Systematic Structure is the Foundation of Family Wealth Succession











Mr. Huaijiang Yan (Andrew Yen), founder of Panhe Family Office, delivered an independent speech titled “Structured Family Wealth Management System”.

China Offshore Summit Shenzhen 2016 was held at the Grand Hyatt Shenzhen on May 25-26. During the summit, Mr. Huaijiang Yan (Andrew Yen), founder of Panhe Family Office, delivered an independent speech titled “Structured Family Wealth Management System” around the theme of the forum “Chinese Estates: House of Cards or Build to Last?”.

Mr. Yan mentioned that under the framework of transnational laws and international agreement concerning offshore finance in 2015, world economy would be more transparent and subject to more stringent regulation. Currently, high net worth individuals (HNWI) and well-off families in China are eagerly looking for increasingly diversified cross-border assets allocation and therefore, institutions for financial, law, tax planning, and corporate services will face increasingly difficult challenges of reality. Homogeneous products and short-term solutions will no longer satisfy the future trend of demands. Should there be no systematic wealth management framework family wealth inheritance will be just like a house of cards and hard to defend against the increasingly diversified, globalized and sophisticated risks. Consequentially, a well-developed systematic management framework must be readily available so as to make family wealth rock steady.

Mr. Yan emphasized that many domestic customers currently try to find different financial institutions according to their own ideas, understand and even buy different products or services to satisfy their needs that they could think of at the moment. But without the help from professional financial teams that can systematically analyze, combine and flexibly use such wealth instruments, it is much likely that these instruments are not used at the right place or the right time and therefore, there will be no way to logically integrate them so that they are favorably interacted and optimize the overall performance in family wealth inheritance.

Taking Kongming Lock, the ancient Chinese invention as a metaphor, Mr. Yan said that family wealth management system is just like the Kongming Lock. By following the core family structure, precious family wealth is preserved in the core of the structure. This is reminiscent of the lock, where the lock is dismantled in a reversed order as how it is assembled and only the original assembler knows how to dismantle it. All wealth instruments, whether trust or foundation, must perform the will of family business and if they are not supported by core values, these instruments will focus only on ROR-related wealth products, which, however, is not the complete picture of family wealth management. From another perspective, family governance is an upgraded edition of corporate governance. How to refine and integrate the experience, concepts and core values accumulated in corporate governance into family values and instill them into the next generation plays a vital role in family estate succession.

In his keynote speech, Mr. Yan reviewed and analyzed the optimum solutions where Chinese Family Office helps its customers preserve wealth and hedge against regional recession, and as the moderator for panel discussion, Mr. Yan, together with other participating experts, shared his practical consideration on “How Inheritance Planning Tools and Strategies Are Developed to Fit the Need of Chinese High Net Worth Clients”.

In the meantime, Mr. Yan, as the representative of Asian Offshore Association China Region, gave a warmly-responded lecture to dozens of AOA member representatives under the theme of “Looking upon HNWI Services from the Perspective of Chinese Family Office”, and the representatives spoke highly of the open talks with industry leaders in China on future market trends.