Wealth planning specialists offer in-depth support about regulatory aspects related to the detention of the different assets (financial investments, corporate holdings, real estate, luxury goods and, in perspective, crypto assets and NFT). Regulatory deepening is fundamental and preparatory to identify the asset planning solutions suitable for specific family needs. Once the most effective solution has been found, they still pass implementation of a personalized capital strategy that will be calibrated for the specific needs expressed by the customer and will be monitored from the design phase to the implementation one. An at least 300° approach that few intermediaries are able to offer, but will be strictly needed in the future.
Entering in more details of the different asset classes, a first strand is dedicated to financial wealth, the aim of which is to neutralize the risks and inefficiencies of the possession of financial portfolios by natural persons. This mode, especially looking at the Italian experience, turns out to be quite frequent. Nevertheless, it appears to be inefficient, both from a fiscal point of view than under that of the risk of aggression of the heritage. For this reason, solutions are promoted through which persons and families can hold such assets and their volatility more effectively.
A first solution concerns the establishment of family holding companies. Who provides a more sophisticated service in this area carries out a constant activity to update the tools adopted, adapting them to changing clients’ needs. On the one hand, the holding statutes provide the opportunity to include the latest corporate instruments governance such as particular rights of some individuated members. On the other hand, have been taken into account also foreign legal structures. Some of these family safes have turned into trusts, which by reason of the ductility that characterizes them, have appeared particularly effective in asset management. This has prompted some solutions, like Family Offices, to integrate this component through internal trustee companies.
A further solution, also capable of combining asset protection with generational transition, resides in private person life insurance (PPLI), internalized activities with more advanced facilities, often by acquiring an insurance broker. These activities are manifold and range from the analysis of the needs of the family to the consolidation of portfolio instruments until the check-up of themselves also with the aim of stylizing the tax risk related to requalification, like the process that could transform the policy from an insurance tool to a financial instrument, causing its tax and civil benefits to lapse such as exclusion from inheritance tax or distraints.
A service particularly requested concerns the world of trust, an increasingly integral part of top asset management services. It implies immediate confidentiality, simplification in the possession of assets abroad (as part of its tax monitoring obligations), fiscal consolidation, and the recovery of double taxation. In addition to the services have been joined by others, such as the assignments of testamentary executions or those related to hereditary divisions, or those aimed at ensuring the appropriate confidentiality in making donations on behalf of the trustee. The fulcrums of the new frontier of wealth planning services provided reside in the in-account aggregation and in the consolidated capital, fundamental instruments for top wealth management business and for the supervision of large assets.
A particular parenthesis must be reserved for asset planning services dedicated to real estate assets, not infrequently capable of representing almost 50% of the value of the entire family wealth. Valorization of this component – perhaps with the help of property managers – is particularly in demand by families. Too often the properties are managed irrationally, leaving aside several of their economic, fiscal and successor aspects that specialists can manage virtuously by having the ability to evaluate on time the contribution in terms of risk/return made by the real estate to the entire worth estate.
Thanks to sophisticated software, asset managers can carry out a mapping capable of bringing out increasing levels of deepening. For example, it will be possible to highlight both at the international level and in a domestic way the taxation or peculiar characteristics of overly concentrated or poorly performing geographical areas. Fundamental is, by the way, the contribution in terms of the reference market and its evolution, especially since up to a recent past real estate investment was perceived as free risks and capable of generating almost certain and significant returns.
In this sense, the assistance (or the advisory) offers services focused on the analysis of new market trends such as those related, for example, to the revolution of the student sector, a segment not yet considered in the mature phase, with wide margins of yield. Equally noteworthy is the impact of technology on the real estate of the hotel industry, which through new channels, has revolutionized the concept of hospitality. Properties are devoted to the search of returns and cash flows and not to direct use for HNWI.
By the investment side (perhaps related to trophy assets, such as are called the properties of absolute value, in exclusive locations and with architectural characteristics of exception, or income properties), it is necessary to a thoughtful strategy that avoids focusing on overrated locations and the exposure of the real estate component in the overall picture of the family heritage. Asset planning can be useful in the early identification of risks potentially likely to cause detriment in the value of real estate assets when they are held directly by the individuals. This condition, which is often inefficient from the point of view of protection of assets, can be overcome through the interposition of companies or trusts until more complex structures such as real estate reserved funds.
Always on the risk management side, think of the tax one (mainly the taxation of successors) resulting from the purchase as a natural person of a property situated in a foreign state. Turning to transmission to future generations, on the other hand, they are fundamental optimization of the tax burden and, below, the ability to avoid of inheriting communions that could deplete their value and make them management (both ordinary and extraordinary) almost impossible.
Equally crucial can be the maintenance of the unity of certain real estate, especially if instrumental. Wealth planning strategies concern all the heritage, wherever it is allocated, and always make the centrality of internationalization is more evident. This phenomenon has an even greater incidence for wealthy families, where some members move for various reasons in different parts of the globe, dislocating portions of their heritage and family. It is therefore not surprising that the most sophisticated asset managers offer services related to the growing demand for strategies in international successions and regimes assets of international couples. Linked to internationalization are also relocation services, like assistance to families compared to their transfer to another country. They must be read in a sense not limited to tax assessments or related to residence permits, but able to range also in the search for housing or training institutions for school-age family members.
Training plays an important role in services for families and some advisors are involved also in the selection of the best universities or master’s degrees up to the promotion of tailor-made training initiatives tailored to the desired of the single-family for some of its members. Others come to identify pathways for younger generations in business management and more in general of business administration. Finally, it is necessary to mention all the administrative and management services of boats or aircraft or art collections, as well as those related to leisure and, last but not least – assistance in carrying out activities, philanthropic services, which may appear marginal, but which embody instead a growing interest of top customers.
Article edit by Giuseppe G. Santorsola
Full Professor of Asset Management
Corporate Finance and Corporate & Investment Banking
Parthenope University of Naples