With the upcoming UK general election on the horizon, many UHNWs have had to grapple with a series of unknowns around their wealth.
In the recent Spring Budget, the Chancellor Jeremy Hunt, announced a new residency-based scheme replacing the existing remittance basis for ‘non-dom’ individuals.
As a result, a significant number of wealthy international families based in the UK now face ‘added layers of complexity’ over how they structure their asset bases and tax arrangements going forward, explains HSBC Global Private Banking’s Jeremy Franks, who heads up the private bank’s wealth planning and advisory teams across the UK and EMEA.
However, he says, conversations around the policy announcements provide an ‘opportunity for a wider reset’ around how clients plan their financial affairs.
When clients visit HSBC’s offices on Mayfair’s Cork Street, queries around fiscal policies and the election can often expand into fruitful conversations around asset protection, wealth structuring, family governance, succession and estate planning and philanthropy – which Franks says are the core focuses of HSBC’s wealth planning team.
Putting tax into context
‘For me, it’s very much about putting tax into context,’ Franks says. ‘What we suggest to internationally minded clients is that they consider their lifestyle. The UK continues to be attractive, whether it be for their businesses or their children’s education. It’s really important that they take a step back, appreciate their priorities and consider their options without making any knee-jerk reactions.’
While HSBC’s wealth planners do not offer legal and tax advice, Franks says they can help clients to ‘take advice on the issues that are impacting them, at the right time’. He adds: ‘We have one of the largest wealth planning and advisory teams in the UK – we are tax aware and tax informed. And we have strong relationships with many of the leading private client tax experts and lawyers, helping to make sure our clients can make informed decisions that take into account their own unique circumstances.’
Articulating a purpose
For Andra Ilie, a senior adviser in the wealth planning and advisory team at HSBC Global Private Banking who specialises in family governance, family office advisory and philanthropy, conversations around purpose can be the first step towards creating a long-term plan helping families to weather fiscal uncertainty, political change and other challenges.
‘We encourage clients to build a decision map around what matters most and how to achieve it – this exercise often helps people to consider their wider wealth purpose and create some practical steps for what comes next,’ Ilie says. ‘If the end goal for one’s wealth is to steward it and pass it on, tax policy changes are only a small area in the context that UHNWs need to consider.’
Passing on a family business
First-generation entrepreneurs can benefit from introspection around their goals and bringing their families into discussions around wealth, Franks says. ‘Often, entrepreneurs are so busy creating wealth that they haven’t had time to think about the purpose of it.’
It’s common for successful business people to have a blind spot around family succession issues. HSBC’s 2023 Global Entrepreneurial Wealth Report found that while nearly four in 10 entrepreneurs have started to transfer their wealth, two-thirds haven’t discussed setting up a succession plan with their family.
Ilie says it’s important to think about the governance framework needed as a family business moves forward, including ‘the roles and responsibilities each family member can take on to achieve the family’s shared goals’. These conversations can also help entrepreneurs considering a potential exit, as many can ‘lose the sense of identity they found in their work’ after a sale, Ilie adds. If your top identity is no longer that of a business owner, who are you?
Pursuing Philanthropy
Next-gen family members, meanwhile, may wish to pursue new avenues of purpose than their parents, Ilie says. Often, she advises younger family members who are the beneficiaries of significant inheritances to utilise their wealth as a ‘force for good’.
‘They are driven by doing the right thing and creating long-term impact,’ she says. ‘They have come into family businesses or family offices to make a change in a strategic and collaborative manner. It’s no longer just talking about it – it’s rolling up your sleeves and actually doing it and measuring results along the way.’
The backdrop of increasing global instability, meanwhile, has underscored the importance of charitable giving, philanthropy and tax positivity for many families, Franks says. ‘Many are very proud of the amount of tax they pay, and want to ensure they do the right thing and contribute to society and the communities they live and work in.
‘Many want to help those less fortunate than themselves and often perceive philanthropy as an opportunity to ensure their values are passed on to future generations.’
A global support network
The UK general election is one of a number of important polls globally this year, with India’s elections taking place in the spring and the US’s in the autumn. The Global Entrepreneurial Wealth Report also found that three-quarters of entrepreneurs operate businesses outside of their borders — and the complex geopolitical climate adds to the uncertainty faced by UHNWs.
Given its global outlook, Franks says, HSBC is well placed to offer advice. Last year the private bank bolstered its international presence with new operations in India, Mexico and the UAE, increasing its network of on-the-ground advisers who can provide local expertise.
The team in London, meanwhile, is complemented by the work of other advisers in EMEA, which Franks oversees. ‘Very few global institutions have the footprint we’ve got in the UK, EMEA, Asia and America.’
Ilie adds: ‘When UHNWs move across jurisdictions or send their children to schools in the UK, they need advice on what to expect and how to plan for their new life. That’s a really nice way of introducing our wealth planning services and support them from the outset.’
Many UHNWs will be engaging with advisers to revisit their financial arrangements given the far-reaching political uncertainty. HSBC can support with everything from financial planning, wealth structuring and family governance to helping set up a family office and developing an effective philanthropic strategy, Franks says.
‘We will work collaboratively with a client’s other professional advisers to ensure that all wealth planning strategies take into account their often unique circumstances and priorities.’
But it’s also the emotive elements of support where he and Ilie say the bank is eager to add value. Ilie explains: ‘Many banks can help with the “rational” advice clients require, whilst other advisers help with the emotional complexities. We always look at both.’
HSBC UK Bank plc has no responsibility for providing legal or tax advice. This material is issued by HSBC UK Bank plc which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Any reference to tax is based on our understanding of current legislation or practice, which may change and is dependent on the individual circumstances of each client. This is for information purposes only and does not constitute tax advice. Opinions on the tax characteristics of some investments can vary even amongst legal and tax advisers. You should always seek professionaltaxadvicewhenconsideringyour investment strategy.
HSBC UK Bank plc is registered in England, number 09928412. Registered office: 1 Centenary Square, Birmingham, B1 1HQ.
