Transamerica Life Bermuda Releases New Study on High Net Worth Individuals’ Approach to Succession Planning

Transamerica Life (Bermuda) Ltd. (Transamerica Life Bermuda), a leading High Net Worth (HNW) life insurer, partnered with and sponsored Asian Private Banker to conduct a HNW research study to examine the increasing role that life insurance products play in succession planning and wealth transfer among Asian HNW individuals (HNWIs) and Ultra High Net Worth individuals (UHNWIs). 

The study, “Succession Planning 2018: Perceptions and Opportunities for HNWIs,” was conducted from February to September 2018, and included in-depth interviews with over 100 HNWIs, with a special focus on Hong Kong and Singapore. 

The survey is part of Transamerica Life Bermuda’s continuous efforts to gain key insights into the needs and preferences of its HNW customers.  It provides a thorough analysis of the critical factors and concerns that HNWIs face in their succession planning.  It also outlines the opportunities for life insurers who can offer innovative financial solutions that meet the rising challenges of and demand for succession planning and wealth protection in Asia.

The Asia Pacific region continues to be the world leader in the growth of the HNW population and their wealth due to social and demographic factors. According to Asian Private Banker, the region is experiencing “the largest wealth transfer in history” and is home to 6.2 million HNWIs whose investable assets totalled US$21.6 trillion in 2017.  China, being one of the fastest-growing HNW markets in Asia-Pacific after India, recorded that its HNW population grew by 9.1% in 2017.

As Asia’s wealth transfers to a growing new generation of HNWIs, there has been a shift in mind-set and wealth management priorities for this population, in particular towards insurance products as a key tool for wealth creation and protection as well as for legacy planning, which is a complicated process. This is in conjunction with a rising awareness and demand among HNWIs for comprehensive and efficient succession planning as they seek to preserve their wealth, ensure their wellbeing in retirement and effectively transfer their wealth to their family or successors in the future. 

Some of the key findings in the study include:

• The decision to launch the process of succession planning and wealth transfer usually follows a “trigger” event.  An overwhelming 43% of the respondents cited “retirement” whilst 25% said “significant investment portfolio changes” as the two most significant trigger events that led them to consider succession planning.
• In regards to how much is needed for succession planning, 77% of the respondents indicated that 20-80% of their total wealth was needed in order to maintain their current lifestyles.  As for when the ideal age is to start succession planning, a majority of the respondents believe it is between 50-59 years old.

• Almost 60% of the respondents do not have a wealth transfer plan in place.  However, 75% of UHNWIs already have a succession plan or are currently in the process of planning their wealth transfer. 

HNWIs face many external and internal risks in their  succession planning.  Political and geographic elements, market volatility and cross-border restrictions top the list for external risks, whereas concern with the inability of beneficiaries to properly manage their inherited assets is considered the biggest internal risk.

Traditionally, succession planning has been dominated by time-tested means, such as wills and trusts. However, as complexities arise from increasing global regulations and taxes, HNWIs in need of fiscal optimisation are progressively seeking alternatives that could ensure an unscathed wealth transfer to their successors in such an environment.  Universal life insurance is increasingly seen as one of these beneficial alternatives.  Others include joint investment portfolios, whole of life insurance, annuity products and trusts.

The life insurance markets in Hong Kong and Singapore have benefitted from, at least in the first half of 2018, market concerns over rising interest rates, falling yuan and increasing market uncertainty, as Mainland Chinese HNWIs opt for life insurance products denominated in Hong Kong, Singapore, or US dollars to hedge against currency risks.  Moreover, in times of political and economic instability, HNWIs tend to seek shelter in financial products that will help protect their economic security and mitigate external risks.  Life insurance policies naturally become a valuable solution.

Transamerica Life Bermuda with its headquarters in Hong Kong and with over 80 years of experience in Asia and expertise in handling large sums assured and complex cases, is very well placed to service this growing population of UHNW and HNW individuals. 

“Our goal is to be the leader in the HNW life insurance market, and as such we continually commission targeted consumer research, including this latest study on succession planning with Asian Private Banker, to gain additional key insights into the needs and preferences of the HNW customer.  As Asia continues to experience a wave of intergenerational wealth transfer in the coming years, we believe that our depth of expertise and growing accumulation of deep consumer insights will help us continue to develop and provide innovative, tailored financial solutions for our HNW customers in order to help them achieve their long term financial security and peace of mind,” said Marc Lieberman, Global President and Chief Executive Officer of Transamerica Life Bermuda. 

Stratos Pourzitakis, Head of Research at Asian Private Banker, said, “We are proud to partner with Transamerica Life Bermuda to be able to conduct this in-depth research to examine how Asia’s first generation of HNW and UHNW individuals approach retirement, succession planning and inheritance, which are rapidly becoming major concerns in the region.  This study also offers a thorough analysis of succession planning-focused life insurance solutions in Asia and helps to identify the perceptions and opportunities for life insurers, such as Transamerica Life Bermuda, as they work towards diversifying and designing their products to meet the unique demands and needs of this group.” 

About the study

The “Succession Planning 2018: Perceptions and Opportunities for HNWIs” report was sponsored by Transamerica Life Bermuda and conducted by Asian Private Banker. A total of 263 completed questionnaires – comprised 159 relationship managers and 104 HNWIs as well as 33 semi-structured interviews with insurance brokers and insurance experts from various sectors in Hong Kong and Singapore, were surveyed between February and September 2018.

The report defines HNW and UHNW individuals as individuals with at least US$1 million and US$30 million in investable assets respectively, excluding primary residence, collectibles, consumables and consumer durables.

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