A report entitled “Creating a world with the Next Generation” is guided by the prevailing interests and concerns of the Next Generation revealed by a recent survey, and is published by Credit Suisse and the Young Investors Organization (YIO).
The publication presents real life case studies of inter-generational challenges and solutions aimed at triggering an open dialogue, while also providing a toolkit to aid families at this critical juncture. It furthermore questions what this generational shift means for the wealth management industry.
By Next Generation, the report refers to the inheriting generation, destined to take the reins of a business started by their parents, grandparents or earlier family members or those likely to inherit at least part of the wealth accumulated by previous generations.
As the Next Generation faces the growing responsibility for their families’ legacies, “Creating a world with the Next Generation”, takes a close look at their concerns, needs and ambitions, including what they expect from their wealth manager. The publication stems from more than a decade of collaboration between Credit Suisse and the YIO, a network of heirs to entrepreneurial families across the world. The survey, conducted recently among YIO members globally and included in the report, quantifies the Next Generation’s views in terms of family, business, wealth and legacy.
Highlights of the report include:
· The Next Generation craves a greater flow of inter-generational dialogue. Well over a half of those surveyed want to discuss wealth more openly (59%) and over two thirds (68%) say their families would benefit from more communications tools.
· The majority of the Next Generation is interested but not invested in impact solutions. The survey found that sustainable and impact investing is the asset class the Next Generation knows the least about, with 56% saying their knowledge of impact investing is poor and only 8% stating their knowledge is excellent.
· The Next Generation will transform the role of the wealth manager from one based purely on financial know-how to including a broader “Network Orchestrator” role across all life stages. 41% answered that they want a personal advisor to help identify or solve their non-financial needs. The number one quality a wealth manager should have according to the Next Generation is a “close relationship”. Only 4% noted that being digitally-savvy is key.
· The Next Generation seek investment advice but want to make the final decisions themselves. 63% see value working in an advisor for investment recommendations but want the power of the final approval when making financial decisions and 26% want to make their own investment decisions with validation from an advisor.
· The Next Generation are interested in managing their family’s wealth. A substantial 39% are actively managing their family’s wealth.
· The Next Generation want to be involved in managing their family’s investments. About two-thirds (63%) said that they are very interested and 34% are moderately interested.
· The Next Generation have the know how to manage their family’s wealth. Almost half (46%) agree and 8% strongly agree that they have the knowledge and skills to successfully manage their family’s wealth.
Viola Steinhoff Werner, head of global next generation and families at Credit Suisse, as well as founder and general manager of the YIO comments: “This is a generation with an ambition to create impact and one that wants to collaboratively create actionable solutions for the benefit of future generations. YIO was established in 2007 to support the Next Generation at important crossroads to become better family members, investors, entrepreneurs or social change makers. Credit Suisse’s aim is to learn about the needs and wishes of the Next Generation in order to be the best partner it can be, both currently and in the future.”
Through a compilation of articles, interviews and case studies with leading academics and wealth and investment experts, as well as with leading family business members, the report, “Creating a world with the Next Generation”, aims to give the Next Generation a voice as they embark on transforming the meaning of wealth.
The report introduces a much-needed discussion in the wealth management industry about how to address the changing demands of its future clientele.
Benjamin Cavalli, head of private banking South Asia at Credit Suisse Private Banking Asia Pacific says, “In the Asia Pacific region, wealth is still largely generated and controlled by the first- and second-generation entrepreneurs, with the bulk of family wealth still sitting within the family business. The topic of the next generation, and how to transfer wealth from one generation to the next is becoming increasingly important as we will be soon be seeing a huge wave of intergenerational wealth transfer.”