Business – Page 4 – Greg Fok Advisory

Wealth disappears in less than 3 generations

August 20, 2019August 20, 2019
by Gregory Fok

Wealth disappears in less than 3 generations.

I met with a 3rd generation of this family who came to Singapore many years ago. The family had multiple properties, buildings and shophouses all over Singapore. The family background was in a profitable business. The properties they had were situated at very prime areas near Orchard, Oxley, Raffles Place and Tanjong Pagar areas. If held till today, the wealth could easily be in hundreds of millions.

But today, most of it is gone after the passing of 2 generations. The business has closed and it is left with one condo which the family has worked hard to purchase on their own. Doesn’t this story sound familiar and I am very sure you personally know someone who had gone down this path.

You have built up a good business and have a certain amount of wealth. You are very aware that wealth does not go past 3 generations.

There are many scenarios where wealth may take a turn to the wrong entities or persons.

Designing a trust for legacy planning is critical and it does not cost very much unlike what most people perceive it to be. It only takes one to be open to face the difficult decisions ahead.

If you know someone who
1) has a freehold landed property,
2) has at least a million in investible assets,
3) is running a successful profitable company.

They should start to have an open conversation about what happens next.

Speak with us who can ensure that wealth continues over more than 3 generations.

Successful Businessman thoughts

March 28, 2019March 28, 2019
by Gregory Fok

If Mr. Businessman has four basic objectives, then there are four questions that should be asked:

What is the price tag on the first clause in his will, which says, “Pay my debts, taxes and costs?”
Who will write a check each month to his family, and for how long?
How will the assets be transferred to the children one day with minimal conflict?
How can the business be kept healthy?

The larger the assets, the larger the potential problems

March 6, 2019March 6, 2019
by Gregory Fok

The larger the assets, the larger the potential problems.

We have experienced going through some tough times with the people we work with especially when the person passes on.

Most of the assets that is being held is not liquid. Some examples of assets that are not liquid are properties and businesses.

And normally, these are converted to cash at the worst price and time in order to split the properties. And businesses are closed after many years of operations because the owner did not look into the details of succession.

And that is where you normally see the stories on the newspapers where the children and partners are trying to have a fair settlement over the assets, which usually does not turn out pretty.

The wealthier and senior a person gets, the more they have accumulated and the bigger the problem becomes.

If you know of a successful person or business owner with significant assets in the age range of between 40 to 65, highlight these potential risks to them.

2019 Financial Advice

January 16, 2019January 16, 2019
by Gregory Fok

2019 financial advice

A number of people have been asking me for advice for this coming year and what to do with their money.

I go back down to the fundamentals.

1) Spend less than what you earn.
Set a budget for your expenditure and keep within it.

2) Create an emergency fund of minimum of 6 months.
You never know what is going to break down or go wrong.

3) Plan for the long range goals like retirement, insurance, estate planning.
The earlier you start planning, the easier it gets for you and your family.

4) Debt reduction
Avoid rolling over credit card debt at all costs! Clear off credit card loans every month. The only loan you should try to have left is your home loan as it is usually the largest.

Create legacy and retirement strategies

September 13, 2018September 13, 2018
by Gregory Fok

Create legacy and retirement strategies

You are now a successful business owner or individual and have built more than sufficient for yourself. But you are worried about your children and if they might be able to manage.

One of the strategies we use is to create legacies for 3 generations.

With an structure of an annuity, you start off by benefiting through the monthly payout it provides to yourself as the contributor. You are the first generation.

As you pass on, the funds continue to last for the period of your children’s lifetime. It means that the monthly payout continues for the rest of your child’s life. If he lives till age 100, the payout continues till then.
And when he passes on, there’ll be a death benefit that would be paid out to the 3rd generation, which is your grandchild.

On top of that, with an annuity trust, you can ensure that the funds are protected from divorce or even bankruptcies of your children and grandchildren. In this way, the wealth will be protected from unnecessary risks.

How do you want to be remembered?

July 24, 2018July 24, 2018
by Gregory Fok

As a family man, how do you want to be remembered? A or B?

A : Someone who has created a great vision for his business and many generations to come.

Or…

B : Someone who has left many problems and headaches, problems which could have been avoidable if a person had done planning. Planning for the immediate family members and also succession of the business.

Speak with us as experienced insurance trust advisors to find out more how you can be remembered well as Person A.

Key risks to consider investing in corporate perpetuals

July 6, 2018July 6, 2018
by Gregory Fok

Key risks to consider investing in corporate perpetuals

A corporate perpetual can be able to generate potentially more returns and can seem pretty attractive compared to deposits in the bank.

However, do take note the risks that comes along with it can be significant as well. The largest risk could be the corporate might not be able to perform as what was originally planned.

Some of these perpetuals are deemed to be “safer” as it is a bond like structure. Unfortunately, there is a very large risk of non diversification.

Hyflux was considered as a “blue chip” that had great “potential” due to it’s background and ownership from even Temasek Holdings.

Of course, to Temasek, this was just a small portfolio held by the very large company and they could afford that single company risk. Most of us individuals do not have such large holdings to diversify into that many companies.

Remember, look at the downside risks before you look at the headline returns.

Speak with your experienced investment advisor to help to value add to you.

https://www.businesstimes.com.sg/investing-wealth/key-risks-to-consider-when-investing-in-corporate-perpetuals

Asset Protection for Business Owners

May 26, 2018May 26, 2018
by Gregory Fok

Asset protection for business owners

Imagine this.

You’ve build a very successful business. Each project that you undertake is worth at least $5mil. Revenue has been great and you have been taking projects one after another.

At the peak of your business, an accident happened and death occurred on the owner. A Domino effect of events start to snowball.

a) For the business, the projects are partially completed and each of them has a deadline. If it is not done by certain timeline, penalties and fines start to compound.

b) The staff are worried about their future as the “boss” who is also the key person is no longer around. The competitors who are waiting on the side begin to take advantage of this crisis.

c) Suppliers who had a good relationship with the “boss” are concerned that anything sold to the company, they might not be able to recover back their sales, especially if they ran into problems of completion of projects.

d) Family is left to deal with the overwhelming problem on the business as the “boss” has been the guarantor of all the on-going projects. And with that, the personal assets of the deceased is also stake because a lot of the assets like property are joint in nature with the spouse.

A few thoughts for the owner.

A) As a successful business owner, you should start thinking about how to protect your personal assets?

B) How do you ensure continuity of the successful business?

C) You should structure your assets appropriately to ensure the creditors and potential ones do not access what rightfully should belong to the family.

Speak with your experienced business advisor to protect your assets from risks happening at the wrong time.