By Yi Whan-woo
Commercial banks are capitalizing on a sharp rise in the elderly population, which is increasing demand for services related to safe transfer of wealth to designated beneficiaries.
Four major private lenders ― KB Kookmin, Shinhan, Hana and Woori ― have been rushing to take the initiative in trust asset management services exclusively for wealthy and elderly clients during their lifetime and posthumously.
Under the services, a bank takes care of a client’s assets as a trustee. When the client dies, the bank will serve as trustor on their behalf and make sure their wealth will be passed down to beneficiaries according to a will.
The services have emerged as Korea is expected to become a so-called “super aging society” by 2025, a term referring to a society with more than 20 percent of its population aged 65 or older.
The pace of aging here is faster than other countries, considering Korea became an “aging society” in 2017. This term refers to a society with more than 14 percent of its population aged 65 or older.
The aging population is accompanied by an increased number of dementia patients, whose wills have been debated in terms of trustworthiness.
Under the circumstances, data from the Supreme Court showed the number of registered cases related to inheritance disputes amounted to 628 in 2020. The number is a steady increase from 379 in 2016, 404 in 2017, 487 in 2018 and 576 in 2019.
Accordingly, sales of the trust asset management services among the four banks have expanded. It was estimated to be 1.5 trillion won ($1.29 billion), up from 600 billion won in 2018 and 800 billion in 2019.
KB Kookmin was the first to launch trust asset management services for aging consumers. Titled “KB Great Expectation,” it offers consulting services on taxation, law, real estate and family businesses among others to ensure smooth inheritance.
Shinhan allows its client to designate a funeral services company as a beneficiary in addition to surviving family members so that the former and the latter can better cooperate and conduct funerals efficiently.
Hana’s services are designed to transfer wealth to designated beneficiaries promptly, with a consensus among the family members of a client being established prior to the client’s death.
Woori set up a special team this year to better focus on its trust management service.
“A trust management service in accordance with a will was common abroad but not here due to lack of promotion,” an industry source said. “In that regard, we take the major banks’ advance into the market as a positive sign.”