Technology and Succession Drive Next-Gen-Family Disconnect
Despite the increasing awareness that a new generation of high-net-worth individuals is coming into the market, many believe the future of wealth will be determined by technology and succession. The fam and the next-gen face a disconnect that could be worsened by the introduction of artificial intelligence and the increasing complexity of the business. The key to overcoming this is communication and education.
Communication
As more and more UHNWI (ultra-high net worth individuals) and HNW (high net worth individuals) families grapple with the realities of succession planning, some have started to look to the next generation as a saviour. Amongst other things, the future generation has its own unique set of challenges and needs. While this isn’t necessarily a bad thing, it does mean that the old guard is in for a rude awakening. Fortunately, there are a few steps that can be taken to mitigate these challenges. In the first place, you need to get to know your millennials.
Another way to do this is to attend a few conferences and events. Besides meeting and getting to know your heirs, you will also be able to network with other families in your peer group.
Generational contracts in Next Gen
A new survey reveals what’s in and what’s out in the world of family-owned businesses. One of the largest surveys of its kind, the PwC Global Next Gen survey surveyed 1,036 next-generation family business leaders across 68 countries, regions, and geographies. While the results were diverse, a number of common themes emerged.
Among the many topics uncovered in the PwC study, communication was top of the list. The biggest revelation was that two-thirds of the next Gens would like to engage in a formal dialogue. It is also not uncommon for next-gens to wait for the family to initiate a frank discussion. Although, the same research revealed that a full half of those same family members would like to buck the trend.
Sustainability concerns in Next Gen
Developing sustainable business practices has become a top priority for the Next Gen and their families. In fact, more than two-thirds of respondents to PwC’s Global Next Gen Survey (2022) believe that the family business has a responsibility to address climate change.
Sustainability refers to a set of broad concepts, including environmental, economic, and social issues. Sustainable businesses prioritize the conservation of natural resources, lowering waste, and limiting emissions. They may also adopt policies that benefit their local community.
While many companies have taken a proactive approach to sustainability, others have been accused of greenwashing. To avoid this, companies must plan for both short and long-term goals while simultaneously managing day-to-day operations.
In order to develop a successful sustainability strategy, Next Gens must first understand the issue. Fortunately, most Next Gen is aware of the challenge and has a clear idea of what needs to be done to address it.
Observing the wealth management process
A wealth management firm’s ability to deliver the next Gen of wealth management depends on its understanding of the trends driving the industry. These changes will impact the operating model and sources of competitive differentiation. It also has implications for the talent strategy of wealth managers and advisers.
The future will see a much more diverse client base. Increasingly, customers will demand integrated financial advice, including the services of an adviser who speaks their language.
The emergence of big tech-ecosystem players as core infrastructure providers for the wealth-management industry is also shaking up the landscape. They are accruing significant economics from cloud services offerings and analytics. In turn, these companies are gaining market share. Their clout will grow over time, and they could become direct competitors.
Generational transition not falling solely on the shoulders of the current generation
A successful generational transition can be an exhilarating time for everyone involved. With the average age of the baby boomers at an all-time high, there’s a greater emphasis on family values and legacy planning. However, it’s also a lot of hard work. And the rewards don’t always trickle down. Luckily, there are plenty of people who are willing to help. Whether you’re looking to buy a house or find a job, a network of friends and relatives will go a long way in helping you navigate the next phase of your life.
The big question is, how do you go about it? The old-fashioned way is to let the professionals do the legwork. Fortunately, there are a host of organizations dedicated to helping you find your next job, a home, or a new relationship.