Banking, Entrepreneurialism and the Next Generation of Wealth Holders
BNP Paribas Wealth Management in Asia collaborated with Campden Research to develop this report to better understand the key drivers and motivating factors at play with the ultra-high networth NextGen community in Asia.
This report examines the next generation of ultra-high net worth individuals (‘Next Gens’) in Asia-Pacific: their education, professional experience, engagement with family businesses and investments, and expectations of banks.
Just over 100 Next Gens were surveyed, the average age of the NextGen was 38 years and average family networth at US$640 million.
The full report is available for download below.
Asia has seen a prolific value creation in the past couple of decades and Entrepreneurialism is at the heart of this economic expansion and with majority of wealth creators (mostly first generation Entrepreneurs) now at the cusp of an intergenerational transfer.
The research methodology saw engagement with a very diverse set of ultra-high networth NextGeners who other than being native to Asia can best be considered as global citizens of the world.
These are individuals who are highly educated and come with considerable amount of prior work experience; majority of them already successful business owners in their own right with diversified interests in Finance & Technology.
The report focuses on a multitude of points that shapes their thinking around a diverse set of topics. What's noteworthy is the enormous respect they have for their parent's approach to business and financial prudence; actively seeking to be guided by those experiences.
Trailed are some of the key findings of the report; we encourage you to download the abridged version of the report and should you need to have an in-depth view then kindly reach out to us by filling out the Contact Form.
Nextgen Profile - Key Characteristics
NextGen Profile - Education & Experience
Educated and experienced in finance, but keen to learn from parents
Nearly half of the Next Gens surveyed are educated beyond Bachelor’s level (48%), and often in finance-related subjects (33%). Nearly half have also obtained work experience in finance (48%). Younger Next Gens are looking to spend three or four years in the industry; they prefer to learn about running businesses from their parents.
Frequently involved in the family business and wealth management
The bulk of the Next Gen are involved in both operating their family business and investing their family wealth (45%), and about twice as many are involved only in investing as only in the business (31% versus 14%).
Improvements sought in governance, diversification, and professional management
Next Gens believe improvements can be made in wealth management by implementing a governance framework (37%), diversifying holdings (36%), and relying on professional managers (33%). Many emphasise adding value through integrating technology and making alternative investments.
Business owners diversifying into finance and technology
Over three-fifths of Next Gens identify as business owners (62%). Notable proportions have diversified from their family’s core industry and moved into asset management / alternative investments (24%) and technology (15%).
Balanced portfolios, with real estate ranking top
The average family allocated similar shares of its portfolio to private and public investments, with real estate, the top asset class, accounting for 20%, followed by liquid fixed income and liquid equities (each 17%).
High level of engagement in sustainable / impact investing
Roughly one half of Next Gens are engaged in sustainable (51%) and impact (48%) investing. Most are interested in making their own businesses more sustainable and impactful.
Generations engage with banks differently
The top criteria for selecting a bank are the family’s relationship with it (42%) and the bank’s ability to offer a wide range of services (11%). But Next Gens engage with banks differently and expect to carry out a substantial cull – from working with 7 to 9 down to 4 to 6 banks. Inherited relationships are the starting point. Next Gens go with banks based on their specific capabilities and edge.
Digital cannot fully replace human interaction
Next Gens appreciate the convenience that comes with digitisation in banking. But they still want human interaction (72%), as it enables banks to better understand their businesses and offer consultative services.
Full range of banking services in demand
Next Gens want banks to offer strategic reviews of acquisition targets (35%) and M&A advisory (17%). The majority use / plan to use banks to arrange or directly finance acquisitions (67%) and finance business operations (78%). Next Gens want proactive forecasts (81%) and to be treated like institutional clients (80%).
Investment focus shifts from public to private markets
There is palpable interest amongst Next Gens in private equity and venture capital, and the majority see a role for banks to play in generating deal flow (82%).
Observations on COVID-19
- The pandemic has pushed back or scaled down expansion plans for many traditional family businesses.
- Many NextGens have accelerated their engagement in their family businesses and investments because of the Pandemic.
- The Pandemic also leads to higher psychological acceptance for sustainable and impact investments.