We are in the early innings of the largest generational wealth transfer in human history, with estimates ranging from $75-$125 trillion of assets and liabilities moving from Mom and Dad to the Sandwich Generation to the Next Generation. It is a seismic enough shift that it will reshape industries and families.
Vanguard published an article Building confidence for the great wealth transfer ahead which explores this dynamic and offers some practical advice on how to deal with the inevitable transitions. Estate planning and enduring family wealth are not one time, set it and forget it events. They are a process that needs to be orchestrated over years. “This transition will happen in stages: first to spouses (predominantly women), then to Gen X, Millennials, and Gen Z.”
The Business of the Family needs to be treated like a business. Planning and process needs to be curated. Family operating agreements (wills, trusts, etc) need to be organized. Assets and liabilities need to be accounted for. Succession planning needs to be addressed. And regular, scheduled communications need to be crisp and clear. In that spirit, Vanguard's advice includes guidance on communications, succession planning, and service models.
As we preach and practice at Forward Inheritance, family communication is critical for building family wealth. “Families must proactively pursue conversation and connections ahead of the wealth transfer event. While it can be incredibly difficult to think about wealth and death, we’ve seen tremendous success when families discuss the values first (not the dollars), communicate the intentions of their wealth, and bring the inheritors into the dialogue early and often.” So, so true…
Odds are that Mom will outlive Dad. This probability has a profound impact not only on the family but how the Wealth Management industry serves the family. And since even my favorite band knows the Women Are Smarter, what are some ways the article notes women can be prepared for this responsibility:
- “Build your financial readiness first: Learn the basics of investments, taxes, and estate plans.
- Get involved early: Once you have the knowledge, join discussions with your wealth advisor and ask questions.
- Turn on your superpower: Bring your perspective—clarity, transparency, and emotional intelligence—to make wealth conversations collaborative and values-driven.”
And the article touches on implications of serving the Next Generation. Digitally native family leaders will expect customized offerings, personalized attention, and evolved communication methods. This again has wide-reaching implications for family communications, strategies, and expectations. (Who cares about us Sandwich Generation folks anyway? Ha!)
“Your family’s wealth is a tool to help you live your values and create your legacy. A clear plan aligns your financial strategy with what matters most, whether that’s security, philanthropy, or growth.” The best way to do so? Treat the Business of the Family like a business. Define the values. Set the goals. Organize the estate. Then optimize it. Ensure leadership is aligned and communicating well. We can help ourselves. We can move our families forward…