Succession Planning Essentials: Navigating the Complex Intersection of Family and Business
By Jill Shipley
Family Governance and Education
By Stephen O'Kane
The term “rising gen”, which describes the next generation of wealth holders, has become ubiquitous. When each individual has such different motivations, interests, and investment philosophies, Stephen O’Kane, Director at AlTi, asks the question: why are we generalizing? Here, he investigates the many facets of this dynamic group and why it’s essential to understand and nurture their unique style.
The world’s wealthiest people are poised to make the greatest capital transfer of all time. According to research from Cerulli Associates, which analyzes data from the global financial-services industry, $84.4 trillion will change hands between now and 2045, a figure almost four times the entire gross domestic product of the US.
The lion’s share of this wealth will pass to heirs – around $72.6 trillion in assets – while the rest will be donated to charities. Generation X is expected to inherit the greatest portion of this wealth transfer, including $8.9 trillion in the next 10 years, according to Cerulli’s research, and totaling $29.6 trillion over the next 25 years. Millennials are expected to inherit more than $27 trillion by 2045. The impact of this kind of inherited wealth is truly seismic, creating a rising generation of wealthy custodians from all over the world.
But who exactly are the people behind this term “rising gen”? As we can see, they hail primarily from the Gen X and Millennial demographics – but are they custodians of family fortune or creators of new value? Their motivations and interests are of paramount importance to us all. These people will have the spending power to shape the world.
If you were to define a rising-gen individual, what would they be like? This seems a simple question, but the answer is complex. In my experience, there are more differences than similarities between these individuals.
Let’s look at a handful of people who fall under the rising gen umbrella.
They could be someone hailing from the second generation who is taking over a successful family business – with all the stresses and responsibilities that come along with the wealth itself. Or perhaps they are the scion of a multi-generational wealthy family, accustomed to financial freedom but keen to make their mark on the world.
Alternatively, I have met rising-gen clients in their 30s who were raised to be careful with money but whose parents have now sold businesses, suddenly realizing significant wealth. Some people become rising gen overnight, when they inherit unexpected wealth – sometimes from relatives they never knew to be high-net-worth individuals. I have also met those who retain long-held family assets, such as real estate, that are punitively expensive to maintain, but cannot let them go. It takes experience and sensitivity to help these individuals plan for the future.
Or think of a tech entrepreneur who has just exited a business or completed another investment event and created brand-new wealth. Or a sports and entertainment personality who has built a lucrative personal brand. They too are rising gen, but their lived experience and priorities may be very different.
Then you get geographical diversity. In Asia, for example, most billionaires hail from the first generation – they are the original wealth creators. According to PwC, of the 1,143 billionaires in Asia, 47% were created over the past year. In Europe and the Middle East, that year-on-year difference is just 22%, while the US figure stands at 21%, so there are fewer newly minted billionaires and more long-standing wealth in these regions.
That said, the number of millionaires and ultra-high-net-worth individuals (UHNWIs) is expected to grow over the coming years, according to Credit Suisse – to 87 million and 385,000 globally in 2026 respectively. Asia, in particular, will see an additional 51,000 UHNWIs, reaching a total of nearly 118,000, with 51% of those from China.
This group is truly a diverse and fascinating one, all arriving at this point in their lives from different origins and with very different goals in mind. When each person has their own unique perspective, creating an investment strategy and suitable financial infrastructure with them becomes a fine art. The ‘cookie cutter’ approach has no place for this exciting demographic.
Of the vital differences between members of the rising-gen demographic, there are two principal considerations: what makes them tick and what they want to achieve in life. I see this as informing the journey and the destination when it comes to their financial plan and investments.
Someone from the second or third generation, taking on the family business as well as assuming the mantle of wealth, may bear a great burden: “I want to enhance the legacy of this business,” is something I hear often.
Some may have entrepreneurial forebears and share those honed skills and appetite for calculated risk, putting their own spin on the family’s approach to business and investment. Others may want to express themselves in a different way: through philanthropy or charitable impact. There has been a boom in impact investment in recent years, as the Millennial generation prioritizes supporting projects and companies that protect people or planet. Last year, 61% of Millennials considered impact in their investments, and with the global impact investing market projected to grow by 9.5% annually through 2031, the rising gen are likely to continue to influence this expansion.
All these nuances will inform a person’s investment appetite and strategy. It’s as personal as their fingerprint – no two will be the same. The biggest questions to ask yourself are: what destination are you aiming for? If that is unclear, what elements are important to you on your journey? Is it about supporting the causes close to your heart or investing in the start-ups that are changing their industries? Do you want to hone your business acumen or do you have other priorities right now?
We are dedicated to ensuring that those next steps are impactful in all the right ways – we recognize that the rising gen, more than any generation before, wants to consider the environment with a different outlook that is dynamic and global, so we have significant resources in place to make that happen. Our people are true experts and specialists, and can create the opportunities and connections that make a real impact in the lives of our clients.
The idea that the majority of today’s most wealthy people are just sitting on a pile of family money is inaccurate. In fact, 68% of the world’s wealthiest people (with a net worth exceeding $30m) are self-made. While 24% possess a combination of inherited and self-created fortunes, just 8.5% became wealthy through inheritance alone.
As an aside, 70% of family fortunes don’t make it through to the second generation; this figure rises to 90% for the third generation. So the people who manage to retain inherited wealth down the generations have done so through great instincts, the best advice, a little luck, and by taking full advantage of opportunities that have presented themselves.
The stakes are high. The American baby-boomer generation alone is estimated to hold more than $53 trillion of the $431 trillion in privately held assets worldwide, according to 2020 data from Boston Consulting Group. It is estimated that the value of these assets will rise by £65 trillion within the next two years.
When it comes to wealth management, a lot of careful thought and analysis must take place before this industry can engage with the rising gen. We need to view this multi-faceted demographic as global citizens and strive never to provide a one-size-fits-all service. The onus is on us to listen and to understand how the individual’s needs, goals, and mores translate into a wealth-management strategy, and how to do that over the lifetime of the individual, even as they evolve and their priorities move and change.
But one thing remains a constant – we are here to provide those opportunities and use our expertise to connect individuals with the people and projects that best fit their life and financial goals, whatever they may be. We start by engaging early, offering mentorship when it’s wanted, and opening doors to access; it’s all about the relationships we forge. Also important is a sharing of the experiences of what has worked for other families, enabling this demographic to learn from and discover the strategies that might apply to them too.
And yes, at AlTi, of course we want to be a safe pair of hands, but we also have an entrepreneurial approach that aligns with a lot of these global citizens. We get it, we relish it, and we know how to support them.
But we must keep one eye on the horizon too. What about the next generation beyond rising gen? How will they feel when it is their turn to become chief custodian of the family fortune? When they have their own ways of doing things, then we, as their advisors, won’t be afraid to tear up the rule book to create a brand-new way of working that is as unique as they are.
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