Asia’s UHNWIs: An entrepreneurial state of mind

Asia’s population of ultra-high-net-worth individuals (UHNWIs) has been growing at a faster rate than anywhere else in the world.

The recent Knight Frank 2018 Wealth Report reveals an incredible 36.7% growth in Asia’s ultra-wealthy* population between 2012 and 2017, compared to the 31.3% growth seen by North America and 9.6% in Europe. While North America still holds the title for the largest number of UHNWIs, Asia now sits in second place having surpassed Europe.

Asia’s UHNWI growth is expected to accelerate even more in the coming years, and it has been predicted that in China this segment will more than double its current size by 2022. India, Japan, Indonesia and Malaysia are also set for very strong growth.

For the first time Asian billionaires have grown to outnumber their US counterparts, as revealed in the UBS and PwC’s Billionaires Report. The US still retains the greatest concentration of wealth, but if the current trend continues, the total wealth of Asian billionaires will exceed that of those in the US within four years.

With wealth in Asia growing at such a rapid pace, it is vital that as fiduciary professionals we fully understand these newly affluent individuals and how best to support their evolving asset structuring and succession planning needs.

Self-made success

Taking a closer look at Asia’s UHNWIs, what really stands out is their entrepreneurialism. Indeed, the Billionaires Report remarks that the significant growth in Asian billionaires has been “powered by the rise of China’s entrepreneurs”, with China now accounting for almost precisely half of the region’s billionaire population. Moreover, the research data shows that the vast majority (84%) of billionaire wealth in Asia is self-made, compared to 69% in the US and 46% in Europe.

The world’s youngest billionaires

While the dominance of self-made wealth is perhaps unsurprising given Asia’s status as an emerging market, what is notable is the fact that Asian billionaires are achieving their wealth by a younger age. The Billionaires Report further reveals that, at the end of 2016, the average age of an Asian billionaire was 59 years old – considerably younger than their European and US counterparts (66 and 67 years old respectively). This difference is even greater when looking specifically at China, where the average age of a billionaire was found to be just 55.

Entrepreneurs as clients

Given the relative newness of much of Asia’s private wealth, seeking wealth management guidance and support is a somewhat novel concept in the region. Added to this is the fact that entrepreneurs are, by nature, self-sufficient and independent and therefore unlikely to simply take advice.

That said, the discussion during our STEP Journal roundtable in Singapore last November highlighted a shift towards a more receptive attitude to taking advice among Asian clients. This change derives partly from the younger, university-educated and tech-savvy generations rising to the fore, who have a more open and collaborative approach to doing business. Further, the world’s increasingly complex regulatory landscape is driving clients to seek professional advice and set up more formalised structures to adhere to rising international standards.

Certainly, through our Singapore and Hong Kong operations we are witnessing more and more Asian UHNW entrepreneurs proactively engaging wealth advisors as they consider how best to protect their assets now and in the future. As my fellow ‘First Name’ Stuart Dowding observed: “Entrepreneurs are now much more engaged, making informed decisions and taking an interest in how their structure will be regulated and taxed.”

The roundtable discussion also underlined the fact that taking a long-term view and investing the time to build trusted relationships with Asian clients is paramount to success. Having a thorough understanding of the client is key; as is avoiding overly complex industry jargon. Finally, UHNW entrepreneurs are active individuals who are used to evaluating worth and negotiating deals, therefore the benefits of a particular service or structure must be clearly and succinctly articulated.

With the rapidly growing population of UHNWIs in Asia it is essential that we continue to evolve with our clients, their needs and value their entrepreneurial mind set. It’s an exciting phase in the region’s continued growth story and one that we are ready to support.

*Individuals with a net worth of US$50 million or more

Karen O’Hanlon is Managing Director of First Names Group in Singapore. An experienced fiduciary professional, Karen is primarily responsible for driving business development in Asia and working closely with the senior team to deliver the Group’s strategic growth plans in the region.

This article has been issued by First Names Management Limited on behalf of certain companies that form part of the First Names Group. The article has been prepared for general circulation to clients and intermediaries, and does not have regard to the particular circumstances or needs of any specific person who may read it. Nothing in this article constitutes legal, accounting or tax advice or investment advice.

The information contained in this article has been compiled by First Names Management Limited and/or its affiliates from sources believed to be reliable, but no representation or warranty, express or implied is made to its accuracy, completeness or correctness. All opinions and estimates contained in this report are judgements as of the date of publication, and are provided in good faith but without legal responsibility.