Survey says more ultra-rich families seek wealth inheritance

Ultra-high-net-worth families in China have a strong desire to set up privately-held firms and exclusive professional service to manage tangible and intangible assets as the number of billionaires in China continues to rise.

According to a new report by the Swiss private bank Union Bancaire Privée and Hurun Research Institute, 83 percent of ultra-rich families in China plan to use family offices to seek "wealth inheritance" followed by "risk management" (75 percent) and "global resource allocation" (58 percent).

Ultra-high-net-worth families in China are defined as households with more than 100 million yuan (US$16 million) of total wealth.

As many as 96 percent of them have already leveraged family offices for wealth inheritance purposes, with family governance (70 percent) coming in second, and charity management (65 percent) third.

Commercial family offices, those set up by financial institutions, or independent asset managers are more common in the Chinese Family Offices space.

Non-commercial ones which are generally initiated and set up by the family itself, are seen less in China.

According to the Hurun Global Rich List 2022, China led with 1,133 billionaires, 60 percent more than the billionaire number in the United States.

There were 490 new faces, led by 235 new entrants from China, followed by 63 from the US and 51 from India.

Family office

Industry experts believe that a family office has to work effectively across four dimensions: family wealth management, family business management, family member management and the protection of family values and traditions.

About 82 percent of respondents identified "wealth planning" as a core competency required for family offices looking after ultra-rich Chinese clients, followed by asset planning (55 percent) and professional advisory services (36 percent).

As many as 65 percent of the ultra-rich population hold a positive attitude towards family offices with 35 percent staying neutral or conservative, according to interviews with more than 30 founders of Chinese family offices and Hurun Report's analysis of the ultra-rich customers.

Looking ahead, there will be increasing demand for integrated services and investment focusing on ESG (environmental, social and governance) themes and expanding social impact.

"Chinese family offices and ultra-rich population should further embrace the next stage of globalization in the ASEAN region to maximize investment return and optimize asset management on a global level," said Huang Yi, professor of finance at Fanhai International School of Finance at Fudan University and former economist in the research department of the International Monetary Fund.

Countries in the ASEAN, or the Association of South East Asian Nations, offer a variety of consumption scenarios and trade opportunities as globalization enters a new chapter, he noted.