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Transferring Wealth Across the Generations

Transferring Wealth Across the Generations

2 March 2023

Careful succession planning and family governance are just some of the strategies we need to consider when transferring wealth from one generation to the next.

Estimates predict that the next thirty years will see a record-breaking £5.5 trillion transferred between "baby boomers" and "millennials" as inheritance or gifts. This trend, often referred to as the "Great Wealth Transfer," is currently a key area of focus for those working in the wealth management sector worldwide.

Marina Mauger, Executive Director of HFL, explains that this transfer will require careful succession planning, family governance, asset management, investment strategies, and tax planning to ensure that the first generation's wishes are fulfilled while also considering the next generation's wishes and personal circumstances.

Such discussions can be complex, especially when the family has an international presence, multiple operating businesses, or conflicting views. HFL, as a family business that has successfully transferred control from the first to the second generation, is perfectly placed to advise families in similar situations.

As the wealth transfer occurs, there will be a need for increasingly sophisticated advisory, fiduciary, and investment management services to navigate the progressively complex regulatory, tax, technology, and ESG landscape.

Service providers offering expertise and solutions across these areas will be best placed to support UHNW clients. Furthermore, wealth management firms must embrace and invest in new and emerging technologies to provide instant access to information and advisers, meeting the changing expectations of the digital world.

Trustees working with multi-generational families should begin discussing succession planning and governance considerations with the family as soon as possible. Succession planning should be a collaborative process involving multiple generations and branches of the family, and the family should regularly review their arrangements to reflect any changes.

The transfer of wealth comes with responsibilities, and we need to consider educating beneficiaries, which typically happens in tandem with planning and ideally before any transfer of wealth takes place.

Advisers need to adapt to the changing needs of the next generation, who have different priorities, values, and expectations regarding wealth management. For example, the next generation expects transparency, bespoke rather than 'off-the-shelf' solutions, real-time access to data, and round-the-clock multi-channel communication. They are also more likely to focus on impact investing and sustainable or socially responsible investing.

In conclusion, successfully transferring wealth the next generation will require careful planning and collaboration among families, trustees, and advisers to ensure that the transfer of wealth is smooth and meets the next generation's expectations. Advisers must adapt to the changing needs and values of the next generation, as they will drive the future of wealth management.

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