Charting the course

Being a younger member of a wealthy family provides immense opportunity. But it can also carry with it a number of expectations and even demands. At the Merrill Center for Family Wealth™, we recognize the many challenges and uncertainties faced by the scions of wealthy families. So we gathered feedback from more than 1,000 members of this rising generation – seeking to better understand their top priorities and concerns.

The following summarizes some common questions we heard along with key insights and practical strategies to help navigate the complexities of inherited wealth.

1. How can I determine what my family expects of me, and what I can expect (without seeming entitled)?

Younger family members who have been gifted assets are often reluctant to make use of those funds —uncertain about their family’s desires and the intended purpose of the gift. Rather than providing a sense of empowerment, the inheritance instead creates a hesitancy where opportunities can be missed.

Clear communication about the family’s values and expectations can eliminate this ambiguity; freeing up the emerging generation to start businesses or change careers, fund important goals like a child’s education, support causes they’re passionate about, or simply invest for the future.

Don’t shy away from these inherited wealth conversations. Be curious about the giver’s values and intentions. And show your desire to honor the family’s legacy. Over time, these candid discussions will strengthen both trust and transparency between generations.

2. How can I maintain healthy sibling relationships when working together on shared family ventures?

Family disagreements are inevitable. Adding a family business or philanthropic endeavor to the mix, however, can ratchet up the tensions surrounding individual roles, responsibilities, expectations and desires. Concerns about favoritism and escalating sibling rivalries are common.

Committing to regular family meetings where open, honest dialog is encouraged (and wealth creators share necessary information with the emerging generation) will help everyone more effectively navigate these hurdles, preserve family relationships, and ensure the continued success of the endeavor.

Many wealthy families build shared decision-making capacity between siblings or other extended family members, but always with realistic expectations of each other’s capacities and interests, a process for how decisions will be made and clarity as to who has the final say.

3. How can I build my own personal identity, both within and outside of the family wealth?

On the one hand, you want to please family members and fulfill their expectations. But what if those expectations directly conflict with your own vision for the future? We strongly encourage families to broaden their definition of wealth – to value each member’s contribution of human, relationship and spiritual capital and how they enhance the whole.

Before making any major career decision based on the needs of the family, members of the emerging generation should take time to explore their own passions and purpose. Look for opportunities around the intersection of your strengths/skills and your interests, and only then consider how those might align with the needs of the family business or stewardship of the family’s wealth.

4. How can I navigate uncomfortable money dynamics and questions from friends and romantic partners?

It can be challenging to find the right balance between transparency and privacy when dealing with friends and potential relationship partners. Upholding personal boundaries, however, is an important aspect of navigating relationships with integrity.

One way to accomplish this is to craft a quick ‘elevator speech’ grounded in personal values to help define your relationship with wealth confidently and authentically. Alternatively, you can just try to steer conversations away from money by responding with a question such as, “What exactly are you curious to know?” It’s a strategy that can reveal what’s at the core of the individual’s curiosity beyond just dollars and cents.

Of course, a serious long-term romantic partner requires more disclosure than a friend – especially in situations where one partner has significantly greater wealth than the other. But once again communication is key. Don’t wait too long to sit down and discuss your personal financial situation and values (being careful to honor your family’s privacy and confidentiality) with a prospective partner.

5. How can I acquire the skills necessary to manage family wealth responsibly?

Building the necessary skills to manage family wealth will be vital to ensuring your future financial well-being. You need to actively engage in learning – identifying areas for growth, setting realistic goals, planning and leveraging all available resources (including your family’s advisors).

It’s not only a matter of learning how to manage wealth and invest, it’s also about educating yourself as to family governance, philanthropy, the complexities of a family business, and the skills you’ll need to successfully navigate those challenges.

Now’s the time to act.

Your Private Wealth Advisor can offer invaluable assistance in helping to identify and prioritize the most critical competencies you should strive to build and hone, as well as devising a skill-building plan to help get you there.

Tackling these and other pressing questions by initiating a dialog with family members can empower everyone – both wealth creators and the emerging generation – to navigate the terrain with more optimism and confidence. It won’t solve every problem, but establishing open lines of communication can reduce or eliminate uncertainty and strengthen family bonds.

Interested in exploring this topic in greater detail? Read our latest “Charting the Course” white paper on the top priorities and challenges facing the rising generation.