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Passing the baton: business and wealth transfer in Taiwan

While much of today’s HNW wealth in Taiwan was generated during rapid industrialization in the second half of the 20th century, the country’s entrepreneurial spirit is still alive.

Our Wealth in Taiwan: HNW Investors 2017 report reveals that 61% of Taiwanese HNW individuals have accumulated their wealth as a family business owner or first-generation entrepreneur. The majority of this population is over the age of 50, which can be attributed to the aforementioned industrialization.

As these individuals begin to approach retirement age, the transfer of their wealth and business ventures to the younger generation becomes a more prevalent issue. However, strategies for business succession are a relatively new concern in Taiwan. And while Taiwanese millennials are starting businesses of their own, many are disinterested in taking on the projects of their parents and grandparents.

On the other hand, they do work closely with advisors. Our survey of mass affluent investors in Taiwan shows that financial planners are the most common channel chosen to arrange investments in this segment.

For wealth managers, the current landscape lends itself to the opportunity of acting as a link between the older and younger generations to better service the needs and concerns of both segments. Wealth managers can support older business owners in passing on their wealth to younger beneficiaries. And by working with younger individuals, wealth managers can help them better understand their parents’ businesses, preparing them for inheritance. With the potential for millennials to become HNW, this presents wealth managers with the ability to resonate with this audience at an early stage.

Looking ahead, wealth managers will do well to recognize the benefits that come with servicing older family business owners and first-generation entrepreneurs. Indeed, this opportunity is not exclusive to the Taiwanese market but is present in other geographies. Competitors can stay ahead of the herd by offering existing HNW clients a suite of services that focus on intergenerational wealth transfer and strategies for passing on a business. At the same time, this is an opportunity to establish relationships with the children of these investors, many of whom source their wealth in a similar manner.

By Nicole Douglas, Wealth Management Analyst

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