This recommendation comes from a team of HSBC Private Bank experts, specializing in asset planning for individuals living to 100 years old. According to Drazen Turujlija, Director of Wealth Planning and Advisory for Europe and International, effective asset planning for long-lived individuals requires a combination of financial and legacy planning.
A key consideration is transferring assets during one's lifetime, rather than through a will after death. The prolonged wait for a single, substantial inheritance can lead to family tensions.
Globally, asset transfer is increasingly shifting towards a phased approach rather than a one-time event, according to the experts. This method offers the advantage of providing heirs with consistent financial support, ensuring assets are utilized precisely when they are most needed.
With careful planning, this strategy can foster harmony between generations and shape family identity. "Preparing for continuous provision to support successive generations is not only a financially astute move but also brings emotional meaning and social cohesion", the expert team noted.
Alongside gradual asset transfer, owners must maintain dialogue and guide their heirs early on how to manage and grow wealth. Drazen Turujlija cited an example of a business founder living past 90 who might be managing assets that support two or three generations, or more.
"When you know you have decades of healthy living ahead, it's important to carefully consider whether and how to maintain control while simultaneously transferring responsibility to the next generation", he said.
Open dialogue between generations helps align aspirations, expectations, values, and responsibilities. This also enables heirs to understand how assets were built, why they are structured as they are, and how they will be transferred.
According to Drazen Turujlija, family members should share their perspectives and desires from the outset. When discussions occur in a neutral environment, awkward emotions can be more easily diffused or resolved. "It's important to start these conversations early", he stated.
Furthermore, equipping the next generation with the knowledge, skills, and sense of responsibility for long-term family asset management is crucial. Early education and gradually empowering them to participate in decision-making can be beneficial, helping maintain cohesion.
One of the best ways to maintain harmony is to involve the next generation in the asset creation process, rather than simply waiting for an inheritance. This multi-faceted, long-term approach addresses the needs of both current and future generations, enabling families to adapt to complex issues that arise over time.
The world is undergoing significant demographic changes, with human longevity increasing due to advancements in medicine. Georgios Leontaris, Chief Investment Officer for Switzerland and Europe, Middle East, and Africa markets at HSBC Private Bank, forecasts that by 2050, more than one-fifth of the global population will be over 65 years old.
This older demographic is also likely to possess greater wealth. "Many studies indicate that the richest 10% live 10 to 15 years longer than the poorest 10%", he noted. In this context, the question arises: how can one fully enjoy an extended lifespan, and what purpose should assets serve when there is more time to utilize or accumulate them?
Therefore, individuals anticipating a long life should establish asset plans early. This allows strategies related to health, education, business, philanthropy, and finance sufficient time to take shape and mature.
Dy Tung
