The next generation of the ultrahigh net worth (UHNWI) is eager to assume control of family wealth, but a new study suggests they haven’t yet been appropriately prepared for the role. According to Matthew Carroll Atlanta Braves a joint survey by BNY Mellon Wealth Management and Campden Wealth surveyed more than 100 Next Gen UHNWIs, who collectively have an estimated family net worth of US$77 billion.

While Next Gens seem ready for their post-succession role, they are hesitant to fully embrace it due to concerns about the complexity of their transition and challenges with addressing conflicts within the fam business. 

However, the survey found that many Next Gens are willing to discuss family governance and trust planning issues. This could alleviate some of the lingering concerns.In addition, most Next Gens are interested in pursuing alternative assets such as private markets, hedge funds and commodities. They also want to incorporate cutting-edge technologies such as blockchain into their family offices once they take charge.

Over two-thirds of Next Gens believe their family businesses are responsible for addressing climate change. This is a significant divergence from their parents’ generation, who are less concerned with sustainability.They want to diversify their portfolios by increasing the percentage of growth-oriented investment strategies and incorporating alternative investments, such as private markets and hedge funds, into their family office portfolios.

 

They are also more likely to invest in digital assets and new technologies than their parents’ generation.But a lack of a formal framework and family communication are key hurdles for this generation, says Ben McGloin, head of advice, planning and fiduciary services at BNY Mellon Wealth Management. 

He notes that this gap needs to be addressed if Next Gens will succeed their parents.Despite this, the Next Gens also want to expand and transform their family business as they take over. In addition, they intend to refocus on sustainability when taking over their families’ portfolios.

This may be a challenge for many families, particularly those in Asia, where families oftenhave conservative attitudes about the role of the second and future generations. It is also challenging for many family office professionals overseeing the wealth transfer.While several factors can lead to a disconnect between the Next Gen and their families, the most important is a lack of understanding. 

Educating the Next Gen about their responsibilities as they move up in the family and establishing a clear communication channel are crucial to bridging this gap.As a result, family offices must take steps to educate their clients about their roles and responsibilities and the transition timeline. This will help them avoid any conflict and create a smoother succession.