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00:00So, you know, I think this is just a massive event. The amount of wealth that is transferring between generations. And, you know, it's a younger, more educated, digital natives. So I think that to go to you first and I want you to kind of give us some kind of definition here or outline some of the opportunities that we're going to see in this generational wealth transfer and what people need to be aware of for that kind of opportunity to capture. Sure. Thank you. Thank you. I'm Chi-man. I'm from Raffles Family Office. So I think one of the key things that, you know, we've been asking, why is everyone, you know, suddenly looking at this industry at large, right? And I think one of the numbers I always look at is, you know, as Raffles Family Office, we are always very focused on, you know, greater China, Asia as a whole. And if you look at the bigger number, you know, in China alone there, the so-called ultra high net worth, they hold about 160 trillions of wealth. You know, that is about one point six times of the GDP in China. And then if you look at the amount of wealth that being transferred from one generation to the next in the next 160 trillion, in which currency? U.S. dollars? Always US dollars. Just making sure. Well, so. So. So in the next 10, 20, 30 years, you know, in China alone, you're talking about nineteen forty eight and ninety two trillion that's going to be passing on from one generation to the next. Right. So, so even look at, you know, the Chinese government's foreign reserve, which is as of last year about three point two trillion. So what you're looking at essentially is that the Chinese government are trying to pass on their whole, you know, on foreign reserves from one generation to the next, which is about 20, 25, 30 years younger. And they're going to do it for the next 30 years. And along the way, this number is going to go up. So I think it really about, you know, if you're going to be part of this industry, you better understand what the next generation will be thinking and the preference is going to be. I love it. You basically made clear why this is the most important panel of the day. Ignore everything. All right. This is the thing you need to understand. So, Stephanie, with that in mind, we've got you know, we know a big opportunity is what are the risks of this generational transfer? Yes. So with opportunity always comes with risks. Right. In Chinese, the word always tends to go together. So I think what Chi-man mentioned that just came back from Shanghai this weekend and everything was booming. And you rightly mention, I think China is the biggest market. But I think there are two things that when we think about when the next gen, particularly in this part of a region, we have to think clearly about as an industry. First as that I also worked in China for a few years myself. For a lot of us, we probably are working for foreign brands that are offshore, trying to tap into onshore market, foreign brands who we thought are very well known outside of China. Actually, some of our sort of onshore clients might not have heard of the likes of the biggest foreign names in the world, and they tend to sort of have this home based bias that, oh, these are the names that I'm growing up with. So brand building as like a foreign sort of name, especially based offshore, is something that's really sort of important for us to think about. And then second is when we think about the next generation. And I also think back when I was growing up. If your parents are using a certain sort of firm or certain set of bankers, do you necessarily want to sort of reuse the same set of providers that your parents use? I think that's a question that we want to ask, do the young generation really wants to sort of try something new? Sort of like, oh, I'm now sort of establishing my presence. Maybe I'll try something new. Right. So thinking about how do you have multigenerational sort of offerings and teams to serve the new generation is something that's also important because they might not necessarily want to sort of exactly use the same thing. Just because the family's been using the same set of providers for the past decades. I know that Stephanie is living what she says by wearing an endowest t-shirt, brand building is really, really important right now. We kind of, focusing in on a bit on how do we define this generation. And I specifically want you know, when we talk about this next generation, how they're different, what are the overhyped differences? One of the underappreciated differences? How are they really different that some people in this audience may not understand? Sure. One of the you know, when we say, you know, wealth transference, which means, you know, for one generation you're passing to the next, then it's about understanding what you know, how they see the world. And and two arguments I always put forward is about risk and return you know? How do they define risk fundamentally from one generation? For example, if you talk to the previous generation, you know, you talk about risk is about, you know, in the financial market, about 60 40. Right. But the next generation, they added more elements, which means, let's say, private equity, real estate, you know, digital assets or all these other asset class to look at is a lot wider. Right. So in some sort. So, you know, you can argue that the newer generation, they do have more to add to their portfolio. Right. So some of it is this much more volatile. You know, there could be volatility. But if you look at it from a portfolio perspective, is actually good for the portfolio and that the Beta Alpha is actually improved with the volatility and more volatility as an asset class. So that is on the risk side. On the return, you know, on the previous generation, I think what they look at is financial returns mostly. Right. Their debate basically that a lot of these decisions are pretty much being dictated by financial returns. But the newer generation, yes, financial returns is one thing, but there are also other elements to look at, for example, you know, the social impact. So these are the returns they look at. And also, fundamentally, we could understand the new generations, you know, especially in Asia. You know, I think that that is really hard to define where which funds you get from. Because generally this new generation, they are very well traveled. They are very well educated. And they were born and grew up in the Internet. You know, in the Internet boom. So to them, you know, the world is almost like a village. Right. So I think how they see risk and how they see return is fundamentally very different. OK. As a pass trader, I like the fact you define as risk reward return. So a tolerance for slightly higher volatility and diversity in the risk side and on the return side. It's not just financial terms. Still most important, but not just that same question to you, Stephanie. How do you define this, audience you're trying to capture? So I want to expand on what Chi-man said. I agree with what he said. But I think one more aspect I want to add and he kind of alluded to it because we're talking about intergenerational transfer. And I think majority of the transfer is transferring to millennials and their digital natives. So they were all born with sort of doing everything on the phone. So I'd also stress an aspect as they also care about experience. And I think we always talk about digital versus offline. It's actually not so clear cut anymore. I think the next generation of clients I have bad news for all of us is gonna be difficult to surf. It's not just online or offline. It's gonna be omni channel. So there are gonna be like, oh, I want to be able to have the news and the information on my phone. But if they have a question, they expect I call up someone. Someone should be able to answer my call or if I send an email or send out WhatsApp. So it's going to be harder to surf them because they're going to require omni channel. And I think it's also present a lot of opportunity. So in Dallas, we are a digital first platform. I think digital first doesn't mean you eliminate the human aspect, but with technology you can lower the servicing costs. You can do a lot of interesting things such as personalization. So in that way, I think it's to add on to what was discussed. I think the experience side is going to be also something that's interesting. How we craft the next generation's wealth experience is something that they're going to care about. It's not just about returns. So when you say omni channel, what it boils down to is that really just about being a much quicker turnaround time for response rate? So, you know, it's true that the primary means of communication with a wealth manager in the past might have been by phone and by meetings and then by emails. And now you've got social media in other ways. But is the change really that just like you now expect to go to WhatsApp your wealth manager at any time of day and get a response instantly, or is that really the change? So I've sort of been through this myself. I moved to fintech about seven, eight years ago. And I'd say when I first moved to fintech, fintech, 1.0 is exactly what you mentioned. What we saw was just moving things from offline to online. So previously I go to a bank and then now I can do things on a mobile phone. But I think we're really at the cusp of or we've started 2.0 and really accelerated by Covid. It is not just of being able to do things online faster. But how do you really harness the technology, the data to provide sort of more in-depth sort of next generation experience through AI, through personalization? I think ChatGPT is the hot word, but I do think there's a lot of sort of imaginations of the next generation of experience we can harness the technology to provide to these clients. It's not just doing things online, but providing things that they find value for through the data, through your interactions. How do you provide things that they find it's valuable? I think this is something that I find super interesting and not just, oh, with technology, I'm able to respond things faster. Okay. So I have a question for both of you. And I think there's probably a mixture of people in the audience. There's people like myself who are like I mean, not at the forefront of this digital transformation, you know, and therefore kind of where it's happening. I guess I'd look for some concrete examples of like we we use this strange phrase, digital transformation is kind of trope, but like, what does it really mean? But specifically in terms of building new ways of trust and engagement, how does that work? Can you give me some concrete examples of this stuff? I'll go to you again first, but I will ask you after his treatment. So when I think about how do you build a. Generational sort of wealth experience. I think we go back to the the champions that we've seen in the tech sector. Why? I really like shopping on Amazon, on Taliban as because it's not just they moved everything online. There's so many things to buy online. But when I go on that app, they really sort of recommend me things that I find interesting and find engaging, I find useful. Right. So I think for four for me. For Dallas, what we're trying to do is similar provide that curation for clients using sort of profession. Our professional sort of wealth experience, DNA married with technology to really create that experience for clients. So to be more specific outcomes to client. It's not sort of one size fits all. We do a lot of testing. We test OK, whether you're a morning person and whether evening person, whether you like numbers in your email headers, whether you like words in your e-mail headers, what is the open rate? And these are things that that we can continuously monitor and see whether whether the clients would like sort of our outcomes better. And we continue to improve our our engagement with them because I'm sure all of us back a few years. All our mail box is spam emails and they tend to just be one size fits all the same email and it's not their personalized style. That's something that that that we've been doing. And I'm also curious to hear more from you. What are you doing or please? Yeah, I think so. Well, you know, there's a lot of similarity between raffles on the office and I'm not always, but I think in terms of the technology and how much digital digital transformation is going to affect the settlement of client that we are targeting. Is a fundamentally there's quite a big difference. But I think in terms of digital transformation, it play a bigger role probably and always. But I think in terms of raffles, family office and the ultra high net worth, I think it play a much smaller role. Right. However insidious, 2017, 2018. You know, one of the strategy that Raffles family off is to try to future proof ourself is via the spectrum of asset class that would be going to and potentially, of course, you know, the def that we go into, for example, one of the thing that we look at is private private equity. But when we say private equity, we're not talking about a blanket of funds. We are talking about direct investments. Right. Because this future generation, they want to look at, they want to have the full transparency and they want to be actively participating in the building of this company. That is not that is going to show, you know, there's going to be a financial return for them. But definitely they are also pirating other things, like, for example, the social impact. Right. So which is definitely on a very high priority list on them. And, of course, you know, real estate, they should have assets. So these are the things that that I think are play a much bigger role in terms of the ultra high net worth that reference from the office is going after. In fact, last year we launched and other family office that focus on purely digital assets. But underlying is a blocking technology. I mean, of course, when we talk about digital asset, we are not just, you know, referring to, you know, big koi theorem. You know, this cryptocurrency, what we are really after is the stable coin. Now, I think that is going in the future. And right now you have a Hong Kong dollars. Recently I came back from Shanghai as well. The EIB is really out. You know, a bank of China is really promoting this quite actively. And we've got Japanese in Japanese, a small Japanese yen, the Singapore dollars, U.S. dollar stable, quite a lot of this stable going down. But potentially they are going to be backed by know central government. Right. So in five years from now, a billion Emma Chandra don't and say, you know what, I like you forced from office. Would you like to take out my assets? However, 30 percent of them might come in the form of new currency, which is a digital currency that is backed by the government. And that's when the custodian, you know, the the product and the strategy has to change. Right. So that is why when that happens, you know, that 30 percent will go to rival digital family office and the 70 percent will go to report from the office and constantly. That's how we future proof ourself. Okay. When you say they want much more depth and like on their investments, is it they actually want much more influence and control over what's happening or is that they want the feeling of more influence? Control, which is it? I think it's a bit of a both, really. I mean, you have to be honest. But I would say the majority is really about, you know, really about making a difference. For example, let me give you an example. Let's say rare state, which is, you know, in Asia, you know, an average Asian family will have about close to 30 percent exposure in this asset class. And when the new generation take over. Right. What they want to do is this a new way of dealing with this? You know, very traditional as asset class. Right. So so how do you turn a building from brown to green? Right. And that's when you need expertise on untying the property from brown to green. And then, of course, you know, you talk about this. There's a green premium, as we say, is a better return. And of course, but ultimately, fundamentally, the second on the new generation, what they are really after. They want to have a social positive social impact on the society as a whole. OK. And by the way, Jim ISE said that. You know, Ruffles, Wealth Management and Dallas are more similar than I think. I'd be remiss not to observe his little pin ruffles. He's also aware of branding and the importance in a more subtle way. I guess I'm curious, but the gender balance shift that's happening in Asia, wealth as part of this generational transfer, so particularly the last 25 years, there are many more female entrepreneurs, many more powerful female businessmen. It's really, really changed for twenty five years ago where the wealth was very much managed and many quite patriarchal societies. How is that affecting how you're doing business? I think it's it's a very powerful force and we definitely see that on our platform. We see sort of very balanced kind of gender sort of split on our platform that historically you'd imagine that, oh, maybe the male is responsible for taking care of the family sort of wealth planning. But I think we do see that female. It's really taking a much more critical role. And I think we alluded to this in our early conversations. And it is because this generation, they're more educated, they're more sort of well travelled. And I think one word that was mentioned and I really want to raise it again is this word about transparency. It's because they're more educated. They really want more transparency. And I think that's why technology comes to comes to a role. To do this with technology, everything's sort of it's more clear you provide more transparency. Historically, I think that industry, we like to bundle things together and it's difficult to unbundle and everything. It's in the stack of very thick paper. But if it's it's it's sort of digital. And people want to take their finances more seriously than they want more transparency. I think that's that's that's part of the reason why female also taking more of a role that with technology, with digital platforms, that you can have more access to information, more access to advice. They can take charge into this. And I think it's very interesting. And as you mentioned, it is not just helping with the family. We have a generation of female entrepreneurs as well that's generated great, generating a lot of wealth themselves. And I think this is something that's a very booming area. And I recently also started out writing columns specific to this area because there's just so much demand for this that people looking for advice for peers at bias. But it's historically it's not a big focus area, but we do see there's a lot of interest in this area. Okay. And just before I follow up, if you want to ask any questions to our panelists, you've got about three minutes to lodge something in through the QR codes also on your little barge. By the way, you can see a QR code and your question, I guess with that evolution, then it does not mean there are many more or less this huge amount. I mean, it's a family wealth. No. Are there many more stakeholders? So if you've got a very wealthy family, it used to be quite a centralized decision process, whereas. No. Do you have to make your offering appeal to much more broader set of the family, even though it's only one account? Or does that not? Do they just have separate accounts? I think this is every family is different, right? I would say is a liberal both. But I think from my perspective, from my observation about raffles, my motto is, is that about one third of a coin, not actually single family office. Right. And generally, they they they are in the range of, you know, between five to eight people, family office setup. And if you really look at the amount of wealth that is being created and the kind of asset class they are trying to cover is really a small number. Right. So a lot of it, you know, they outsource as a part of it to a multifamily office like us. And and that makes a lot of sense because in terms of cost, in terms of efficiency, it makes a lot of sense. Right. So I think in terms of, you know, really what one multi-family office, single family is eating some way is not really a competition. It is is more about working together. You know, and one of the key thing that that we put forward as a breakfast Matt Miller is also at the same time as well, sometimes linking up to different families that that they would add value to each other. Right. And that is also one of the key reasons sometimes people use a multifamily office like us. Right. Because they might potentially say, you know what? You know, I'm very good at this market in this industry, but I'm looking to expand to the other market in the other country, in the same market. And it makes a lot of sense for someone strategically, you know, to be to be introduced by a middleman. Bye bye. Bye bye. Multifamily office. Let us. So when they do that, when we do that and I think there's a lot of value we really add to the family rather than just returns. Okay. Question to Stephanie. We're running out of time, but said there is strong interest in creating family foundation legacies. What are your thoughts on that? I think echoing to what was mentioned earlier, there is definitely the strong sense of ESG giving back to society for the sector and second generation. So I do think there is this increasing and it has been there for for a lot of years. But I think the second generation really. Wants to take a sort of more direct sort of approach in terms of how they think about philanthropy. So I think there is definitely interest in that to sort of build up the family legacy in terms of the areas of philanthropy. And you mentioned earlier about transparency. Is that squeezing fees too much? Or is the next generation aware there needs to be fees there that they need to pay for a service? And as long as it's transparent, they don't mind paying the fee or what's the situation? It's interesting. So might my firm's model is all about sort of transparency and fees. And I think you rightly mentioned I think people are if you give them good advice, professional advice, they know they that they're willing to pay. But I think the next generation, they're more educated and they just want to know. So exactly what are the fees? How are they justified? What kind of value when I'm getting out out from from the fees. So I do agree that if you can sort of provide more transparency, people are willing to pay. But I think why people are a bit hesitant and about sort of fee structures and are sort of interested to learn more sort of our fee only independent fee structure is that they want more transparency. They really want to understand what exactly am I getting out from from from your service? OK. We're running out of time. So I'm going to conveniently skip the question, which you did get with the rise of digital players. What are the factors the next generation consider when picking their own provider? CAC go 10 seconds. What do you think? Obviously, both the growth firm, which is why is going to grow, you know, committed to I think for this I'm going to say, you know, that Revolt, Digital Family Office, the foundation of is based on regulation and governance. And I think if there's one thing that you look at is definitely regulation and governance. And this is exactly the foundation of both digital family office. OK, Stephanie. Same transparency cost, fiduciary duty, sort of be agile, provide some, isn't it? Regulations basically agree. You're the two best for these. Your only two options for the duration wealth margins of.

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Raffles Family Office and Endowus on NextGen Wealth

Chi-man Kwan, Group CEO & Co-Founder, Raffles Family Office and Steffanie Yuen, Managing Director & Head of Hong Kong, Endowus discuss how wealth managers can more effectively engage with the younger generations with Bloomberg’s Mark Cudmore at the Bloomberg Wealth Asia Summit. (Source: Bloomberg)

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