There is a real risk of wealth erosion across generations as concerns remain about Gen Z’s readiness to lead family businesses, new research has revealed.
While 69 per cent of young heirs aged 18-40 – Gen Z and millennials – express enthusiasm about stepping into leadership roles the findings Nedbank Private Wealth highlighted gaps in practical experience and confidence among young heirs. Nearly 30 per cent of respondents fear they lack the skills to lead an organisation, while a quarter worry about the financial burden of their roles. For others, challenges include stress (25 per cent), fear of failure (26 per cent), and operating under the shadow of their predecessors (22 per cent).
Even more concerning is the potential for family wealth to dwindle over time. Research indicates that only 10 per cent of family wealth typically remains intact by the third generation, with communication breakdowns and lack of trust cited as the primary reasons for wealth destruction.
Despite this, younger generations display a strong readiness to engage, with 98 per cent of Gen Z heirs claiming they feel prepared to manage family wealth. However, history suggests that only 10 per cent of family wealth remains intact by the third generation, with poor communication and lack of trust often contributing more to this erosion than market risks.
Bridging generational gaps with Gen Z
Despite 78 per cent of young heirs recognising the potential benefits of philanthropy, 57 per cent of millennials with wealth exceeding £25 million report their families lack a philanthropic focus.
Spear’s Top Recommended HNW Wealth Manager, Rebecca Cretney, Senior Investment Specialist at Nedbank Private Wealth, said integrating philanthropy into succession planning can be a ‘powerful tool to bridge generational divides’.
Content from our partners
[See also: Why the Great Wealth Transfer will be a dangerous time for global capitalism]
‘Through charitable initiatives, heirs gain hands-on experience managing assets, serving as trustees, and making impactful decisions, all while reinforcing family values and strengthening bonds,’ Cretney said.
She said philanthropy not only builds practical skills but also nurtures leadership qualities, promotes personal growth, and fosters a sense of responsibility toward societal issues.
[See also: Who’s afraid of the big bad next gens?]
Simon Gibbons, Executive Head of Wealth Management at Nedbank Private Wealth, agreed preparing heirs: ‘By engaging in hands-on philanthropic work, they can develop leadership abilities, strengthen family values, and build meaningful connections to their legacies. This approach also addresses the fears and uncertainties that often come with succession.’
Beyond charitable giving, philanthropy offers practical benefits such as board experience, leadership development, and a deeper understanding of societal issues. Gibbons encourages families to integrate philanthropy into their succession planning as a way to unify values and create meaningful impact:
‘By aligning philanthropic initiatives with wealth strategies, families can achieve a win-win: preserving wealth while making a difference in the world.’
