Great Wealth Transfer: How Families Can Get on the Same Page

An older woman and a younger woman talk on the deck.

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The Great Wealth Transfer is molding the next generation of high-net-worth individuals. While there were 53 heirs who inherited $150.8 billion in 2023, according to a UBS report, the Great Wealth Transfer doesn’t apply to only billionaires — it will encompass $68 trillion in assets being passed down across income levels. Many families may believe they don’t need to talk about the wealth transfer or even realize that they will be part of it. But it’s important to ensure there’s family alignment when transferring wealth, so both sides feel confident in how assets will be used for future generations.

Navigating the wealth transfer requires a plan. It’s a two-way street: Parents passing down their wealth should clearly communicate to their kids what they will be receiving, and children should be proactive in speaking to their parents about their financial goals and how assets can help fulfill them. Communication is key to creating mutual respect among different generations.

Starting the conversation

Talking about money can be awkward. It may feel uncomfortable to have conversations about passing down money — especially if it doesn’t seem like a large amount. But the values and multigenerational plan passed along with wealth are arguably more important than the amount itself.

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For most families, the outcome is known: The next generation will take over most — if not all — of the wealth, or the “family business.” As in the business world, today’s intern doesn’t become tomorrow’s CEO without a path that includes education, mentoring and the passing of values. The wealth transfer is no different. It’s imperative that the next generation is prepared with the knowledge to make the money they inherit have the strongest long-term impact. Parents should have values-based conversations early and often with their kids, emphasizing why certain decisions have been made over the years rather than discussing specific dollar amounts.

When talking about how to appropriate the inherited assets, a common point of friction between generations is differences in values and priorities. While some children may plan to follow in their parent’s financial footsteps, there are differences in the ways generations think about wealth management goals.

For example, the next generation may place a stronger focus on climate change, technology and impact investing, according to a CNBC report. They may be more future-focused, with investing interests in AI, clean energy and the electric-vehicle transition. Parents, on the other hand, may have wanted their children to get involved with a foundation they have personally supported, and it can be hard to hear that their children may want to put their money toward different causes.

For parents planning to pass on wealth, it’s important to talk about the long-term vision they have for the assets and give their children a chance to talk about their role in that vision. Avoiding these discussions early on, or not having an open mind when they occur, can cause family quarrels in the long run.

Taking a unified approach

When there are conflicting goals and visions between generations, bringing in an outside perspective can help identify how to create positive outcomes for all family members. A financial adviser will make sure everyone has a seat at the table by coming up with a comprehensive plan to fit each family member’s goals, needs and strengths. By connecting with each member, advisers can take into account how they feel about the assets and share unbiased advice.

If there is friction between family members on where money should be allocated, an adviser can help find a compromise that suits everyone’s goals. By asking questions and helping remove emotion from the conversation, an adviser can help to find commonality within perceived conflicts.

For example, if a child doesn’t want to be as involved in a family business or foundation as their parent may expect, or doesn’t want to bear the responsibility of inheriting their parent’s house, an adviser can help set guidelines. Having clear roles that all family members can agree upon ensures that all generations feel comfortable about what lies ahead.

While financial advisers can play a pivotal role in mediating conversations that might feel uncomfortable for families, the ownership still falls on parents and their children to collaborate to ensure they’re tracking toward one goal. As we watch the Great Wealth Transfer continue to unfold, it’s important to identify what multigenerational success looks like for all generations to ensure that the assets passed on are making the strongest impact that align with family values for the future.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only and should not be interpreted as legal opinion or advice.

SEI Private Wealth Management is an umbrella name for various wealth advisory services provided through SEI Investments Management Corporation, a registered investment advisor.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Kelley provides tax, estate, philanthropy and succession planning advice to ultra-high-net-worth and high-net-worth clients. Throughout her career of over 20 years in wealth management, Kelley has solely worked with high- and ultra-high-net-worth families, individuals and organizations. Immediately prior to joining SEI, she was a relationship strategist at Hawthorn, PNC Family Wealth, where she led client management activities.