Published July 7, 2007

Banks roll out courses for 'intern billionaires'

More children of the wealthy are lapping up money tips


(SINGAPORE) What started as a trickle of advice from banks on preserving wealth from generation to generation has morphed into a series of full-fledged programmes. As billionaires fret about the future of their money, bankers are showing their children the ropes.

The result is a series of carefully tailored courses, rolled out by Citigroup, JP Morgan, Merrill Lynch and ABN Amro, among others, for the children of their private-banking clients.

Typically, in stints that range between two and 14 days, wealthy kids from Singapore, Taiwan, Malaysia, Hong Kong and the Middle East gather in a town to talk business during the day and soak up the high life when night falls.

When Citi realised the growing demand for such 'tuition' and held its first Next Generation conference in Singapore in 2003, it attracted 40 participants. Later this year, when well-heeled youngsters fly to Hong Kong for Citi's next offering, there could be as many as 70 of them.

Citi is even running programmes for its 200 conference alumni.

Similarly, JP Morgan's weekend seminar for such 'intern millionaires' has drawn 30 to 50 participants each year since its Asian programme began in 2003. The demand for its seminar is 'usually a bit more than the capacity', said managing director Kwang Kam Shing.

The demand for such programmes stems from Asia's rising ranks of millionaires as well as the fear that the next generation may not be able to preserve this wealth.

A Merrill Lynch and Capgemini world wealth report released last week found that the number of Singapore's US-dollar millionaires grew 21 per cent to 66,660 in 2006. In addition, the combined wealth of high-net-worth individuals in Asia rose 10.5 per cent to US$8.4 trillion.

But once Dad has made his millions, will Junior have the financial savvy to grow this legacy?

As things stand, the parents are right to worry. An Insead study commissioned by ABN Amro last year found that only one in 10 family-run companies survives into the third generation.

The banks have stepped in to put the minds of their high-net-worth clients at ease - and to touch base with their next generation of potential clients. ABN Amro held its first 'next generation weekend' in October 2006 and now wants to make it an annual affair.

The methods differ. Credit Suisse Private Bank, for example, runs a 'family legacy programme' where rich parents and their progeny (young women as well as men) gather for group discussions - typically on issues facing family businesses.

Citi, on the other hand, just brings the wealthy youngsters together. They receive lessons in trust and estate planning. Working in teams, they sweat it out on a simulated trading floor and play an interactive financial board game designed to mimic companies in the business environment. The ages of the participants range between 18 and 25 years.

JP Morgan's programme comes with a selection criterion. It insists that the participants must already be working in the family business. This is to ensure that they have sufficient grasp of some of the challenges they are presented with.

Beyond the practical lessons in trading and capital markets, participants in these programmes often learn soft skills such as how to communicate and negotiate with their parents and manage the expectations they face.

But it's not always serious business. Participants in the two-week Merrill Lynch Summer Wealth Management programme also visit stock exchanges, sample wine at tasting sessions and learn to appreciate classical music.

Merrill Lynch's South Asia market managing director (global private client) Kong Eng Huat said: 'This two-week programme is just to give them an overview of wealth management issues, not to train them to be financial advisers.'

And although every participant can afford to shell out a hefty fee, banks usually foot the cost of such conferences, even picking up the hotel tab.

Wealth management conferences are part of their service to premier clients, and the sheer goodwill generated is invaluable, they say. Not to mention the chance to get chummy with the next generation of clients.