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Private Wealth Management
Greater China Summit
4 September 2015
Hong Kong
MARY K DUKE
Family Wealth Advisor
Coming Wave of Wealth Transfer
• Unprecedented wealth created
in the last 60-70 years
• Trillions expected to be passed
to...
Biggest Threat to Family Wealth
A family has a 91% likelihood of failing to transition wealth
to the third generation
WHY
 Taxes?
 Investment performance?
 Business Failure?
 Bad Estate Planning?
Williams & Preisser - 85% of failures du...
So what are families around the world
doing to address this issue?
Life gets complicated!
a/k/a – a Dog’s Breakfast
OPERATING
COMPANIES
PHILANTHROPY
ADMINISTRATION
FAMILY
TAX &
ESTATE
INVESTMENTS
Family Office Functions
A Single Family Office varies according to
the family’s areas of focus
Family
Investments
Operating Company
Philanthropy
A...
Many Family Offices
start inside the family Business
Co-located family office – with array of outside advisors
+ Advantage...
Primary Family Office Models
Single
Family Office
Tailored services for one
family – “top of the line”
• EXPENSIVE
• Highe...
Where are the billionaires?
"The World's Billionaires: 2015
Ranking". Retrieved 2015-07-29
World Tour of Family Offices
AUSTRALIA
State of play
• 27 Billionaires, 24 Mil people
• Emerging Family Office Community
• Conferences, Networking grou...
CANADA
State of play
• 39 Billionaires, 35 Mil People
• Nascent Family Office Community
• Few conferences, networking grou...
GCC REGION
State of play
• 21 Billionaires, 43 Mil people
• 30-40 SFOs, only one MFO
• No tax or business need to separate...
RUSSIA
State of play
• 88 Billionaires, 144 Mil people
• Private wealth only since early 1990s
• Legal framework is new an...
UNITED KINGDOM
State of play
• 117 Billionaires, 65 Mil people
• Long legacy of private wealth
• Resident, non-domiciliary...
INDIA
State of play
• 90 Billionaires, 1.25 Bil people, and growing
• Rapidly emerging Family Office Community
• Family Of...
UNITED STATES
State of play
• 615 Billionaires, 320 Mil people
• 3-5,000 SFOs,
• Well into succession transition cycle
• E...
BRAZIL
State of play
• 54 Billionaires, 200 Mil People
• Emerging Family Office Community
• Many on shore FOs do not manag...
SWITZERLAND
State of play
• 29 Billionaires, 8 Mil people
• 100+ SFOs, Vast number MFO and FO
Service Providers
• Jurisdic...
HONG KONG
State of play
• 55 Billionaires, 7 Mil people
• Major IFC with vast resources
• 40 SFOs, many FO service provide...
CHINA
State of play
• Visible wealth is very new – transition will
be a bit later
• Deep traditions of kinship, social str...
Universal trend: TRANSPARENCY
A burning question for families with wealth –
What would you do differently with your
family wealth, if the public could s...
Remember the GREEN!
The greatest risk to family wealth is in transition –
THE FAMILY is the MOST IMPORTANT ASSET TO MANAGE
Thank you for your kind attention!
MARY K DUKE
www.thehighrd.com
+1 917 434 7150
mkduke@thehighrd.com
MARY K DUKE
www.thehighrd.com
+1 917 434 7150
mkduke@thehighrd.com
Mary K Duke helps families leverage their wealth as a t...
For more information about the
marcus evans investments
summit series:
investmentseries@marcusevanscy.com
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Best Practices from Around the World: An Extensive Overview on the Latest from Successful, Global, Multi-Generational Family Enterprises

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Speaker Presentation by Mary K Duke, Private Family Office Expert, Family Office at the PWM Greater China Summit 2015 in Hong Kong

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Best Practices from Around the World: An Extensive Overview on the Latest from Successful, Global, Multi-Generational Family Enterprises

  1. 1. Private Wealth Management Greater China Summit 4 September 2015 Hong Kong MARY K DUKE Family Wealth Advisor
  2. 2. Coming Wave of Wealth Transfer • Unprecedented wealth created in the last 60-70 years • Trillions expected to be passed to next generation • Different regions are at different points in transition cycle • Huge risk of loss in transition!
  3. 3. Biggest Threat to Family Wealth A family has a 91% likelihood of failing to transition wealth to the third generation
  4. 4. WHY  Taxes?  Investment performance?  Business Failure?  Bad Estate Planning? Williams & Preisser - 85% of failures due to: 1. LACK OF TRUST & COMMUNICATION 2. POOR PREPARATION OF RISING GENERATION
  5. 5. So what are families around the world doing to address this issue?
  6. 6. Life gets complicated! a/k/a – a Dog’s Breakfast
  7. 7. OPERATING COMPANIES PHILANTHROPY ADMINISTRATION FAMILY TAX & ESTATE INVESTMENTS Family Office Functions
  8. 8. A Single Family Office varies according to the family’s areas of focus Family Investments Operating Company Philanthropy Admin Tax & Estate BUSINESS OWNING – FOUNDER’S OFFICE POST LIQUIDITY INVESTMENT OFFICE 100 YEAR FAMILY OFFICE
  9. 9. Many Family Offices start inside the family Business Co-located family office – with array of outside advisors + Advantages – share staff, easy to manage, low cost - Disadvantages – privacy, lack of expertise Catalysts to move family office function out of business:  Privacy  Need for specialist talent  Sale of business  Generational transition  General desire to professionalize If family services are not embedded in the business, where are family members getting matters addressed? Not every wealthy family has a family office!!
  10. 10. Primary Family Office Models Single Family Office Tailored services for one family – “top of the line” • EXPENSIVE • Highest service level • Privacy • May be located in multiple jurisdictions! Multi Family Office Origin of firm is clue to business model (SFO, accountants, former private bankers, etc.) • Scale, enhanced services • Less privacy • Better staff retention • Professionalism Family Office Service Provider Platforms offered by private banks, Investment shops, accountants, lawyers, wealth management firms, etc. • A la carte services • Access to institutional offerings • Bias/product push
  11. 11. Where are the billionaires? "The World's Billionaires: 2015 Ranking". Retrieved 2015-07-29
  12. 12. World Tour of Family Offices
  13. 13. AUSTRALIA State of play • 27 Billionaires, 24 Mil people • Emerging Family Office Community • Conferences, Networking groups • Family Office Congress • Approx 500 SFOs, Few MFOs • Economic, political, social stability Trends • Asian Investment driving RE / Commodity prices • Challenge of “Dictatorship to Democracy” • Building their own resources – no easy access elsewhere
  14. 14. CANADA State of play • 39 Billionaires, 35 Mil People • Nascent Family Office Community • Few conferences, networking groups • Few MFOs • Highly regulated financial sector • Very stable economy, strong banking sector Trends • Influx of Asians relocating or dual-locating • Tightening tax and immigration rules • Easy access to US market for family office resources, even staffing
  15. 15. GCC REGION State of play • 21 Billionaires, 43 Mil people • 30-40 SFOs, only one MFO • No tax or business need to separate family and business • Large, complex families with large, complex business holdings still G1 or G2 Trends • Use of “partial” IPOs provides valuation and incentive to professionalize • Use of offshore jurisdictions due to uncertainty/instability • Dubai DFC as FO jurisdiction • Leverage family office resources in UK/US
  16. 16. RUSSIA State of play • 88 Billionaires, 144 Mil people • Private wealth only since early 1990s • Legal framework is new and fragile • Few local experts & professionals to run FO Trends • Strong preference for managing wealth outside Russia • Focus is on generating wealth • Family offices are an exotic concept, not a factor in Russian market
  17. 17. UNITED KINGDOM State of play • 117 Billionaires, 65 Mil people • Long legacy of private wealth • Resident, non-domiciliary regime • Vast resources for FO, MFO and Service provider platforms Trends • A gold standard jurisdiction for families seeking a jurisdiction outside their country • Some political uncertainty around res non-dom regime
  18. 18. INDIA State of play • 90 Billionaires, 1.25 Bil people, and growing • Rapidly emerging Family Office Community • Family Office Certification Trends • Pro business governmental policies removing restrictive trade practices • Challenges of East meets West • Growth is driving need for talent • Leveraging large diaspora resources
  19. 19. UNITED STATES State of play • 615 Billionaires, 320 Mil people • 3-5,000 SFOs, • Well into succession transition cycle • Extensive FO community & resources • Sophisticated MFOs & FO service providers • Political, economic, social stability • High tax and regulatory environment Trends • Use of US as “off-shore” jurisdiction by families in regions with uncertainty (also UK and Canada) • Expansive definition of family • Very sophisticated 100 year family offices to address the succession challenges
  20. 20. BRAZIL State of play • 54 Billionaires, 200 Mil People • Emerging Family Office Community • Many on shore FOs do not manage money • Complex tax and reporting regime • Strong economy buoyed markets • Strong trend toward professionalizing FO • Few MFOs Trends • Lawyers forming family office services groups • Strong M&A has led to vast liquid wealth
  21. 21. SWITZERLAND State of play • 29 Billionaires, 8 Mil people • 100+ SFOs, Vast number MFO and FO Service Providers • Jurisdiction for many non- resident families Trends • Financial services industry is dealing with fall-out from recent tax and banking scandals • Very sophisticated wealth management capabilities – working on building 100 year family resources to match
  22. 22. HONG KONG State of play • 55 Billionaires, 7 Mil people • Major IFC with vast resources • 40 SFOs, many FO service providers in banks & wealth management firms • Confidentiality cloaks real numbers • Business and family often intertwined • Further into succession cycle than PRC Trends • Increasing regulation • Increasingly public family disputes and litigation • Challenge of learning to be effective owners and stewards
  23. 23. CHINA State of play • Visible wealth is very new – transition will be a bit later • Deep traditions of kinship, social structure and respect • Family education and safety highest priority • Nascent tax and regulation • Few SFOs, few professionals & experts Trends • One child policy – impact on succession and concentration of wealth • Challenge of East meets West • Reliance on offshore jurisdictions for access to investments, diversification and professional staff • Service Provider model is popular
  24. 24. Universal trend: TRANSPARENCY
  25. 25. A burning question for families with wealth – What would you do differently with your family wealth, if the public could see inside?
  26. 26. Remember the GREEN! The greatest risk to family wealth is in transition – THE FAMILY is the MOST IMPORTANT ASSET TO MANAGE
  27. 27. Thank you for your kind attention! MARY K DUKE www.thehighrd.com +1 917 434 7150 mkduke@thehighrd.com
  28. 28. MARY K DUKE www.thehighrd.com +1 917 434 7150 mkduke@thehighrd.com Mary K Duke helps families leverage their wealth as a tool for family flourishing and social good. Fusing deep technical expertise with skills in family systems and dispute resolution, she focuses on empowering the rising generation and on helping wealthy families adopt the practices that foster individual growth and make family collaboration more effective and rewarding. With over 25 years serving families in multiple capacities Mary is an expert in trusts and cross-border transfer of wealth strategies, family business succession, family office formation and operations, next generation mentoring, philanthropy, entrepreneurship and governance for families and their businesses. She spearheaded a leading private bank’s award winning global family wealth Initiative and has worked with many sophisticated families and their advisors helping them navigating the challenges of successfully transitioning wealth across generations. Mary is an author and international speaker, often quoted on topics relating to families and wealth. She has conducted next generation and family retreats in Europe, Latin America, Asia, the Middle East and the United States. Previously, Mary headed two private family offices involving prominent families and significant owned operating companies. She practiced private client law in New York and is a licensed attorney and certified accountant. Mary lives with her husband Richard near New York City and they have three grown children. She is an avid squash player working to improve her game despite the march of time.
  29. 29. For more information about the marcus evans investments summit series: investmentseries@marcusevanscy.com

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