The latest report from the Barclays Wealth Insights series – The Transfer of Trust: Wealth and Succession in a Changing World said that high net worth individuals (HNWIs) in the Middle East showed the highest levels of trust in their children to manage and protect their wealth.
Based on a global survey of more than 2,000 high net worth individuals, the report provides an in-depth examination of wealthy individuals’ attitudes toward wealth transfer and succession planning, as well as offering an insight into what the future holds for the next generation. It also looks at how wealth in many cases can act as a double-edged sword, leading to distrust and conflict.
Globally, developed countries display higher levels of uncertainty when it comes to trusting their children and stepchildren to look after their wealth. Respondents in the Middle East (78 percent), Africa (77 percent) and Latin America (75 percent) show high levels of trust in their children and stepchildren when it comes to money management and protecting their inheritance, when compared to Australia (59 percent), North America (61 percent) and Europe (62 percent).
The report also revealed that those with higher levels of wealth of more than £10 million (44 percent) and those that have inherited their wealth (46 percent) are more likely to have experienced such conflict. Yet the reverse rings true for earned wealth, as those with a higher income are less likely to find that wealth causes conflict.
Globally, 43 percent of respondents earning a salary less than £100,000 cite that they have experienced conflict due to family wealth, compared to only 37 percent of those earning over £500,000.
The report also showed that those with more children are also less likely to encounter such disputes over family wealth. Globally, 47 percent of respondents with no children state that they have seen wealth lead to family conflict, as opposed to 32 percent of respondents with four or more children.
Rory Gilbert, Managing Director and Head of Middle East and North Africa for International Private Banking at Barclays Wealth, said: “Regionally, 90 percent of Middle East respondents place a high priority on setting up a trust fund for their children to secure their future.”
“However, when it comes to seeking professional advice in developing an inheritance plan for their offspring, respondents are evenly split on their views,” he further said.
“Understanding options for succession planning in advance, and seeking professional advice can provide confidence that your wealth will be wisely managed in the future,” he added.
Catherine Grum, Director, Wealth Advisory, Barclays Wealth, said: “In the case of wealth that has been inherited, tensions around entitlement may lead to disputes. However, it is surprising just how many wealthy respondents report experiencing such conflict and the impact that source of wealth can have on this, with wealthier respondents more likely to have encountered such conflict.”
Despite all the potential conflicts associated with succession and wealth, the report showed that the world’s wealthy remain committed to passing on their assets to the next generation, with only four per cent of global respondents believing that this should not be the case. Globally, 60 percent of respondents say that they require a significant level of professional advice when deciding on an inheritance plan for their children and stepchildren, emphasizing the need for expert advice to guide them through this decision-making process.
The report found that 70 percent of global respondents believe that when it comes to wealth transfer, assets should be divided equally among their children.