Succession plans are becoming increasingly numerous and structured in response to growing wealth transfers due to demographic changes in Italy and elsewhere (such as declining birth rates and longer life expectancy). According to estimates in the latest Global Wealth Report by UBS, more than $2 trillion is expected to change hands in Italy over the next 20-25 years. Not to mention the fact that in some cases, wealth is transferred between spouses before passing on to the next generation. But wealth alone is not enough and represents a challenge both for those who inherit it and for the advisors who manage such assets. We Wealth contacted a number of industry players to paint a picture of the Next Gen at the helm, exploring their identities, impact, and new family leadership.
“The generational transition in wealthy families has become a strategic and proactive process in which the new generation of Millennials does not simply inherit, but demands to actively manage the family capital, integrating digitalization, sustainability, and new governance models. It is a trend we see every day when interacting with families who come to us,“ explains Luca Mainò, Consultique SCF Founder, citing evidence from a global study by FPSB (Financial Planning Standards Board) LTD in February 2023, ”The Value of Financial Planning,” which surveyed 15,332 investors in 15 regions, including 1,731 Certified Financial Planner™ clients, highlighting, among other things, that 75% of CFP™ clients report an increase in their quality of life and 83% feel more financially secure, compared to 71% and 74% respectively among the “unadvised.”
According to Manuela Soncini, Head of Wealth Advisory, UniCredit, “The younger generations are showing greater interest in expanding the investable universe than their parents, with an obvious curiosity about the world of innovation, digital assets, and private markets. On the ESG front, especially among younger generations, there is a growing awareness of the social responsibility of investments, which, however, often fails to translate into concrete action: while it is becoming increasingly important to balance impact objectives with financial returns in the investment process, what is being loudly demanded is a transparent and reliable approach on the part of operators. The younger generations are extremely attentive to the power of reputation and the damage that its loss can cause. The message is clear: new leaders seek consistency between behavior, messages, and strategies in the world of financial operators.
“Sustainability is no longer incidental, but central, particularly among women of these generations, and is perceived as a lever for more solid returns in the long term. This is driving growing interest in the green economy, renewable energy, digital technologies, and highly innovative start-ups,” comments Francesco Bianchi, private banker at Fideuram. “For the very young generations, who are still in the formative stages, it is important to focus on financial education to provide a solid foundation for approaching financial markets and investment products. Those who have already embarked on a professional career require support in wealth planning, setting up vehicles (holdings, trusts), lending solutions, and expanding their product mix. Access to private markets, club deals, venture capital, and involvement in networking and exclusive initiatives are highly appreciated,“ adds Manuela Soncini.
”The new generations are generally better prepared and more informed: they are not just looking for products, but personalized advice and ongoing dialogue about their needs. They are very cost-conscious and, for this reason, prefer passive management, which allows for control and transparency. They use digital tools that facilitate simple and constant communication, and they want to be able to intervene quickly in their portfolios. They aspire to be an active part of the decision-making process, through solutions that make financial mechanisms clearer. As digital natives, they also show a strong propensity towards equity and sectors familiar to them, such as AI and Blockchain, with growing attention also to the world of cryptocurrencies,” says Francesco Bianchi.
“Successive generations in an entrepreneurial family have a common need: to carry on the family heritage and therefore both the business and the financial side of the wealth. The latter often represents a significant component of the assets for the generations following the first,” notes Claudio Barberis, Head of Asset Management at Kairos Partners SGR. “In some cases, the financial aspect becomes the predominant part of the family wealth, in others less so: it is necessary to understand how much of the financial component must still have an entrepreneurial spirit and therefore focus on high-growth investments, and how much should be allocated to more conservative investments, i.e., maintaining purchasing power over time but with controlled risk. In terms of ‘new financial opportunities’, every era has its own innovative themes: a wealth manager focused on HNWI clients always has a part of their offering that also covers these opportunities, from venture capital to specific ideas on individual themes.”
“In entrepreneurial families, the generations following the founder find themselves having to manage the complex balance between interpreting the values passed down by previous generations and the desire to leave their own innovative mark on the company’s path. The concept of ”novare serbando” sums up the idea that the values passed down and the wealth created by the family must be preserved and protected, while at the same time being made functional tools for personal and business growth. Dialogue between generations is key to achieving this balance. The younger generations, accustomed to more complex family dynamics and new priorities, are less embarrassed to discuss wealth and investments within the family, breaking down barriers to concrete family planning,” concludes Soncini.
