Sun Life Survey Reveals Nearly Three Quarter Family Business Owners In Asia Have Not Prepared Business Eradication

JAKARTA - Sun Life Asia's latest survey shows an important moment for the sustainability of family businesses in Asia. Although most business owners intend to prepare inheritance arrangements, only 27 percent of respondents already have a complete business successor plan, so nearly three-quarters of family businesses are still not ready. This gap confirms the need for concrete steps to maintain the sustainability of the business and the welfare it produces.

Family efforts are the foundation of the Asian economy, with 85 percent of companies in the Asia Pacific region owned by families. Together with SMEs covering 97 percent of businesses in the region, Asia also has a significant share of large-scale family companies. These companies represent 18% of the world's 500 largest family companies, emphasizing the importance of a business successor plan in maintaining value and wealth across generations.

"The transition of cross-generation wealth on a large scale has taken place in Asia, so it is important for business owners to prepare for the future and maintain their legacy," said Maika Randini, Sun Life Indonesia's Chief Marketing Officer, Friday, November 28.

Business successor plans are not adequate, although inheritance is a top priority

Few business owners have clear business next plans, although the majority want to ensure their wealth is maintained for the next generation. According to the survey, although 94 percent of business owners plan to prepare comprehensive inheritance arrangements, only 27 percent have a fully ordered business successor plan, leaving many businesses uncertain in the future.

As many as 25 percent only have part of the plan, 24 percent are compiling it, while 19 percent don't have any plans even though they intend to do it one day. The biggest challenge is seen in Vietnam, where only 14 percent have a structured business next plan, compared to 39 percent in Indonesia the highest among the countries surveyed. In Hong Kong, only 20 percent have a complete plan, while in Singapore the figure reaches 28 percent.

Among the successors to the family involved in business operations, only 44 percent stated that the previous generation had communicated a comprehensive heritage plan. This communication is even rarer for families whose successors are not involved in business, down to only 27 percent.

The majority of respondents who were already involved in the family business said the inheritance discussion was carried out through formal family meetings (57 percent), followed by formal one-on-one conversations (52 percent), and informal discussions (43 percent). When asked about the ideal forum to discuss inheritance, respondents still chose formal family meetings (61 percent), formal conversations one-on-one (50 percent), and written documentation (38 percent) such as a will.

Long-term protection, planning, and growth are family priorities in building inheritance

Although many do not yet have a formal business successor plan structure, nearly 7 out of 10 families of business owners (69 percent) place family financial protection as the most important factor in inheritance planning. The next priority is to have a clear and well-conveyed legacy plan to avoid confusion or dispute (54 percent), as well as build enough wealth to be inherited to the next generation (51 percent).

More than two-thirds want the wealth left behind to be used for long-term growth, with 68 percent wanting the inheritance to be invested through financial assets, life insurance, or family businesses.

Many families are not ready to face the future, despite understanding the importance of a structured business successor plan. This is a great opportunity for business owners to strengthen the foundations of the future, but many still face unnecessary risks," said Maika.

Differences in value between generations trigger a business next crisis

Differences in values, interests, and priorities between generations have caused more and more families to be reluctant to continue their efforts either because of their desire to be independent, fear of responsibility, or have different interests and vision.

Among the family owners who are already actively involved, only 40 percent believe the next generation is fully willing to continue the business. On the other hand, from the successor to the family who are not involved in operations, only 31 percent have stated that they are fully willing to take over.

The survey shows a significant generation gap. Half (50 percent) of the next family who are reluctant to take over the business mentions wanting to stay independent as the main reason. Other reasons include fear of responsibility (42 percent), lack of interest (28 percent), and differences in value or vision (27 percent).

The business of families in Asia is at a crucial point due to the wider generation of differences. The younger generation now prioritizes independence, goals, and balance of life. Business owners need to strengthen their business successor plans and open up space for dialogue about the future," explained Maika.

Preferences on inheritance consulting services

Less than half of the family's business owners have sought financial planning advice. Of those who have or plan to seek advice, 61 percent place professional expertise as the three most important factors in choosing consultants. The next factor is the ability to plan the needs of families across generations (52 percent) and personal and adjusted approaches (49 percent).

Regarding the service model, 36 percent chose individual experts with certain specialties. Nearly a quarter (23 percent) prefer comprehensive family office services involving several experts, while 32 percent chose the combination of the two.

"Our findings show that family business owners need deep professional insight and an adapted long-term approach. Both individual expert services and family office have their respective places. Proactive advice can help business owners achieve their next-to-business goals, prevent conflicts, and maintain family heritage," concluded Maika.