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Business Owners Don't Think The Kids Are Alright – Study
Editorial Staff
11 December 2024
A survey of 123 business owners in the US has found that almost two-thirds of them lack confidence that their children will be able to manage the firms and wealth they’ll inherit. Such studies are relevant for wealth advisors because the inheritance and transfer of businesses, as well as liquid wealth, has become a major issue as the Baby Boom generation passes. Respondents younger than 65 exhibited a growth mindset with plans to expand into a new line of business or acquire a new business next year. On the other hand, respondents older than 65 were more interested in selling all or part of their business .
The Northern Trust Institute’s third Business Owner Benchmark, based on the Chicago-headquartered firm’s own clients, reveals that despite mixed feelings about the economy, many respondents are poised to undertake large scale changes within their business next year.
“We discovered that many respondents are thinking big – for instance, evaluating new areas to grow their business or considering ways to monetize their business, all the while attempting to navigate how to best prepare their children for the wealth they will eventually inherit,” Eric Czepyha, Northern Trust director of business services, said.
Fieldwork for the study was conducted in the third quarter of 2024 when the Federal Reserve initiated its rate cutting cycle and expectations increased for a “soft landing.”
However, only 8 per cent of respondents said they are optimistic about next year’s economic outlook. The leading cause of respondents’ malaise was the current political environment , followed by potential changes to tax policy and the impact of ongoing global conflicts .
Transfer and the future
For 43 per cent of respondents, it is also important for their business to still exist 100 years from now. However, 64 per cent of respondents are not familiar with the emerging trend of transferring ownership of your business to a perpetual purpose trust, which can be a powerful strategy for preserving the legacy of a business over the long-term, the study found.
An online survey was fielded in September 2024; respondents represented small, midsize and large companies from all industries. The median age of respondents was 67.