Recently many friends ask me what exactly I create for my clients through the unique financial planning process mentioned in the scope of service. Therefore I decided to write and publish some classic example of my own clients which I hope it helps to illustrate. Some key data and information are intentionally modified so that their identity and privacy are well protected. I would appreciate all of your feedbacks and comments, and welcome for discussion. Should you have any friends facing the similar situation, please feel free to share, or make a personal introduction. 

Cheers
Gifford

Background Information.

Age: 38

Occupation: Business owner

Human needs: Growth, Significant

Objective: Asset protection from future creditors. 

Real objective: Provide a stable financial certainty to family. Minimise potential liability in case of business downturn. Safeguard asset against creditors.

Concerns: Liquidity. Business Downturn. Liability and personal guarantee. 

Risk: Business debt ($20,000,000) affects family life. No other financial investment or engagement except operating business. 

Resources: $8,000,000 equity value ($28,000,000 asset valuation).  $1,000,000 family income each year.

Real Resources:  $105,000,000 Business turnover. Time. Married status. 

Strategies based on human needs: 

1. As long as the client wants to grow all the time, he will not satisfy & prepare a plan B with his significant traits. Therefore, setting aside of certain amount of capital is necessary for the family well being in a long term. 
2. Zero for the whole strategy since he is not able to deploy a large amount of asset at once. Build the financial ark by small amount of contribution each year, balancing the liquidity and flexibility. 
3. Simple asset separation reduce the correlation between high risk and low risk asset.
4. As he signed personal guarantee with banks for further financing, procedure should be done carefully with professional advice to make sure validity.

Implementation of holistic planning: 

1. While the business is capital intensive and requires liquidity, setting up a subsistence trust is not suitable for this client. Therefore, by making use of the married person status ordinance, he can enhance his protection and safeguard his family asset by purchasing a life or endowment insurance policy with his wife as beneficiary. This could protect the insurance proceed from the creditors just in case. 
2. Yearly contribute around 0.4% of turnover, i.e. $420,000 into annuity policy, for 10 years. At year 11 it generates $350,000 lifetime income to his family, totally tax-free. If he chooses to retain the asset inside the policy, the money is well-protected agains creditors because it’s purpose is for protecting his family. Such tiny amount will not affect liquidity. 
3. Re-arrange potential liability asset like car, and high risk business into separate corporate entity. Personal holds only cash & insurance policies. 

Gain & Benefits after planning:

1. Lifetime passive income creation other than business active income, which creates multiple streams income for his family. 
2. Capital reserve for family in case of insolvency. 
3. Save over $500,000 cost of setting up a trust. 

p.s. I am your plan B. You can always earn a lot if everything is well. The only question is, if something bad happens, who provides you the money? And thats what I stand for.

#assetallocationplanning #businesscontinuity #universallifeinsurance #riskmanagement 

最近有客人好奇問起關於遺產安排的事情，就此分享一下吧。

香港奉行普通法，根據法例《無遺囑者遺產條例 Intestate’s Estate Ordinance ch29》，若有人離世而沒有立遺囑，一般會將遺產分給配偶及子女，年紀老邁的雙親往往會遭忽略。有了平安紙，便可確保上一代仍會得到妥善的照顧，並大大減少出現混亂或爭產的情況。而平安紙不一定要請律師代行，專業人士如遺囑撰寫員、或曾接受相關訓練的財務策劃師也可以。

承受遺產的人必需經過遺產認證手續。若沒有遺囑，認證過程可能會長達半年至一年;　如資產複雜、繼承人數眾多的個案，更可長達數年。而在認證過程中所有資產均會被凍結。若過身者是家庭的經濟支柱，配偶又沒有充裕的流動現金，隨時會令家人陷入拮据的財困中。遺產策劃則可避免這問題的發生。

若某人生前擁有大量股票，又愛從事高風險的投資活動，若他離世後，家人在遺產認證期間遇上股市大跌，便會因無法作出適當調配，隨時令資產大幅貶值。

若某人認為自己遺產不足以分配所希望的生活水平，亦可以透過遺產策劃，創造充足現金。

其實，每當我們的生活出現變化，如資產大幅增加或減少、個人意願改變、婚姻出現變化等，便應將遺囑作出相應的修訂。作為一個成年人，我們會為自己的身體作定期的健康檢查；作為一個負責任及有智慧的成年人，對資產轉承安排亦應抱同一態度。

高築牆，廣積糧，緩稱王。相信大家在中學時代都會讀過吧。

在朱元璋稱帝之前，所奉行的策略是朱升提出的「高築牆、廣積糧、緩稱王」。高築牆是指加強軍事防備，鞏固後方；廣積糧是指發展經濟生產，儲備糧食，增強經濟實力；緩稱王則是指不要過早稱帝，以免樹敵過多。這三條建議極具戰略眼光，是朱元璋發展初期的指導思想。 

深深細味，這九字真言不論在商場上，還是在個人財務策劃上，也極具參考價值。

高築牆正是風險管理，你有為你的生意建立競爭者不能染指的市場嗎？你有為你的個人資產築起高牆嗎？

廣積糧正是儲蓄管理，你有為你的公司建立強勁的現金流嗎？你有為你自己建立穩定回報的長線儲蓄嗎？

緩稱王正是投資管理，在你進行高回報的投資前，有注意到以上兩點嗎？

Well, to begin with, this is not from a view of a financial planner, but two physicists.

To answer this question, we shall think of what is the definition of wealth. Suppose wealth is all the materialistic objects that you can own, from insurance cash value to real estate, MPF, vehicles, yacht and
mutual funds …etc

From the macroscopic view, there are two ways of flow of wealth in the society. The first one is transfer between different people. For example, one purchase a meal is to transfer a little bit wealth from the customers to the restaurant boss, or vice versa, depending on the value. There would be a change in wealth for individuals, but there is no change in wealth for the whole society.

The second one is investment. While transfer wont change the total wealth in whole society, investment does. If you invested in a mutual fund targeting China in the past 10 years, you had a 900% return which that generates the wealth effect. And this boost the whole wealth in the society as well as the individuals.

Two physicists Jean-Philippe Bouchaud and Marc Mezard based on the thought above developed a AI model for studying the why the 20/80 rule are so accurately happened no matter which civilization, culture, environment, such that always the few people controls the whole country wealth.

In this AI world, people would do transaction as well as investment. A further assumption has been made to make the situation more realistic is that, the value of wealth is relative to one’s wealth. That is, for a widow without much money, $10,000 is a huge burden while this is not a big deal for a financial planner who earns $1,000,000 per year. This leads to a behavior that, the richer the person is, the more willing he would do investment. (In reality, the poor generally has very few insurance, mutual funds or stocks)

As a result, the rich would spend more than the poor. Wealth tends to be evenly distributed under the AI model with millions of identical individual. (the only difference of starting is their wealth)
However, this force is significantly weaker than the other, investment. Through Jean and Marc gave the same investment technique to each individuals, some individual can earn more profit simply by luck, and thus, more capital for compounding!!

As Einstein said, compound interest is the most powerful force in the universe. The result of the AI model tends to be the reality — 20% of individuals controls 80% of total wealth.

The key is, a 10% return of $1,000,000 is significantly larger than a 10% return of $10,000. The earlier you start investing, the earlier you enjoy such a huge compounding effect, and this does not require extraordinary investment technique or skills to achieve. For succession, a $10,000 premium can generates over $1,000,000 liquid asset instantly for their families, which an investment experts cannot ever achieve. Such simple financial tools can make a big difference, provided that the initial capital is huge enough, or time is long enough. Without such perspective and reluctant to do financial arrangements lead to poor, and poor gets poorer.

This concludes that wealth cannot be evenly distributed by nature. Would government policy or social welfare change the poor to the rich? Unfortunately, the answer is no under this model since a forced distribution by government is only a transfer of wealth.

How to be an exceptional case such that can become richer and richer under this realistic model? Think about it!!!

你可能唔知道，在遺產策劃的角度看，只運用保險工具創造大筆現金遺產，還是未足夠保險。

舉例來說，如有一對夫婦不幸同時於意外中喪生，這對夫婦未成年的小孩雖然獲得保險公司上千萬元賠償，卻可能無法享受到應有的保障，因為小孩的法定監護人領走了保險賠償之後，可能將小孩丟給其他親人照顧，從此不聞不問、一走了之。 

如果父母生前將其購買的保險加上信託的保障，若不幸身故，保險賠償將撥入信託戶口，由受託人統一管理。即使受益人還未成年，也能夠善用龐大的保險賠償，在他們成長的過程當中可以得到合適的資助，並可防止不肖親人不當挪用，保障未成年子女的利益，亦解決子女不當使用的問題，因為立託人可以訂立財富運用的條件，如進修創業可以提款，而不能購買名貴跑車等。

一直以來，信託被視作富人的專利，身家要有過億，這實際上是個假像。我遇過不少的信託基金，立託人的身家只有一千多萬。更重要的是，妥善運用保險並透過遺產信託的形式，一千萬的財富可以倍增至四千萬的資產之餘，信託於身故後即時生效，充份保障了家人的未來，更破除“富不過三代”的魔咒。

如何做到？容後詳談。

以下是少少資料分享。

2008年9月26日，香港上市公司金至尊珠寶的創辦人林世榮博士在自宅心臟病發去世，享年53歲。股票收市價為1.63港元，市值15.5億。
2008年9月30日，金至尊珠寶集團通告指出，集團現有4.22億元具約束條款的貸款，由於林世榮辭世，將構成有關條款違約的問題。股票收市價為0.65港元。
2008年10月，新鴻基投資服務入稟高院向林世榮遺產代表追討5,000萬元另加利息。
2008年10月，東京三菱銀行入稟高院追討2,400萬元。
2008年10月9日，該4.22億港元貸款遭到終止。
2008年10月14日，金至尊珠寶集團通告指出，因主席離世，集團大部份應收賬款存在收回困難。
2008年10月19日，遭滙豐銀行呈請清盤。
2008年10月22日，菲律賓金融銀行有限公司向林世榮遺產管理人追討502萬元另加利息。
於2008年，林世榮與妻子育有兩女一子，二十三歲的長子偉龍，美國大學畢業，十九歲的長女沛鈿，亦於美國就學，次女沛紋，只有九歲。

當企業東主去世時，失去的不止生命，更有可能是一生的心血結晶，連同家人的幸福，俱付諸東流。
首當其充的是信貸問題，因為銀行向企業提供信貸，是相信在企業主的努力下，業務能得到長足發展。當企業東主逝去，銀行及投資者信心大大動搖，因此終止貸款。
同時發生的有經營問題，因為繼任者或家人未必擁有企業主的經驗，能力，技術或人脈，業務能否創造以往的佳績，甚至能否繼續營運亦成問號。
這就導致資產傳承出現問題，在遭受雙重打擊下，家人所得到的可能不是資產，而是債務。在以上例子中短短一個月內資金缺口超過5億，市值蒸發接近9億(直至現在亦暫停交易)。扣除債務後，家人能否維持原有的生活水平，亦成問號。

無論信貸問題，經營問題或資產傳承，充足並大量的現金是關鍵所在。充足的現金可以償還債務，支持公司渡過損失期，創造充足時間維持營運，物色繼任者，或使繼任者有充足時間得到投資者的信心，更可以使家人得到應有的生活，不必在痛失挈親之餘，失去所有。

重點是，企業為生意發展，一般不會大量囤積現金。那如何用低成本𣊬間創造大量現金？這是每一個企業需要探討的課題。