Habib Bank AG Zurich: Strategies for generational wealth transfer

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With $10.6tn in wealth expected to change hands by 2030, what unique opportunities and challenges do family-owned enterprises face in generational wealth transfer?

The key opportunity is that you can plan within the family and are not beholden to the listed shareholders or other external owners. However, that flexibility can also come with significant challenges. Unifying all of the family behind the succession plan can be a huge task, which takes skill and forethought to achieve and maintain. Finding a purpose for the next generation and beyond to maintain their motivation to continue the family’s success is an ever-present challenge.

What emerging trends are shaping estate and succession planning in the region? How are you preparing to meet the needs of the next generation of wealth owners?

A key one has been the emergence of regional succession structures in the form of DIFC and ADGM Foundations, which have a rapidly growing recognition and use. They not only enable succession planning for assets in the UAE but can also be a viable alternative to the more established choices, such as trusts. Another emerging trend is the increasing recognition of the vital role that family governance can play in complementing the legal structuring to help achieve a smooth succession. In addition, within the region, we are also seeing a growing acceptance by regional patriarchs that daughters, as well as sons, have a role to play and that is automatically putting the eldest son in charge of things is often not the best solution.

Holding carefully curated workshops for the next-gen members of client families is an excellent way to start helping the next generation of wealth owners. Not only can you help them understand the opportunities and the challenges, but you can also hear firsthand from them what they are
looking for and what motivates them.

How do you build and maintain long-term relationships with families to support ongoing succession planning needs?

To gain the family’s trust, you must be the epitome of discretion. Your advice must be timely and uncluttered by the demands of sales targets or your institution’s financial goals. This allows you to focus on giving honest advice.

It is also key to keep the advisor in the picture on an ongoing basis and not to focus on other new structuring opportunities as soon as the structure has been created. Be open with the client about where you can help and where you cannot. Be comfortable bringing in other suitable specialists to enable the best outcome for the client. Regularly review plans to keep them ‘fit for purpose’.

What distinguishes Habib Bank AG Zurich’s Wealth Structuring services from those of other institutions in the region?

At Habib Bank AG Zurich, a significant percentage of our clients are at least the third generation of their family banking with us. This long-standing trust makes generational wealth transfer an integral part of our services.  We set up HBZ Wealth Structuring to be uniquely positioned to give the best advice to our clients.

For most HNW and UHNW individuals seeking wealth structuring assistance, the options are limited: independent advice from a top-tier law firm or advice from a bank-owned or independent trust company, where advisors may be incentivised to sell in-house solutions to meet internal sales targets. Neither option is ideal.

With Habib Bank AG Zurich, advice is provided by a qualified and experienced advisor who can consider all available options without the distraction of internal targets. Implementation is done via trusted third parties on a fully transparent basis, ensuring that our clients benefit from the best solutions available.

Many of our clients have seen the value that this brings, having someone knowledgeable on their side of the table, both during the establishment and continuing with them for ongoing reviews and queries.

Read: Habib Bank AG Zurich 2024 outlook: Navigating volatility, seizing opportunities