Dead money: Battle for Japanese inheritances heats up

Thu Jun 16, 2016 9:03pm EDT
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By Thomas Wilson

TOKYO (Reuters) - Elderly Japanese, among the world's richest retirees, are flocking to inheritance advisers, tackling historical taboos on discussing death and providing a rare avenue of growth for the country's brokerages and banks.

Trillions of dollars parked in savings accounts are set to be released in the coming years as Japan's death rate climbs and new, more onerous inheritance tax rules kick in.

The shift is attracting investment from companies such as Nomura Holdings (8604.T: Quote), Daiwa Securities Group (8601.T: Quote) and Mizuho Financial Group (8411.T: Quote) which are ramping up offerings of inheritance-related services and products, hoping to lock in a new generation of customers.

"Until now, Nomura has dealt with its customers individually. When they pass away, that connection ends. We want their children to become customers," said Naoshi Sakai, who oversees trusts at Nomura Securities, a subsidiary of Nomura Holdings.

"Business chances for domestic sales will get smaller as the population shrinks, and we have to avoid that. Inheritance is one business that will certainly grow in the next 20 years."

Over $470 billion - nearly Norway's GDP - in financial assets is passed on annually in Japan, Nomura Institute of Capital Markets Research estimates. That figure, which includes property, is set to grow to $660 billion a year by 2030. Cumulatively, more than $4.7 trillion, equivalent to Japan's GDP, will be passed down by 2030.

As families plan to deal with this flood of funds, discussion of mortality is becoming more common. Interest in "shukatsu" - literally preparing for the end - has boosted death-related businesses, from try-before-you-die coffins to funeral planning.

"My sons are starting to give their opinion on inheritance, and I'm interested," 84-year-old Susumu Yokoyama told Reuters after a recent Nomura seminar on estate planning in Tokyo. "I'm thinking about what to do."   Continued...

A man and his grandchild walk on the street at Tokyo's Sugamo district, an area popular among the Japanese elderly, in Japan June 15, 2016. REUTERS/Issei Kato