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“One of the most important elements in cultural succession planning is to build a strong a healthy relationship between the first and second generations, so that the second generation understands the parents’ family values and outlook”
[Hong Kong, October, 2017] An exclusive interview with Mr. Jameson Leung, CEO and Founder of Grandtag Financial Group and Dr. Michael Y. K. Chan, Honorary Chairman of the Legacy Academy.
The family succession conversation must move beyond the transfer of wealth to focus on ‘intangible’ assets, such as family values and culture, experts tell Asian Private Banker.
“What most parents want to pass on is not so much their wealth but rather their traditions, rules and wisdom,” says Jameson Leung, CEO and Founder of Grandtag Financial Group, a financial advisory firm that provides cultural succession planning services to HNW families in Asia. “Many of our clients today seek advice on how best to pass on family and corporate culture to the next generation. Over the past two years, only one out 20 families that I have dealt with have shown themselves to be sufficiently aware of what succession planning entails.”
So what is a family legacy? Leung says that values, history and culture reside at the heart of the concept and, therefore, the key to prudent succession planning in a Chinese context lies in their articulation, for example via the creation of a family constitution.
Mr. Jameson Leung
CEO and Founder, Grandtag Financial Group
“One also needs to employ the same level of governance in a family business setting as one would in a corporate setting,” adds Dr. Michael Chan, Honorary Chairman of the Legacy Academy, who points out that roles and responsibilities need to be better defined, as do employment policies that should encourage the hiring of external talent where necessary.
Dr. Michael Y. K. Chan
Honorary Chairman, Legacy Academy
Dr. Michael Y. K. Chan is the former Chairman of Café de Coral Holdings Limited. Dr. Chan was awarded with the most coveted Stars of Asia Award, the prestigious Executive of the Year Award, the Bauhinia Cup Outstanding Entrepreneur Awards, Directors of the Year Award, and Entrepreneur of the Year China Award.
According to Chan, the state of family business transition planning in Greater China is now at a “critical juncture”, with ‘post-opening’ entrepreneurs who are now reaching 60-70 years of age still reluctant to relinquish power, and more fundamentally, with traditional “Confucian cultural norms” jarring with a younger generation that is typically educated overseas and has developed a more liberal mind-set.
Chan cites data from the Chinese Academy of Social Sciences, which shows that close to 3 million business enterprises will face succession-related issues in the next five years. More generally, Asia’s ultra-wealthy are poised to pass on US$1 trillion to the next generation in the next 10 years.
“Currently, in China, you could count on one hand those family businesses that are over 200 years old,” he says. By comparison, Japan is home to thousands of family enterprises that are over 200 years, while Europe boasts family business that are upwards of 500 years old.
Leung himself has first-hand experience in cultural succession planning, having enlisted the help of Chan and Dr. Amen Lee, President of the Legacy Academy, who worked with Leung and his daughter to devise a family constitution to be handed down. For Leung, the process enabled him to “build a better relationship” with his daughter. Grandtag and the Legacy Academy have since joined forces to set up GT Legacy Family Office.
“One of the most important elements in cultural succession planning is to build a strong a healthy relationship between the first and second generations, so that the second generation understands the parents’ family values and outlook,” he says.
More specifically, Chan estimates that only 10% of Chinese HNW families are primarily concerned with passing on wealth, with most focused on building “a platform for their children to perform”.
For full interview excerpt, please visit https://asianprivatebanker.com/wealth-planning/values-culture-wisdom-key...
RM Nexus: Wealth Planning, Legacy & Protection 2017, Hong Kong organized by APB in Oct 2017