The study examines what Millennials and Generation X individuals think about taking over family businesses, views on strategy and how they would run such organizations.

The overwhelming majority (85 per cent) of Next-Gen individuals in the ultra-high net worth bracket indicate they’re ready to take on family firms, but it turns out that fewer than half (39 per cent) of family offices think these younger people are ready.

The study of more than 100 people with total estimated family net worth of $77 billion, was carried out by BNY Mellon Wealth Management and Campden Wealth. The report is called The Next Generation of Wealth Holders in the United States 2022. This study is based on quantitative and qualitative data. Between March and July 2022, 102 surveys were collected from UHNW individuals in the US with a family net worth in excess of $30 million (average net worth per family, $752 million), all of whom have recently or will in the future assume control of the family wealth and/or the family business or family office. The generations that dominate the sample are Millennials (44 per cent) and Gen X (33 per cent), which account for over three-quarters of all respondents. 

Next Gens’ involvement in the family enterprise gives them firsthand knowledge of its goals. They have an appetite to get more involved, with a preference toward strategic and finance-related positions, ranking investment strategy/management on top (42 per cent), followed by financial planning (38 per cent), and succession planning (38 per cent). 

The study found Next Gens have an interest in easing conflict within the family enterprise. Two thirds (66 per cent) believe in the power of regular communication and another 63 per cent seek external support for their succession planning/wealth transfers. Despite respondents’ eagerness to engage, their family members’ roles and responsibilities (41 per cent) and concerns over business strategy (36 per cent) pose obstacles to a smooth wealth transfer. 

“Having worked over the past two centuries with ultra-high-net-worth individuals and family offices that span multiple generations, in some instances up to six generations, we have seen firsthand a willingness from Next Gen clients to be open to formal education, continued learning and community-building to ensure the successful transfer of wealth,” Ben McGloin, head of advice, planning and fiduciary services, BNY Mellon Wealth Management, said.

Understanding about succession, wealth transfer and preparedness around taking over family businesses are the kind of topics that the UHNW Institute, with which Family Wealth Report is exclusive media partner, has addressed, for example. (See its Ten Domains of Family Wealth Methodology here.)

The readiness - or not - of UHNW and high net worth individuals in taking on their parents' wealth and business is a regular talking point in the world's wealth industry, including in fast-developing regions such as Asia. (See a guest commentary here about succession and family offices, here.)

Growth appetite
Despite some concerns about their preparedness, Next Gens have an appetite for growth and vision for shaking up the family enterprise. Once in control, 27 per cent plan to shift towards alternative investments (e.g., private markets, hedge funds, commodities), while another 24 per cent want to integrate new technologies (e.g., blockchain, artificial intelligence) into the family office.

Driven by a desire to diversify from traditional investments (78 per cent) and to invest in an area before it becomes mainstream (70 per cent), respondents see value in investing in digital assets/new tech when assuming control. Within the next year, Next Gens plan to increase their exposure to artificial intelligence (60 per cent), fintech (60 per cent), and robotics (53 per cent). When it comes to cryptocurrency, those active in the space plan to stay committed, with more than half (57 per cent) willing to maintain and 43 per cent planning to increase investments in cryptocurrency. 

Furthermore, more than half of respondents surveyed (51 per cent) think people don’t not have to sacrifice returns to invest sustainably and more than two-thirds (68 per cent) said that sustainable investing has become a permanent feature of the investment landscape.