A new study from BNY Mellon Wealth Management and Campden Wealth suggests that the next generation of the super rich is eager to take the reins with strong focus on future tech. But few family offices think they've got what it takes.
The study, "
Next-gens overwhelmingly indicate they are ready for succession in the family enterprise, with 85% reporting they feel either very or somewhat prepared, according to the study. But Campden Wealth's 2022 research on family offices suggest that a clear disconnect exists, with just 39% of family offices saying next-gens are adequately prepared for succession.
"Being in the midst of the largest wealth transfer in U.S. history, the next generation of wealth holders understand and embrace the gravity of this significant responsibility for a long-lasting family legacy," Rebecca Gooch, director of research at Campden Wealth, said in a statement. "They want to live up to their families' expectations and make a positive impact on the world but face challenges with a successful transition based on complicated family dynamics, understanding their role post-succession and the absence of a formally written succession plan."
More than three-quarters of next-generation respondents say they're driven by a desire to diversify from traditional investments, and 70% want to invest in an area before it becomes mainstream. Respondents said there is also great value in investing in digital assets/new technology upon assuming control.
Within the next year, 60% of next-gens plan to increase their exposure to artificial intelligence and fintech, and 53% will do the same in the area of robotics. When it comes to cryptocurrency, those active in the space plan to stay committed, with more than half (57%) willing to maintain and 43% planning to increase investments in cryptocurrency.
"In line with the study, we have seen many of our next-gen wealth clients approach their investing strategy with a growth-oriented mindset and a profound sensitivity and passion for inclusion of sustainable investing," Leo Grohowski, chief investment officer at BNY Mellon Wealth Management, said in a statement. "Next-gens are also breaking the mold from their parents' generation by embracing alternatives and new technologies but are being thoughtful and measured regarding the inclusion of digital assets in their portfolios."
The study also found next-gens showing an interest in easing conflict within the family enterprise. Two-thirds believe in the power of regular communication, and another 63% seek external support for their succession planning/wealth transfers. Despite respondents' eagerness to engage, their family members' roles and responsibilities and concerns over business strategy rank as the obstacles to a smooth wealth transfer.
Concerns about their preparedness aside, next-gens have an appetite for growth and shaking up the family enterprise. Once in control, 27% plan to shift toward alternative investments while another 24% want to integrate new technologies like blockchain and AI into the family office.
More than half of respondents surveyed (51%) believe one does not have to sacrifice returns to invest sustainably, and more than two-thirds (68%) assert that sustainable investing has become a permanent feature of the investment landscape.
Scroll down to get caught up on other recent fintech news you might have missed in our Wealthtech Weekly recap. And check out the
