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Lasting legacies

Great fortunes are often lifetimes in the making, so it stands to reason that one would want to preserve this wealth long into the future. Our Head of Wealth Planning shares seven tips on how to preserve your wealth.




Vast amounts of wealth were created in Europe in the second half of the 20th century, accompanied by significant improvements in quality of life – a trend we are now seeing in Asia. But once wealth has been generated, the big question remains: how do we use and preserve this wealth? While wealth generation and wealth preservation require two different skill sets, there are commonalities across both: thinking strategically and surrounding yourself with the right people.

Covid-19: Rethinking lifestyle and priorities
The turbulence caused by Covid-19 has made people realise that perhaps they should take a fresh look at their asset portfolios and also their lifestyles. For example, we see people selling city properties in favour of houses in the countryside. There is a renewed focus on quality of life. Retirement planning is no longer driven primarily by age, but also by affordability: how much liquidity do I need to sustain my current lifestyle?

Not only that, Covid-19 is also making people much more conscious of their own mortality, which is leading them to carry out not just medical but also financial ‘health checks’, rebase their financial position, and get their affairs in order. All these factors are likely to have a lasting and positive impact on wealth preservation.

Common pitfalls
Beyond diversified investment strategies to combat wealth attrition, there is one major wealth planning consideration: intergenerational wealth transfer. According to research firm Wealth X, individuals with a net worth of USD 5 million or more are expected to collectively transfer USD 15 trillion of wealth by 2030. It’s worth keeping in mind that wealth preservation is about not just safeguarding assets, but also preserving family values and lifestyles.

A strong family governance framework can go a long way towards professionalising a family’s approach to managing its wealth.

Roger Stutz, Head of Wealth Planning

Even with so much at stake, we repeatedly see common errors that lead to missed opportunities and frustration. There are those who simply start planning too late, waiting for the perfect time to maximise benefits. They typically avoid short-term risks but increase risk in the medium and long-term. Experience shows that the timing is never perfect and the only remedy is to make a start. There are also those who try to handle it themselves because they want full control or are unwilling to invest in expertise. Lastly, many people underestimate the power of family dynamics. For example, those who fail to disclose the extent of their wealth to family members can erode trust and unity over time.

Giving the next generation a fighting chance
Just like markets, families dynamics are hard to predict, so it’s just as important to hedge against potential family disputes as it is against global events. When it comes to wealth erosion, there’s truth in the old adage ‘shirtsleeves to shirtsleeves in three generations’. More often than not, future custodians of wealth need guidance on how to preserve what their elders have accumulated. There are many steps families can take, but some are more important than others.

Key steps to preserving wealth

  • Encourage open dialogue: Some things in life are difficult to discuss, such as death, divorce, and remarriage. Still, they are relevant for wealth preservation. Additionally, in cases where large-scale wealth generation has ceased, future generations may need to adjust their lifestyle as funds become diluted through inheritance. This kind of dilution is close to impossible to offset through investment strategies, so getting a realistic grip on what’s in store by involving all family members is the only way forward.
  • Be open to different views and values: More and more, we see upcoming generations driven by different values. Younger family members are increasingly interested in making a positive social impact, for example through philanthropy or investments focused on environmental, social, and corporate governance (ESG) topics. Wealth preservation then becomes a discussion about values and family legacy. Often, two to three generations are involved and this could lead to conflict if not handled delicately.
  • Professionalise your wealth management:  A strong family governance framework can go a long way towards professionalising a family’s approach to managing its wealth – for example, through family charters, councils, or a wealth education programme. A clear succession strategy is also imperative, taking into consideration wealth structures such as trusts and foundations, wills, letters of wishes, and powers of attorney, depending on your jurisdiction.
  • Keep taxation top of mind: Managing one’s tax situation is a cornerstone of wealth preservation – for example, understanding the intricacies of inheritance tax, particularly where multiple jurisdictions are involved.
  • Build family expertise to tackle complexity: As shown in the 2020 Julius Baer Family Barometer, complexity is on the rise for global families. It has therefore never been more essential for families to have access to expertise. It’s not uncommon to see family offices form organically around families, including legal, taxation, wealth planning, and investment specialists, not to mention doctors and concierge services.

When family businesses run their course
It’s important to remember that some inheritors are expected to manage not just cash but family businesses, too. For families whose primary source of wealth has been a family-run business, it’s prudent to consider whether this business is the best reserve of wealth going forward. To preserve one’s current lifestyle, it might be necessary to extract capital from the business or sell – fully or partially – to ensure adequate cash flow. If pursuing the family business makes sense, and if the next generation is unwilling or unsuited to taking over the reins, seeking external leadership such as a CEO may be appropriate.

Think about how future generations will carry on your family's legacy, preserving not only wealth but also values that have the power to stand the test of time and create positive impact.

Roger Stutz, Head of Wealth Planning

Paving the way for future generations
Preserving wealth for one or more lifetimes requires long-term, strategic thinking. With the largest ever intergenerational wealth transfer on the horizon, there has never been a greater need to plan how future generations will carry on their families’ legacies, preserving not only wealth but also values that have the power to stand the test of time and create positive impact. Philanthropy is increasingly important for families that wish to have a purpose and align their values with their wealth, by focusing on one or various sectors such as conservation, the environment, wealth inequality, or culture. In particular, in light of the pandemic, the desire to use wealth to support those less fortunate may have become more relevant than ever.



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Global Wealth and Lifestyle Report 2021

The Global Wealth and Lifestyle Report 2021 is a lifestyle maintenance tool for high-net-worth individuals. It indexes the price-points and inflation rates of selected goods and services in 25 major cities, allowing wealthy individuals to assess their lifestyle and what’s needed to maintain it. For more resources: visit our hub

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