Strategic financial planning vital for assets transfer to next generation, says Leena Parwani

Most high-profile professionals, businessmen or High Networth Individuals (HNWIs) are currently struggling when it comes to financial planning to secure a better and brighter future.

Getting a right guidance for something sensitive as your personal finance has paved a trend for emergence of financial advisers and Dubai-based Leena Parwani, founder and chief executive officer, LPH Financial Services’ business is to try and help HNWIs from economic recession, income loss or losses in business or asset transfer to next generation.

Parwani has come a long way during her 18-year career, starting out as a Human Resource professional with Al Futtaim Group in 2004, then moving on to Oman Insurance where she has learnt the nitty gritty of family wealth and financial security. Working her way through the corporate ladder, Parwani had the opportunity to work closely with some of the best corporate leaders, watching them in their decision-making, financial acumen, and leadership qualities.

About nine years later, when she was ready, she decided to start her own business. Her entrepreneurship journey started in 2013 with a financial advisory, LPH Financial Services, that helps individuals and corporates in financial well-being, succession planning, financial security, health insurance, savings and life insurance.

Growing customer confidence helped Parwani to become successful very fast, she qualified for both Million Dollar Round Table (MDRT) and the Top-of-The-Table honours from her first year in the profession and continued the performance for the last seven consecutive years, making her one of the most successful in the industry in the UAE.

With a highly trained professional team of 17 people, her company serves a growing number of clientele. Today, more than 17,000 people benefit from LPH Financial Services.

Perpetual Insurance

Perpetual Insurance that insures the head of the family businesses for a longer term covering certain risks, could save a potential $1 trillion worth of wealth in the Middle East in the next ten years as family business ownership changes hands from the first and second generation to the third that might suffer from the 3rd Generation Syndrome, points out Parwani .

According to Capgemini Research Institute’s World Wealth Report 2021, the population of high-net-worth individuals (HNWIs) in the Middle East region grew by 6.8 percent to 800,000, while their wealth soared by 10.7 percent to $3.2 trillion in 2020.

The UAE is home to 92,600 US-dollar millionaires; 4,000 multi-millionaires worth more than $10 million; 251 centi-millionaires (over $100 million), and 14 US-dollar billionaires, according to the latest Henley Global Citizens Report.

Leadership of a large number of family businesses in the Middle East is changing from father to son or daughter, without proper estate plan or succession plan, that usually results in painful split in the family, hostile division of wealth, litigation or even bankruptcy.

Many family businesses have survived from the first to second generation, but failed by the third generation who are accustomed to luxury, a certain lifestyle and a superior degree of comfort and lack entrepreneurship and who are not accustomed to undertake challenges.

Family business wealth to the tune of US$1 trillion (Dh.67 trillion) in the Middle East will keep changing hands one generation to the next in the next ten years – that need to be protected – which might disappear in thin air if not protected properly.

“Perpetual Insurance policies that protects the business owner against certain risks for a longer period with a one-time deposit that works as a premium, is one way of solving this problem,” said Parwani.

“The deposit remains with the insurer for the duration of the policy and could be taken back by the insured in full, without any deduction – which makes Perpetual Insurance Policy an asset, rather than an expense. It is important to fix the legacy issues due to inter-generational transition. Easy money is also lost easily.”

The family wealth goes to the trust once the business owner dies and is partly distributed to the surviving members. The rest of the family money is invested in businesses and investment schemes while proceeds go to the family members as per the succession plan and as per the terms of division of wealth, explains Parwani.

“Perpetual Insurance protects the family wealth by ensuring that the wealth is invested in well-running businesses and sustains for generations. This way family wealth could be protected and passed on to the next generation,” concluded Parwani.

sandhya@khaleejtimes.com

• Dubai