Swiss bank UBS released its latest Investor Watch report this week – a survey of 4,500 investors in 14 markets with at least $1 million in investable assets.

A new report by UBS shows that a majority –  68 per cent – of investors surveyed in Asia Pacific are concerned about the hurdles they face when transferring their wealth and want the process to go smoothly. 

According to the report, 72 per cent of respondents in the region said it was challenging to divide their assets fairly. 

Among heirs, 43 per cent wish they had discussed inheritance plans with their benefactors before they passed away and many who served as executors said that carrying out their benefactor’s last wishes was difficult, the report adds.

It also found that around 40 per cent of investors globally have not formalised an inheritance plan, due to the complexity of dividing their inheritance fairly. 

Fifty per cent of investors surveyed have not shared where their assets are held, how they intend to divide them, or how much they are worth, the report states.

Navigating a wealth transfer can be a complicated and emotional procedure. Two-thirds of investors struggle with how to share their wealth in a way they consider fair, particularly if it means dividing assets unequally among heirs, the report continues.

At the heart of wealth managers' concerns is how to retain the business of the rising generation of wealth holders. It is a force that keeps advisors "awake at night" and is a regular subject for reports and commentary in the wealth management sector. The wealth transfer issue, in part, explains the enthusiasm for digitalisation of the wealth management sector, ESG investing, attention on diversity, equity and inclusion, and talent management and training. 

Heirs and estates
Investors who choose to favour some of their heirs over others are clear about why, with 80 per cent giving more to heirs they have closer relationships with. Others cite what their heirs’ financial needs are and how much responsibility they have in taking care of their benefactor as they age.

“While investors overwhelmingly want the inheritance process to go smoothly, inadequate inheritance planning can be costly and could lead to unresolved family conflict,” said Iqbal Khan, president of global wealth management and president of Europe, Middle East, and Africa at UBS. 

“Every family has different values and should be supported by a team of professionals who can help them develop a personalised strategy to preserve what is most important to them,” he added.

Different family dynamics can also complicate inheritance plans, the report states. Families that include stepchildren face even greater struggles over dividing assets. Eighty-seven per cent of blended families struggle with dividing assets fairly, compared with 62 per cent of non-blended families. 

Investors without children are more likely to leave a higher proportion of their wealth to charitable causes, compared with investors who have children, the report adds.

Business owners face additional complications when addressing the wealth transfer – particularly since the business is often the most valuable asset and difficult to pass on. Six in 10 business owners struggle to divide assets fairly. Around half hope to leave their business to family, but many have no estate plan and have not discussed their intentions with heirs or set expectations about business transition plans, the report says.

UBS surveyed 4,500 investors with at least $1 million in investable assets, split across 14 markets: Argentina, Brazil, mainland China, France, Germany, Hong Kong, Italy, Japan, Mexico, Singapore, Switzerland, the UAE, the UK, and the US. The research was conducted in April 2022.