Family Barometer 2024

Intergenerational wealth transfer and succession planning has moved up from second place to emerge as this year’s top family-related topic across every single region. This universal focus indicates that families globally are deeply concerned with ensuring a smooth transition of leadership and wealth to the rising generation. As family businesses often play a significant role in regional economies, the emphasis on succession planning reflects a proactive approach to safeguarding the future of these enterprises. At the same time, the increasing amount of wealth to be transferred to more than one generation and the international nature of today’s affluent families – with family members, assets, and business interests often spread around the globe – calls for a coherent plan to tackle the challenges across jurisdictions.

The survey results highlight the particular importance of intergenerational wealth transfers in the Middle East region, where respondents ranked it the highest in comparison with other regions.

In this year’s findings, we observe moderate transparency in wealth transfer processes from wealth givers to wealth receivers, albeit with some variability in the responses. In Latin America and Europe, wealth owners tend to communicate more openly about the transfer of wealth between the generations, while in the Middle East and Asia wealth transfer arrangements are less openly discussed. This suggests that while a majority of respondents experience a fair level of transparency, there is still a need to enhance clarity and communication in wealth transfer practices.

When it comes to societal topics, this year’s results show a greater emphasis being placed on taxation across most regions. The topic rose from second to first place in this year’s survey. It is the top concern across Europe, Asia, and Latin America and the second-highest priority in the Middle East, which highlights its widespread global importance. Political tensions and changes of government in some of the world’s major economies in recent times mean that tax changes and regulations are likely to continue to be of importance for wealthy families in the near future.

Individual and family growth opportunities ranks as the second family-related topic in most regions, gaining one place since last year, when ‘personal development options’ ranked third. This highlights a strongly increasing interest in fostering personal and professional development within families as well as exploring new opportunities for growth and expansion. This year’s results indicate that wealth education programmes for the rising generation are a significant priority for wealthy families. By educating heirs about the stewardship of wealth, families can diminish the risk that the wealth dissipates after one generation.

In a look at regional preferences, Europe and Latin America show a stronger preference for conducting family meetings with the involvement of professional advisors and grant greater importance to wealth education in preparing the rising generation to manage family wealth. This approach reflects a broader understanding that external expertise and structured education can significantly contribute to individual and family growth opportunities. By involving advisors, families can gain valuable insights and strategies that foster both personal development and financial acumen, ensuring that the next generation is wellprepared to sustain and grow the family wealth.

In contrast, the Middle East and Asia show a slight preference for conducting family meetings without the involvement of third parties and a stronger preference for involving the rising generation in investment decisions as a means of preparing them to receive the family wealth. Across all regions, the most emphasised measure in preparing wealth receivers is their involvement in family and business decisions (23%), followed by wealth education (17%) and participation in investment decisions (17%).

Family governance is prioritised differently across regions. While it is the third most important topic for most regions, it ranks second in Latin America. This distinct regional focus reflects the fact that Latin American families place a higher importance on establishing robust governance structures.

This matches our belief that robust family governance frameworks and education are essential in preserving a family’s wealth. Research² indicates that in 60 per cent of cases, a lack of communication and trust is the main reason for the failure of wealth transfers, while in 25 per cent of cases, the main reason is inadequate preparation of heirs. Providing family transparency and governance skills is therefore crucial for maintaining and growing the family legacy.

In most regions, wealthy clients show a preference for adopting professionalised practices and governance structures to ensure long-term wealth preservation and growth. Despite a reported high level of professionalisation in practices and governance structures among most wealthy clients, there remains a reliance on informal frameworks characterised by occasional discussions. It is evident that only 30 per cent of families have fully established governance frameworks that include investment committees and clearly defined roles. This disparity highlights a gap between the perceived level of professionalisation and the actual implementation of formal governance and risk frameworks. The continued reliance on informal structures underscores the need for more robust and formal governance mechanisms.

Political stability has become a top-three societal topic for the first time this year and is a major concern in Asia, the Middle East and, above all, Latin America. This reflects widespread concerns among wealthy global families about the impact of issues such as nationalism, political polarisation, and diverging economic tectonics. The global economy is fracturing into different blocs that are reshaping the interactions between different jurisdictions and having a bigger impact on asset allocation than they have for a generation. A further upshot of this concern is the emergence of geopolitical diversification as this year’s highest-ranked investment topic.

Political stability and personal safety also gained prominence in some parts of the world, indicating the prevailing mindset among the guardians of family wealth. It’s only natural that when families face what they perceive to be outside instability or risk of any kind, they seek the supervision and guidance of professional advisors to increase their peace of mind and the resilience of their wealth management strategies.

Ultimately, the 2024 Family Barometer bears out last year’s early indications that it has become a more difficult and uncertain environment in which to preserve wealth. In a world where the future is uncertain and change is fast-paced, families need to look beyond short-term performance so that they and their wealth not only withstand unpredictable times but also emerge stronger.

This makes it all the more essential for them to work with professional advisors to establish a solid financial plan. Such a plan not only protects their wealth against the negative forces of market volatility, geopolitical turmoil, and the resulting ‘unknown unknowns’, but also ensures long-term growth for their wealth and that it remains abundant for future generations.