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UBP’s Wong Lee: the changing tempo of wealth planning

UBP’s Wong Lee: the changing tempo of wealth planning

Much like the opening bars of Beethoven’s Fifth Symphony, Indonesia’s announcement of a tax amnesty bill struck an ominous note.

For the country’s government, however, it was a long-overdue attempt to boost tax revenues by providing concessions to citizens who chose to disclose and repatriate their millions stashed abroad.

Coupled with the OECD’s Automatic Exchange of Information act, the performance unfolded over multiple movements in Asia, with private banks in Hong Kong and Singapore scrambling to understand the impact on their clients and doing case-by-case risk analysis.

The crescendo came on 31 March, when Indonesian taxpayers declared more than $360 billion in assets.

Trained lawyer Wong Lee, South Asia head of wealth planning at Union Bancaire Privée, says the OECD’s Automatic Exchange of Information act is having a profound impact on how clients construct their succession arrangements.

‘Those clients coming from a regime where disclosure wasn’t something they were accustomed to were asked to analyse their exposure. They were told to provide more documentary evidence of their tax status and banking transactions and to look again at their ownership strategies and plans for the future,’ says Wong, who covers Singapore, Indonesia, Malaysia, Thailand and the non-resident India segment, mostly dealing with entrepreneurial families.

Some clients are going beyond wealth structuring to look at how they will pass on their businesses, and are thinking about issues around relocation and mobility.

Indonesians are increasingly having these discussions with their families, she says.

Building trust

Beethoven’s iconic composition took four years to create. Likewise, the development of a sound succession plan takes time to turn ambitions into a definitive course of action. Indonesians are starting to realise that, Wong says.

‘What you are looking at is a more mature wealth planning market. They are fine-tuning the sophistication of their tools and not limiting themselves to trust structures, for example.’

Despite living in a land where trusts are not a widely recognised concept, Indonesians tend to embrace the concept, she elaborates.

‘There is a need for asset protection and succession planning – making sure you are transiting wealth properly to the next generation.

So while the concept is technically not accepted in Indonesia, there is a lot of buy-in from clients and usage is prominent,’ she says.

‘They are looking at Europe to see how people there have dealt with succession issues in higher-tax regimes, jurisdictions where trust is not a recognised concept.’ Indonesians are starting to look at life insurance solutions such as private placement life insurance, which is commonly used in Europe as a succession tool.

Wong’s Malaysian clients, meanwhile, are gearing up for business succession planning.

‘Malaysia is a country where there will be growth in business succession versus pure wealth structuring. There are a lot of entrepreneurial businesses in Malaysia.

At this juncture, there is a lot more drive in terms of the families considering how to transit wealth and deal with the softer issues of governance.’

She is excited about the growth prospects of her Thailand business as well, where an inheritance tax imposed in 2016 is increasing the momentum for simple succession planning.

Coutts integration

When Wong is not on client calls or amending letters of wishes, she has her hands full with the Common Reporting Standards (CRS) and Tax Conformity steering group at the bank.

But new regulations were not the only changes Wong faced last year.

UBP acquired Coutts’ regional operations for an undisclosed sum in 2015, ballooning its Asia presence from $1 billion to about $12 billion today.

The deal meant significant changes for UBP’s wealth planning department as the businesses integrated. It currently has four wealth planning personnel in Asia.

‘The biggest post-transition difference is that we are now a pure advisory focused team. This allows us to guide our clients to the most appropriate structuring tool in light of their personal circumstances and their planning objectives – be it a trust structure, foundation or insurance policy.’

UBP has no plans to start running trust companies. Where clients’ planning objectives are best served with a trust structure, UBP works with external trust companies to support their succession needs.

‘We do due diligence, on-boarding and monitoring to ensure that we maintain a panel of best-in-class service providers to meet clients’ structuring needs. It’s a different way of doing business, but it allows us to be truly objective and to be true-blue advisers to clients.

‘It also gives us the freedom to review the service providers and change them if we feel that they are not able to provide clients with all that they need after some years of engagement. It helps us strengthen our relationship with our clients.’

Alphas and deltas

Wong flags ‘two and a half’ trends that will change the dynamics of the wealth planning industry in Asia.

Once clients have settled into the tempo of the new transparency regime, Wong says the next step is to help clients make their investments tax efficient.

‘We should aim to be equipped to consider “tax alphas” and after-tax returns in constructing portfolios and solutions for clients’ assets.’

The second trend Wong is mindful of is the next wave of regulatory change – now that the haze around CRS and Ultimate Beneficial Ownership is starting to clear.

‘The OECD’s Base Erosion and Profit Shifting (BEPS) regulation – it’s already around but it’s more prevalent in the corporate world at the moment. This also applies to the business families we advise.’

BEPS refers to tax-avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low-tax or no-tax locations.

If you’re wondering about that half trend, it’s related to digitalisation in wealth planning.

‘We are a very paper-driven industry. But I am fascinated by the developments in blockchain technology and how it could potentially be applied to smart contracts.

‘Blockchain gives you confidentiality and the ability to protect contracts from being amended. In our world, confidentiality is key, and importantly, it can help with avoiding family disputes. It is one of the biggest things we try to avoid.

‘It is probably too early, because I think it will hit standardised contracts first, but it is an interesting space to watch.’

Paying it forward

An essential element of wealth structuring is something close to Wong’s heart – philanthropy. It is as much her future as it is her present.

‘I started a giving circle two years ago. You can’t be a wealth planner, thinking generations ahead for your clients, and not wonder about your own future.

Since I’ve always dabbled in philanthropy, I decided to bring like-minded people together to grow old with.’

She is currently working with Lakeside Family Services to organise coding workshops for underprivileged children in Singapore.

The first programme was held in December 2016, during which she used desktops powered by Raspberry Pi.

The Raspberry Pi is a series of small single-board computers developed by the Raspberry Pi Foundation to promote the teaching of basic computer science.

She is now working on the next module. ‘If you look at wealth planning, the scope is so large. Philanthropy is either a component of something that is dear to the clients or it is something you can build a value system around, training young family members to work together, especially in a business family where assets will one day be split among them.

You can’t teach them to cooperate suddenly.’ Philanthropy. Business. Taxes. Whichever phrase – or rather, phase – of wealth planning you are in, eternal optimist Wong stands by one belief: the show must go on, even if the music stops for a while.


Out of the office

Favourite pastime: ‘I’ve always liked to draw since I was young. I sketch on Sundays sometimes. It keeps my mind quiet.’ Sometimes, Wong involves her eight-year-old son in her art sessions. She once recycled an old serum dropper as a painting tool to create a piece with her son. She turned his Jurassic Park ‘kill zone’ painting into a ‘Savannah Sunset’.

Favourite book: ‘I like the Discworld series by Terry Pratchett. He draws satirical parallels between the fantasy world with modern cultural, political and religious issues. You can always find something in a character that you can identify with.’

Favourite movie: Lord of the Rings. ‘I believe in good’s triumph over evil.’

Life lesson: ‘My innate sense of curiosity has always served me well. Be curious to explore new possibilities. But be vigilant over things that sound too good to be true. If it smells bad, it probably is.’


CV snapshot

Apr 2016-present: Managing director, head of wealth planning, South Asia, UBP

2014-2016: Executive director, head of wealth planning, South Asia, Coutts

2010-2014: Executive director, UBS Wealth Management

2006-2010: Senior vice president, BNP Paribas Wealth Management

2004-2006: Trust company head, OCBC Trustee Limited

This article was originally published in the April issue of the Citywire Asia magazine.

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