UHNW legacy: educating children for generational wealth transfer
What is the challenge of “Wealth Transfer” for entrepreneurial families?
The topic of “wealth transfer” is, rightly, much debated. It is a shift that will redefine global economic and, even more so, family dynamics, given that most of this wealth will be transferred within entrepreneurial families, the true engine of the European economic fabric. But the data also tells another, rather uncomfortable truth: wealth without planning is destined to vanish. 70% of UHNW families lose their wealth by the second generation, a percentage that rises to 90% by the third generation. The reason? A lack of preparation, vision, and shared governance. It is therefore necessary to invest in the entrepreneurial, financial, and value-based education of the NextGen, transforming children into conscious shareholders and responsible leaders. “Wealth is a form of responsibility”, wrote J.D. Rockefeller to his son in 1907.
The skills required of young heirs go far beyond a simple understanding of the family business. The new generations must develop a mix of hard and soft skills in line with the complexity of the current context.
Why is wealth planning essential to avoid the dissipation of wealth?
An HSBC report quantifies the downside when it comes to wealth transfer and generational transition. The analysis focuses on Ultra High Net Worth Individuals (UHNWI) with investable assets exceeding USD 20 million: of these, 24% have not yet developed any wealth transfer plan, 15% have never considered long-term planning, and 13% do not intend to discuss succession with their families.
What are the reasons behind the lack of planning for generational wealth transfer?
Why do many wealthy families fail to plan? Four reasons have been identified: firstly, they often spend all their energy on their business, postponing decisions on wealth-related matters and generational transfer. Then there is the issue of the growing complexity of wealth, which is increasingly global (73% of UHNWI live permanently in more than one country, and 89% control companies operating on a global scale) and fragmented (52% of UHNWI own more than one company, compared to a global average of 19%). This creates legal and tax challenges that not everyone is ready to face. Added to this is a natural aversion to losing control: the more wealth is accumulated, the harder it becomes to “let it go”. Finally, perhaps the simplest but equally decisive factor is the lack of time: managing businesses and wealth leaves little room for structured reflections on the future. Thus, while 59% of the multimillionaire entrepreneurs would like to pass their business on to the next generation, only 36% report regularly discussing succession plans within the family and the generational succession. And 14% have not set up any governance structure to address the wealth transfer.
What skills does the NextGen need to face the future?
The skills required of young heirs go far beyond a simple understanding of the family business. The new generations must develop a mix of hard and soft skills in line with the complexity of the current context. Among these, the most prominent are: financial education, digital skills, with particular attention to areas such as artificial intelligence, blockchain, fintech, and cybersecurity; as well as leadership abilities and strategic thinking. Equally essential are knowledge of family and corporate governance rules and, finally, sensitivity to sustainability issues.
Why are vision, responsibility, and culture important beyond wealth transfer?
To pass on wealth in an authentic and lasting way, it is not enough to transfer financial assets: it is necessary to transfer vision, responsibility, and culture. Educating young people to become conscious and forward-thinking shareholders of the family wealth, even when the company is no longer there due to a liquidity event, is a crucial challenge in the context of generational transition.
The role of wealth management: facilitating generational transition with innovative programmes
In this context, wealth management can play a key role as a facilitator of [generational transfer]. Advanced programmes are needed to actively involve the NextGen, with a dual objective: to prepare young people not only to become future managers but also to be conscious and responsible shareholders.
Article written by Alessandra Losito, Head of Pictet Wealth Management Italy, published in We Wealth, the online and print magazine dedicated to wealth management and investments, in October 2025. ©2025, We Wealth.