Private Client Services by Mercer
It is estimated that 90%^ of affluent families lose their wealth by the third generation. The economic downturn, low interest rate environment and increased market volatility brought about by the current COVID-19 pandemic, have reinforced a greater need to help your clients get their financial house in order, which includes their legacy plans. A proactive approach is needed to tackle the inevitable obstacles that families may encounter with succession and inter-generational wealth transition. Having an estate plan in place can help prevent your clients’ beneficiaries from dealing with a long, contentious probate process, giving them greater peace of mind when assets remain within the family. Life insurance can ensure a smooth and timely wealth transfer, while creating cash reserves that provide immediate liquidity for estate duty and inheritance tax for equitable distribution, without a loss in value to the next generation.
In different unique situations, clients may have different needs. Some of the common needs that may apply to your clients to help them create a lasting legacy planning through wealth protection and distribution include:
As a case-in-point, legacy planning has helped one of our high net worth clients, a Singapore citizen aged 69, allocate her wealth and protect her family’s future. The client had invested her inherited wealth from her late husband but her portfolio was badly affected during the early 2016 market sell-off, and she was concerned that the inheritance would diminish significantly.
The client wanted a regular income for herself and had planned to grow and pass on her wealth to her future generations. Given her age, she wanted to focus only on conservative investments with capital preservation.
A Universal Life insurance policy with Sum Assured of USD 4 Million was proposed, which resulted in the client being able to: