A survey by BNY Mellon Wealth Management and Campden Wealth found a significant gap between the perceptions of family offices and the readiness of the next generation of ultra-high-net-worth people to inherit their families' fortune.
Despite the respondents' enthusiasm to participate, their jobs and duties create hurdles to a smooth transition, as well as worries about corporate strategy. Also, according to two-thirds of next-gen respondents, constant communication may resolve disputes inside the family business.
From computers to transportation, the technology significantly influences the environment around us. It may enhance human well-being by facilitating a better quality of life, boosting affluence, and advancing medical technology. But technology may also interfere with our social structure and contribute to pollution.
Subsequent Gen wealth owners will need to discover strategies to lessen friction and improve communication when they take over the management of their family firms. Yet, not all family offices will find this to be simple.
Family offices need help bridging the age divide in the face of a succession push that is a primary focus for HNW Next Gens. There needs to be more clarity between how prepared HNW Next Gens are for taking over the family company and how well-equipped family offices feel they are, according to a new report from Campden Wealth and BNY Mellon Wealth Management.
This discrepancy may be linked to the HNW Next Gens entering the family office with diverse behaviors and goals and new investing paradigms and governance issues. To achieve socially responsible, impactful, and sustainable results, they are, for instance, upsetting standard banking and investing modes.
There is a need for a community and ideals to help families as they pass on their money to the next generation in a world where technology drives the transfer of wealth. A secure and welcoming environment is required for a generation that has grown up immersed in social media and with brains full of data. This group needs to be able to learn from their peers as well as exchange experiences and expertise.
Family enterprises must deal with these issues by creating an explicit and unambiguous generational contract. This is crucial since the next wealth transfer will be unpredictable due to pandemics, climate change, and aging populations.
Also, they are looking for outside assistance with asset transfer or succession planning. They are also open to frequent communication and seek to reduce friction inside their family business. Yet, the research found that their family members' positions and obligations and worries about corporate strategy create hurdles to a smooth succession.
Next-generation UHNWIs have discovered that despite their want to be active, their family members' roles and duties and worries about company strategy offer significant barriers to a seamless wealth transfer. By switching to alternative assets and incorporating new technology into their family office, they seek to develop and shake up the family business.
Despite their affluence, HNW Next-Gens are wary about giving their money to family businesses. They believe family enterprises often need to uphold their ideals.
This is particularly true in light of the importance that the family accords to sustainability. A significant majority of Next Gens feel that their family company must address climate change, according to PwC's Global Next Gen Study 2022.
Future Gens aim to ensure their family business is socially and ecologically responsible. This is especially true for Next Gen females, who are more inclined to pay attention to ESG issues.
