we get the best performance out of our company," said Mr Landolt.

Mr Landolt was speaking at the launch of the UBS/PwC Billionaires Report 2016 on Thursday in Singapore.

The report surveyed 14 markets where the combined wealth of the billionaires residing there accounts for 80 per cent of global billionaire wealth.

Data stretching back over two decades of over 1,400 billionaires were analysed.

The report found that about 460 billionaires will be transferring a total of US$2.1 trillion to their next generation in the next 20 years.

That's equivalent to India's gross domestic product.

Singapore, with about 30 billionaires, has one of the highest share of multi-generational billionaire families at about 42 per cent.

No concrete breakdown was available.

This transfer of wealth will have an impact on how it is spread out in any given market.

A younger generation that has a different outlook than their predecessors will also affect how wealth is retained and created.

For example, the sectors where they prefer to invest in might change, with e-commerce on the rise.

At the same time, while the older generation might donate to public institutions such as libraries and hospitals to give back to society, their heirs might prefer social enterprises to benefit others.

How each successive generation manages to invest its family wealth will then determine how much risks they are exposed to.

This is because each company that they own is also exposed to market risks, said Mr Landolt.

But issues within the family often pose the most threats to how wealth is retained across generations.

Some families have turned to legal structures to help ensure that wealth is retained, others look at how ownership of companies and assets they own is structured.

In the case of the latter, Swiss and German families succeed at where "only very few people in the family can control the ownership" that can yield the best performance as decisions are made easily, said Mr Landolt.

This article was first published on Oct 14, 2016.
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