The Inheritance Experience

William, a 32-year-old, sixth generation member of a successful business family confided to us, “I want to be known for my first name, not my last name,” when asked about his goal in his own career and life. “Growing up, everyone expected me to follow in the family’s footsteps—no one ever asked what I wanted to do. Who am I independent of my family?”

William’s struggle isn’t unusual. For some inheritors, their relationship to the family enterprise gives them a sense of purpose. We know fourth and fifth generation family members in successful business families who derive energy from the opportunity to engage with their family enterprise and leave it better for their next generation. The ability to leverage their inheritance to positively impact their family and community gives them a sense of fulfillment.

But for others, wealth is a double-edged sword. When a client’s wealth is handed down to them (instead of something they built and fought for), they can become paralyzed by the idea of not messing up what prior generations of their family worked so hard to build. While some inheritors thrive in their roles, others are so concerned about ruining what the family has built that they see their role as playing not to lose, rather than playing to win. Why is that necessarily a bad thing? Because they’re so afraid of making decisions that could alter the role they presume they should play in the family enterprise that they never allow themselves the freedom to figure out what they actually want from life. “It’s always felt like this wealth was never truly mine— I’m just a placeholder in my family’s history,” one third generation family business owner told us, “A beneficiary of a trust that was created before I was born and will likely exist after I die. It’s made me really question what the purpose of my life is.”

So how does a Next Gen family member become confident in their self-identity, develop a positive relationship with inheritance and avoid settling for a pre-destined life? We’ve connected with hundreds of Next Gen inheritors and have seen that a mindset change and a supportive advisor can play a critical role in helping inheritors figure out their own path in life—while still staying connected to the family enterprise. Here’s how.

Changing the Conversation

One of the biggest challenges of being a family wealth inheritor is the fact that very few people understand what it’s like to walk in those shoes. Outsiders often assume that family wealth inheritors are living in the lap of luxury. But that carefree life isn’t the reality for many inheritors. “My family has been included on those Forbes lists since I was young,” one inheritor explained to us. “But it’s not real—even if the business was worth that much on paper, it’s all held in trusts. I couldn’t touch it if I wanted to. But everyone assumes I have access to endless money. They assume I’m selfish or uncharitable if I don’t give to every worthwhile cause that reaches out. But I don’t have access to that level of liquidity. The salary I earn through my own work is $60,000. It feels strange to be expected to give away millions.”

Or inheritors are labeled as privileged “nepo babies” who don’t have to overcome the same obstacles and challenges that others face on their career path. “I know I’m incredibly privileged to be a part of this family enterprise, but the scrutiny is intense,” another shared with us. “The spotlight has been on me since I was born, to see if I can live up to my grandfather’s greatness or if I will have my mother’s talent for growth. I wanted to join the business and work my way up, but I didn’t expect this constant judgment. People watch me like a hawk to see if I’ll misstep. Of course I will—I’m only 23!”

Even trusted advisors can unintentionally make things worse. Too often, advisors default to coddling the Next Gen as the heirs apparent or holding their parents up as a paragon of virtue. While their intentions may well be good—trying to help remove stress by handling a wide range of services for the Next Gen—this kind of behavior can keep Next Gens from feeling motivated to become whole adults and stand on their own two feet.

Advisors can do their clients a much greater service by asking more of inheritors. Our experience is that everyone needs to go on their own “hero’s journey,” suffer setbacks, work through obstacles and emerge victorious on the other side to find their own purpose in life. This journey (not just the destination) is essential for anyone to make the transition from child (someone always taken care of) to self-sufficient adult (someone who can take care of themself and others, who feels worthy and is capable). Even with family wealth and resources, there’s no way to shortcut this journey or protect someone from embarking on it if they want to find their own path in life. The best advisors are the ones who know this, help equip the Next Gen protagonist with solid tools to aid the journey and send them on their way.

Four steps

Here are four steps to inspire Next Gens along this journey:

Step 1: Identify the quest. A starting point for most families is to consider a quest for a Next Gen. Lay out the purpose and why it’s important. This is a conversation that usually starts within the family, from parent to child. However, a great advisor can help plant this seed and encourage the conversation to happen. Encourage your Next Gen client to discover who they are and who they want to be. Here are some questions for your clients to consider:

• How do you want to walk through this life? What do you hope to achieve? What do you want to be known for?
• At the end of your life, what would a fulfilling life look like to you?
• Along the path, what values do you want to guide you? What do you want to do—or not do?
• And if these questions seem too intangible for a Next Gen just starting to figure out what they want from life, consider: What sparks your interest? What do you want to explore in the next three to five years?

Your role as a guide is to both give permission for the inheritor to start thinking about their own path through a personal lens and to push them to want this for themself. They may never have allowed themselves to even contemplate their own goals outside of their role in the family enterprise. Help them open the aperture and look at their life more broadly first, irrespective of the family enterprise.

“A common misstep many advisors make is treating the Next Gen as the “children” of clients, rather than as individuals in their own right.”

Step 2: Equip with tools. Next, arm the inheritor with a set of tools that may be helpful along the way. This can broadly include things like education and personal financial skills, but it can more precisely involve real world skills such as how to persevere through adversity or when to ask for help.

As an advisor, the trick here is to share insights without coming across as parental so that you can build an eye-to-eye, trusted relationship with your Next Gen mentee. A common misstep many advisors make is treating the Next Gen as the “children” of clients (whom they need to placate), rather than as individuals in their own right (and prospective future clients). To set yourself up for this conversation, consider what guidance you wish you could give your younger self—what would you have received well, what would you have bristled at and how can you adjust your delivery to elicit a warm reception.

You’re asking your mentee to take the time to figure out who they are, what they value and what they want from their life independent of the family enterprise. Remind them that to the extent they eventually decide to engage with the family enterprise, they’ll be well-served to earn their own clout first. (We recommend that Next Gen family members work outside the family enterprise first and earn at least one merit-based promotion before even considering coming into the family enterprise. This way, they’ll have a greater conviction of the value they bring to the table.)

“As an advisor, you can both support the Next Gen directly as a mentor, and you can help the Next Gen connect with peer inheritors.”

Step 3: Connect along the way. This is actually a series of checkpoints over time to offer insights, act as a sounding board or simply listen. While it’s clear the protagonist of this journey is the Next Gen hero (it will be up to them to slay the hydra or find a way out of the minotaur’s maze), some words of wisdom at opportune times can make a difference. As an advisor, you can both support the Next Gen directly as a mentor and help the Next Gen connect with peer inheritors:

• Mentors. Offer a one-to-one connection throughout the year. The timing and format are flexible (for example, monthly, quarterly, ad hoc, phone, Zoom or in person). The key is to deeply connect on a human level. Some of the best conversations we’ve had have been a “walk and talk” in the woods—anywhere outside of a corporate office. There should be no multitiered agenda or preset proverbs to offer. Rather, this is open space to hear where they are in their journey and offer any insights that may help.
• Peers. Our Next Gen clients also report that one of the most helpful experiences is connecting with others who have been on similar journeys. Whether there are stories you’ve heard that you can impart, peer clients you can connect them with or a dedicated community you can introduce them to, these relationships are often the key because they normalize the experience (and guilt) of inheriting wealth. Being connected to peers who truly understand what it’s like to walk in their shoes can be both a great resource and a relief. “Family wealth is not taboo or a dirty secret. It’s okay to talk about money, what it was like to grow up cognizant of it, how it affected me,” one inheritor shared with us after connecting with several other inheritors. “I finally felt seen.”

Step 4: Finish the first quest before contemplating the family enterprise. Exploring what the Next Gen wants relative to the family enterprise should only come after they’ve begun to answer the questions about who they are and who they want to be. Of all the steps we recommend, this one is the most crucial to get right (and the most tempting one to break). If they’re pressed too early to make a decision about their future in the family business, they’ll often define themself through the lens of the family enterprise— resulting in an identity wholly wrapped up with the family business or family name. For a Next Gen inheritor to have a well-formed perspective on what they want their engagement to be with the family enterprise, any substantive decisions related to said enterprise have to wait until after the Next Gen has a sense of who they truly are and what their personal goals are in life.

Promise the Next Gen that you won’t push them to engage in the family business before they’re ready; in fact, you’ll do everything in your power to stave off questions about their future in the enterprise until they have confidence in who they are. Remind them that they can’t expect to be a great steward of their family business if they don’t first understand how to thrive as an individual.

Only after they’ve completed their first hero’s journey should they consider what family enterprise role(s) might be a good fit for them given their interests and what they value. Help them think that through. Do they have a passion and talent for commerce? Then they might consider joining the family business. If their passion isn’t in the same industry as the legacy business, they could expand or start their own business. Are they a connector who deeply values familial relationships and legacy? They may want to take a leadership role in the family governance side of the family business. Do their interests tie to areas the family supports philanthropically? Consider getting involved in driving these efforts in their community. Instead of spending mental energy wrestling with their inheritance, encourage the Next Gen to harness the resources they have. And remember, their role doesn’t have to be on a grandiose scale—humble aspirations are welcome if they lead to a fulfilling life. Inheritors don’t need to squeeze a square peg into a round hole. There are other places that will be a more natural fit and different ways to manage a family enterprise than what was historically done.

The impact of these conversations can be enormous.

If you’re able to help your Next Gen clients through this journey, you’ll have achieved every advisor’s dream—a deep relationship with someone who trusts that you have their best interests at heart.

Passing the Lessons On

Our message as advisors to Next Gen inheritors of all ages and life stages is that it’s never too late to make peace with inheriting wealth and to lead a fulfilling life. Some inheritors may find the role of being a trusted steward of their family enterprise fulfilling and one they happily assume. But that’s not the right choice for everyone. We’ve worked with family business owners in their 50s and 60s who are still struggling to find their purpose because they felt pressured to fit an early mold. Being part of a business family doesn’t have to define them. Everyone can and should have their own goals and ambitions to pursue. Their inheritance can be a launching point, not an end point.

Much of the most enduring generational wealth in the world is present because subsequent generations grew it, not just preserved it. Remind your client that they’re the lead of their own life, and it’s up to them to direct where it takes them. And remember, not only does your client have an opportunity to have an impact through their resources, but also they have the power to serve as a model for future generations who will grapple with their own position within their business family. Your client’s experience as a Next Gen inheritor will be what they make of it. As one Next Gen client put it, “I’ve come to recognize my inheritance for the great gift it is—I have the ability to impact change on a larger scale, thanks to generations of my family before me, than I could have on my own, starting fresh. And I have a chance to change the narrative for generations who succeed me.”

Originally published in Trusts & Estates magazine, August 2020