Wealth is often defined too narrowly and is almost exclusively associated with material things. This understanding falls short. Wealth is far more complex. It also includes intangible assets such as family values, cultural and personal traditions or the idea of a family's lifestyle and education. Why is it particularly important to include such intangible aspects in fiduciary activities?
Intangible assets can make a significant contribution to ensuring a family's long-term financial independence and success. They can strengthen the sense of responsibility towards wealth. This requires a basic understanding that wealth not only means privileges, but also responsibility – the responsibility to handle a family’s wealth prudently. This forms an important basis for a long-term asset structure.
Assets are always exposed to external effects
Wealth has always been used to finance state expenditure through taxes and levies. To this end, legislative requirements and international standards are set that have a decisive influence on one’s individual scope of action and freedom. The financial services sector, which includes the fiduciary sector, is particularly strongly influenced by developments in international tax law, compliance and global efforts to achieve comprehensive transparency in asset matters. As a result, the amount of consulting, auditing and administrative work, as well as documentation requirements are increasing.
The financial services industry is also subject to other influences and dynamics that are often difficult to predict. This requires continuous adjustments to business models and investments, for example in employee expertise and IT solutions that can improve the efficiency of work processes for the benefit of clients. However, the actual focus of any fiduciary activity should remain on the long-term protection and preservation of family and business wealth. This includes the structuring of assets via legal entities, taking into account cross-border circumstances, as well as a basic understanding of what assets may mean for a family or a society, and what purpose should underlie long-term wealth preservation.
Foresight and flexibility
The financial services sector is one of the most heavily regulated industries in the world. It provides an interface for the real economy and is particularly subject to the influences and dynamics of the economy, politics and supranational organisations. The industry must consistently focus on regulatory requirements, while at the same time acting in an agile and highly customer-oriented manner.
This also applies to the fiduciary sector. Regulatory requirements have a major impact on the industry and compliance is crucial for a stable and secure business. Asset structures must comply with the current framework conditions, regulatory requirements, and cross-border issues. At the same time, they must not be set up so rigidly that they cannot be adapted to changes that might not be currently foreseeable. This requires foresight and flexibility.
Thinking in generations
Worldwide, many entrepreneurial families are facing a generational change in the coming years, which will further increase the demand for suitable wealth and succession planning solutions. A significant increase in assets can also be observed in various jurisdictions. This further strengthens the need for asset protection solutions, especially in these uncertain times. At the same time, the regulatory pressure on assets will continue. It is therefore crucial to monitor developments with foresight, particularly in the areas of tax law, geopolitics and technology, in order to evaluate opportunities and challenges at an early stage.
When it comes to asset structures it is crucial to build a stable foundation that will enable assets to endure in the long term – no matter how volatile, complex and unpredictable the environment. This long-term approach requires thinking in generations. Despite all the regulatory requirements, generational thinking retains a focus on the essentials: the tangible and intangible assets that are involved in an asset structure, and the people that stand behind an asset structure.
Liechtenstein: a business location across generations
The Liechtenstein financial centre is an independent competence centre for wealth and a recognised partner at a European and international level. Liechtenstein repeatedly receives an AAA country rating. In this year's country rating, Liechtenstein once again impressed with its pronounced stability at all levels, its high political effectiveness and a prudent regulatory framework. In combination with its strong understanding of property rights, Liechtenstein offers essential prerequisites as a business location where assets can be organised for the long term and across generations.
Gisela Bergmann, Princess of Liechtenstein . CEO and Managing Director