Much has been made of the $30 trillion wealth transfer from baby boomers to Gen Xers and millennials. Problem is, many rich families around the world don’t think the next generation is ready to inherit wealth and power, according to a new report.
Forty-seven percent of international families surveyed by Campden Wealth with UBS said their next generation was either somewhat or very unprepared for future succession. And 31% said their heirs were not qualified to manage the family wealth.
Family offices faced other hurdles around succession planning. Thirty-seven percent reported discomfort in discussing sensitive matters, and 33% said the patriarch or matriarch was unwilling to give up control.
At the same time, the study found that 54% of family offices had a succession plan in place, up from 43% a year ago.
However, one analyst interviewed for an article about the study on the Campden FB website questioned how robust succession planning in family offices really is, wondering whether families fully understand the concept.
The analyst noted that many families think they have a succession plan in place when one child joins the family office or when they decide that no family members will do so, but this is not a plan. In family businesses, the proportion of those with succession plans in place is usually less than 40%, according to the analyst.
The 2019 report was based on a survey of principals and executives in 360 family offices around the world, with an average of $917 million in assets under management.
According to the report, the generational transfer of wealth is under way in many families. Twenty-eight percent of respondents reported that their next generation had assumed control of the family wealth within the past decade, and 37% said this would happen within the next 10 years.
Thirty-six percent of inheritors had already served in executive or management positions within the family office, and 25% had held a board position.
Researchers found that next-gen succession globally occurred on average at age 45. Regionally, the average in North America was 47; in Europe, 45; in emerging markets, 43; and in Asia/Pacific, 41.
— Check out How a UBS Exec Gets Families to Open Up About Wealth Transfer on ThinkAdvisor.