Building a legacy is a multifaceted endeavour that implies looking beyond your own years on this planet. It takes foresight and dedication to provide enduring stability and shape a prosperous future for your descendants. Before training your sights on the next generation, however, one of the first places to start when building cross-generational wealth is to consider how much you’ll need to maintain your own needs in this generation.
“It’s not uncommon for people to underestimate the means required to maintain their current lifestyle long into the future,” advises Zurich-based Financial Planner Thomas Bopp. “Some believe they need to maintain the bulk of their wealth well into their retirement to feel financially secure, even though they can’t take it with them. Although this is a very human and understandable way of thinking, it’s important to be realistic about how much wealth is needed to allow you to live a comfortable life.”
Even if each family has its own way of managing its finances and planning for the future, Thomas advises strongly against leaving your partner out of the loop. “It’s generally best to communicate openly, honestly and regularly so that everyone is on the same page and feels secure about the future,” he says. “This is particularly important when couples are not married or in a legally recognised partnership. Make sure you understand marriage and family law in your country of residence and what it might mean for your future.”
Instil the right values to create an equal world
Picking up on this theme, Bruna Casanova, a Relationship Manager in Brazil, said the days when strict gender roles decided which partner would plan for a family’s future are gone. Bruna’s tips for women to build a strong financial legacy for themselves and future generations of their families put the emphasis on education, confidence and awareness. “Knowledge is power,” she said. “It’s important for women to stay informed of structural changes that affect the investment landscape. A strong grasp on economic and technological advancements can help you make informed decisions about wealth planning.”
As a mother of young twins, a boy and a girl, Bruna’s thoughts about legacy extended beyond purely financial aspects. She’s helping the next generation grow into self-assured and responsible adults by raising a strong and independent daughter who’s prepared to meet the challenges that lie ahead, and a confident and considerate son who can find his place without reverting to gender stereotypes when it comes to money and more. “As equals in both professional and private matters, women must strive to build a world where they’re no longer held back by self-doubt in their own abilities.”
Talk openly about the challenges to reduce anxiety
Educating children to navigate the terrain that lies ahead in life is also top of mind for Nada Al Yazdi, a Senior Client Partner in Dubai. Nada has first-hand experience of the effect that outside events such as macroeconomic disruptions can have on a family’s finances. She believes that leaving a sound legacy to our children depends on our ability to have honest and open conversations within the family to prepare them for the ups and downs to come.
“The next generation know that the wealth created by their parents can disappear if it’s not invested wisely,” says Nada. “Many of my clients’ children are already experiencing anxiety about money.” Her three pieces of advice to reduce this anxiety revolve around providing a sense of control: set life goals, make a budget, and plan your wealth transfer in good time. “Stress related to money can affect every aspect of one’s life,” said Nada. “Loss of sleep, headaches, digestive issues, high blood pressure. It’s crucial to effectively manage your economic life and finances to minimise this money-induced anxiety.”
Take emotions out of the equation to protect your wealth
The anxieties surrounding investment decisions are just as familiar to Jia Hao Sng, Head of Mandate Advisory in Singapore. Jia Hao knows that investors’ ability to take a long-term view and build a lasting legacy is easier when they’re not experiencing the short-term rollercoaster of emotions that come with managing their own allocations and positions. “Investors often act impulsively when it’s their own money on the line,” says Jia Hao. “During downturns in the market, they tend to sell off investments too early. Then, without a rational approach to reinvesting, they fail to capitalise on the opportunistic strategies that emerge when things pick up again.”
Jia Hao and his colleagues in discretionary portfolio management help clients’ optimise their returns by allowing them to step back from day-to-day oversight of their allocations and positions. “It’s almost impossible for ultra-high-net worth clients to manage their wealth efficiently on their own. We have more than 150 portfolio managers and more than 100 research analysts covering different investment styles and asset classes, as well as sophisticated systems and infrastructure to manage all these investments in a holistic manner. This increases the client’s chances of good performance over the long term.”
Diversify your portfolio with different asset classes
Throughout the Wealth Architects series, we’ve also consulted experts in specific asset classes for insights into which asset classes offer the potential for cross-generational growth.
Private-market investments, where investors invest in instruments such as non-listed companies in high-growth sectors, are enticing for families looking to build a legacy of wealth because they aim to generate high returns over the longer term. “Be open-minded to new ideas,” advises Dr Giuseppe de Filippo, Head of Private Capital Markets, “hidden opportunities in private markets can’t be found if you don’t search thoroughly.” At the same time, he stresses the importance of selectivity. “Private markets are by nature opaque. Analyse an investment from all angles – don’t invest without doing your homework just because you fear missing out.”
The world of digital assets was similarly opaque to most investors until a few years ago. Now, given the role it will play in the lives of the next generation, many wealth givers are embracing it as part of their broader portfolio. Aline Renda, Business Innovation Specialist, sounds a note of caution for those planning to bequeath crypto assets. “Digital assets worth millions are lost every year due to a lack of succession planning. No one lives forever, so it’s vital that you think about who currently has access to your crypto wallet and how can you ensure that the right people can access these funds in the event of your death.”
Despite the emergence of these intangible assets, bricks and mortar continue to appeal to wealth givers – not only because of real estate’s record as the best performing asset-class over the long term, but also its appeal as a tangible, robust legacy for heirs. In her ‘home truths’ for investors, Residential Broker Peggy Robillard cited the important of understanding local market dynamics: “Always rely on the insights of a local specialist,” she said. “And don’t be too fixed in your ideas – the right property investment depends on the location.”
Maintain your legacy by moving with the times
Throughout the series, we’ve spoken to Wealth Architects from every corner of the Julius Baer world – from Zurich to Brazil and Dubai to Singapore – reflecting the global expertise we provide when supporting internationally located wealth givers and receivers. What advice do our architects have for families seeking to leave a secure legacy when their assets and family members are spread across the world?
“No one advisor can honestly say that they have all the answers,” says Marco Sella-Rolando, Head of Wealth Planning International. “Whilst our skill is in taking a high-level, 30,000 feet helicopter view, the key is to select, harmonise and manage a professional service team around the family that can synthesise the various moving parts.”
Marco also adds context to our notions of leaving a permanent legacy. “‘Lasting outcomes’ is perhaps a misnomer in a world that turns with constant change in the legal, regulatory and tax environments,” says Marco. “Nothing is forever, but prudent and early focus on how planning might react to changes in life events will help ensure that forever doesn’t need to be such a long, or finite, term.” In legacy planning, it seems, as in other aspects of wealth management, regular review is key.