We have all seen the number: $30 trillion. Put it into Google and see how many hits you get; I just got 616,000.

According to an oft-cited 2012 report from Accenture, $30 trillion is the amount of wealth the baby boomer generation will be transitioning to Generation X and millennials over the next 30 years.

Then there are 70 percent and 90 percent. These are the numbers cited by Roy Williams and Vic Preisser, founders of the Institute for Preparing Heirs, that represent the failure rates for wealth transfer between generations.

And those figures couldn’t be more startling: 70 percent of the nation’s wealthy will see their wealth disappear by the end of the second generation, and 90 percent will see it disappear by the end of the third.

As advisors, we often find ourselves at the center of engagement between parents and their children as it relates to developing a plan for successfully transferring wealth. In that context, we have found the following strategies beneficial as we work to engage multiple generations in conversations about family wealth.

BE INTENTIONAL AND PURPOSEFUL

Do not have the conversation in the car on the way to the ball game or during a period of high emotion. Create a setting that is thought through. Put a quick agenda in place, and communicate that everyone is expected to contribute. Send the agenda in advance with a quick email. These meetings are about co-creating expectations and setting up a family vision, and the outcomes typically benefit from allowing participants the opportunity for advanced thought and preparation.

Ad

BE TRANSPARENT

Withholding information creates an environment of mistrust. The information age is powerful, and we live in a search and discover world. So while your next generation probably has a good idea of your wealth, its members may overestimate the size, and likely do not understand the liquidity implications. Being open about these factors helps establish realistic expectations. And talking openly about your wealth and its challenges shows that you care about the success of future generations.

CREATE BOUNDARIES

Being transparent doesn’t change the golden rule; whoever has the gold still makes the rules. Parameters should be set around what will be discussed and how family decisions will be made. As for younger family members, their ability to voice an opinion isn’t the same as a vote. While the next generation should have a say, we work to leave the ultimate decisions in our clients’ hands.

MAKE IT FUN

Allow the next generation to help plan for these conversations. This could be as informal as picking out the restaurant for the initial conversation, or as involved as researching and booking the trip for the next family-meeting getaway.

Giving responsibility and creating accountability conveys a sense of worth and shows your confidence in family members’ decision-making.

It also creates a valuable sense of peership between our clients and their next generation.

Creating the wealth was almost certainly not easy, and the statistics show that perpetuating it is no walk in the park either. Yet, there are practical ways to begin the discussion, and many of these tools and tips can evolve into more sophisticated conversations.

Ad

The key is to start the engagement process between our clients and their legacy.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy or product (including the investments and/or investment strategies recommended or undertaken by Waldron Private Wealth), or any noninvestment-related content, made reference to directly or indirectly in this essay, will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this essay serves as the receipt of, or as a substitute for, personalized investment advice from Waldron Private Wealth. Please remember to contact Waldron Private Wealth, in writing, if there are any changes in your personal/financial situation or investment objectives, for the purpose of reviewing/ evaluating/revising our previous recommendations and/or services. Waldron Private Wealth is neither a law firm nor a certified public accounting firm, and no portion of the essay content should be construed as legal or accounting advice. A copy of Waldron Private Wealth’s current written disclosure statement discussing our advisory services and fees continues to remain available upon request.

This article was originally published in the April/May 2016 issue of Worth.