Next gens empower the family legacy

Managing family wealth and making a positive impact in the world

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While it is key to have a family strategy in place to ensure wealth continuity, it’s just as important to ask what the purpose of the family’s wealth is or should be in the future. A recent comprehensive study by UBS, Voices of next gen: Family wealth at the crossroads of legacy and impact, found that dialogue between the generations and the inclusion of the voices of the next-generation family members is essential to empowering legacy planning. However, next gens frequently find themselves stretched between maintaining the family legacy—sometimes closely tied to an industry household name—and their ambition and wholehearted motivation to positively impact the world. So, what does wealth means to them? And how do they view the family’s legacy in relation to the positive impact they want to create in an interconnected world?

Driving innovation in the family business

From technological disruptions such as 3D printing and artificial intelligence to changing consumer behavior and the need to embrace sustainable business practices, family businesses are under pressure on many fronts. As the landscape changes and challenges mount, next gens are not standing on the sidelines.

Their capabilities, ideas and perspectives are often critical for accomplishing a successful business transformation. They spearhead impactful innovations and serve as pioneers in addressing the challenges of the next decade. They build on the fundamental tenets of their family business, aiming to protect and preserve past achievements while pursuing important (sometimes overdue) innovation projects.

In this subtle balancing act, they diligently reinvent the tradition of the family business—the meanings and values that have been passed on from generation to generation—and leverage it to advance the renewal of their business. Whereas some next gens primarily focus their work on the family business, others seek to leave a mark by charting a more uncertain path with disruptive innovations and launch their own ventures.

Embracing a new mindset

Success has for a long time been narrowly defined in the economic terms of financial returns and profits. But this narrative is shifting rapidly among next gens, many of whom are on a quest for meaning and purpose. The mindset that shapes their behaviors and actions within the family business—and beyond—is driven by a strong desire to achieve positive impact for society and the planet.

The motivations driving this search for impact and meaningful work are often expressed as part of next gens’ identities and are core to their considerations. Many pursue an encompassing sustainability agenda in their entrepreneurial ventures and family businesses, reinterpreting and extending the traditional concept of Corporate Social Responsibility (CSR).

Crucially, this change in mindset affects succession planning. For many, the decision to take over the family business is a conscious, well-evaluated choice rather than a predetermined life decision. This not only relates to their own succession decision, but also that of their children, whom they may want to liberate from any pressure or expectation to take over family wealth-related responsibility.

Recognizing their motivation

Broadly speaking, many next gens are self-aware, seek personal fulfillment with their work and do not differentiate as to whether to achieve this self-realization inside or outside their family’s business. Many say they want to be motivated by what they are doing now, to live in the present and remain true to their values. And when it comes to business succession, they want this motivation to be understood by both the controlling generation they are succeeding and their successors.

Leaving a meaningful legacy is a primary ambition of many next gens. They seek to fuse their family name with their own narrative around wealth, which often encompasses societal and environmental responsibilities. However, while safeguarding the family legacy is important, many next gens see it as not dependent on the business. It may not matter whether their legacy remains as the current business or in the form of an equity firm or asset management.

With a growing number of next gens taking over powerful roles in the coming years, their influence on how business is conducted, the types of innovation pursued and how wealth is allocated will become even more pervasive.

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