Newly acquired wealth is always guarded more closely by Asians and cultural ethos is rarely abandoned by business compulsions. Discussing issues like wealth planning is not an easy task with most clients as it involves talking about death, but with the Chinese, it is even tougher. “Particularly during the Chinese New Year, it is inappropriate to talk about such issues,” says Marcus Hinkley, group partner and head of Collas Crill in Singapore.

At the same time, according to Hinkley, Asian clients really like the idea of being viewed as the patriarch of a dynasty.

Hinkley recalls a recent case when an individual worth more than $100 million was introduced to him by a private banker. The banker had previously suggested a simple single generational, revocable trust which could have satisfied some of his client's objectives in the immediate term. However, the client got emotionally connected with the idea that his trust could become a cornerstone of a long-lasting, multigenerational legacy, he says.

Asia’s dominance in the new private wealth planning sector has been so powerful that the unique needs of Asian clients are directing the whole trust concept which, according to Hinkley, will become a model for the future.

“Since the 1970s, the Anglo-Saxon model of private client trusts has evolved to vest a trustee with significant discretions in relation to the assets under its care,” he says, “Asian clients are, however, apprehensive of losing their hold on their assets, and therefore, insist on having firm control of the trusts.” This motivation is so compelling that it is driving legislative changes in Jersey, Guernsey, BVI and Cayman Islands, and Singapore and Hong Kong to ensure that the trust law meets the demand of Asian clients, he adds.

According to Hinkley, the principal motivation to establish trust structures for clients from emerging economies, such as Indonesia, and the greater ASEAN region seems to be the succession of business and family assets in addition to confidentiality. “Such clients generally don’t want others to know that they have set up these trusts,” he says. It is notable that “tax planning is down in the list of their priorities.”

It is not just the products that have been modified for Asian clients, but the sales techniques employed by the offshore service providers too have become more innovative. “Culturally, it is difficult for non-Asian companies to bring in their own marketing people,” says Hinkley, “a number of companies, including law firms and other service providers, are employing local people to sell their services.” Private banks and trust companies have sales teams that go around in the ASEAN region to find new clients. Based on the specific needs of clients, these teams then instruct relevant service providers in Singapore, he says.

According to the 2012 Asia-Pacific Wealth Report, Asia-Pacific in 2011 became home to more high net worth individuals (HNWI) than any other region. It included individuals with at least $1 million at their disposal to invest. “Driven by growth in the large markets of Japan and China, the HNWI population in Asia-Pacific continued its sustained growth in 2011, and hit 3.37 million,” says the report by Capgemini and RBC Wealth Management.

According to the report, most of these HNWIs hail from China and India, and a large proportion of them are keen to keep their assets in their home region.

The report goes on to say that, “HNWIs around the world are seeking greater control over their assets and want more options for preserving and growing capital, diversifying and restructuring their portfolios, hedging risks, and establishing succession plans for business and family wealth.”

The report also highlights the fact that there has been an internationalisation of wealth over the last decade with individuals and entrepreneurs developing more business and personal interests in various countries. “These HNWIs increasingly form a substantial part of the client base for offshore wealth centres looking, for example, for trusts in multiple locations,” says the report.

Regarding his own clients, Hinkley says that they “are typically the intermediaries like the private banker, lawyers, accountants, trust companies and investment managers.”

Though most lawyers providing offshore related services rarely happen to meet their underlying clients, those engaged in litigation services interact closely with them. “Asians regard litigation as a very serious threat to their business, so they always want to have face-to-face meetings with us,” says Ian Mann, head of litigation and restructuring at Harneys in Hong Kong. “Clients fly in to see me regularly, or sometimes I travel to see clients to discuss litigation matters,” he says.

Indeed, personal relationships are regarded highly in Asia. “They want to get to know you personally, where were you born and educated, and sometimes would even like to meet your family,” says Mann, “it is a very different market for that reason.”

Even in India, it is a norm to gain a personal acquaintance of people and places related to one’s business. According to Shefali Goradia, a chartered accountant and a tax consultant at BMR Advisors in Mumbai, several Indian clients want to travel to offshore financial centres even though it is not necessary for setting up a financial vehicle there. “They like to make sure that they know the people involved and it is not just some fly-by-night operator,” she says, “some even visit their company address in offshore location just to see where their wealth is being managed from.” Generally, they choose a location that is not too far away and convenient to visit once a year - somewhere like Channel Islands and BVI, she says.

Despite being inquisitive and intrusive by Western standards, most Asian clients leave a positive impression on offshore lawyers. They are sophisticated individuals and well-educated business people, says Richard Hall, partner at Conyers Dill & Pearman in Hong Kong. “Many of the younger clients are more international because the younger generations have had the opportunity to be educated abroad and to travel more widely than previous generations.”

Hall says that many success stories in Hong Kong involve the first generation of the families that commenced their business in the 1940s, and moved their way up from owning nothing to running successful businesses. Currently, the second generation of those businessmen are in their 50s or 60s and have grown the business further. Some are even in the process of transferring control to the third generation, he said. Most of the members of this third generation have had the opportunity of higher education, often in the United States or England, with degrees in business management, and other benefits associated with third generation wealth.

However, according to Hall, many clients are still very price sensitive. They do not see any benefit in paying more for what is perceived to be a more expensive offshore jurisdiction over a cheaper one, he says.

"There is a lot of jurisdiction arbitrage in the industry," says Hinkley, "but I suspect this is driven more by the service provider's requirements than the underlying clients.” According to him, offshore jurisdictions have become very competitive and have a very similar service offering.

However, according to Timothy Bridges, a partner at Harneys in Hong Kong who specialises in corporate finance and investment funds, the level of knowledge about offshore financial products among Asian clients is much higher than one might expect it to be.

In addition to clients, local lawyers also take offshore solutions rather seriously. “PRC lawyers who frequently encounter offshore structures have access to copies of BVI and Cayman legislations which they place on their desks and use daily,” says Mann, “after 30 years of using these products, they are in love with offshore structuring for all the right reasons.”

According to Hall, if an offshore vehicle facilitates the operation and performance of their businesses, they are more than happy to use it regardless of the location of offshore centres.

Clients also use offshore if they manage to get an access to a market that otherwise they could not enter, such as listing  on a stock exchange, says Hinkley.

Outlining a profile of Asian offshore clients, Bridges says that most of them have established business with an export and a Chinese aspect to it. “The actual clients may not be Chinese, but the project usually has some connection with China.” Business relating to the Indonesian resources boom is also a very significant client base, says Mann.

John Melia, corporate and commercial partner at Appleby in Hong Kong, says that Asian clients are becoming more and more international rather than adopting any particular national traits of their own while doing business. “Chinese clients have recently been undertaking a large amount of outbound investments, and that is certainly a form of internationalisation for Chinese businesses,” he says. “They have built up enough in their own jurisdiction, and now want to go out and acquire resources brands or knowhow from other countries.”

Mann calls Asian clients as the drivers of the world’s future. “They, particularly people in Hong Kong, know it,” he says, “they are the future, and it is a very exciting place to be in.”

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