Next Gen Relationships in Families

It’s no secret in wealth management that the longer a family has substantial money the more difficult it is to maintain both family dynamics, family harmony and the family wealth. In fact, the dissipation of wealth from one generation to the next is often dramatic: research shows that, on average, 70% of wealthy families will lose their wealth by the second generation – and 90% will lose it by the third.

With barriers aplenty across family structures and shifting priorities from generation to generation, a lack of effective communication and insufficient education are key culprits in dwindling wealth. An added complexity with high net worth South African families, is that in many instances family members are spread across the world.  In such scenarios, the trusted advisor to the family becomes critically important.

Here are some pointers for families to consider:



With people living longer today, the broad range of generations within families can be a barrier. When the oldest generation – grandparents, or in some cases even great grandparents – have a majority vote, there likely will be a communication gap between them and the second or third generations that have grown up in a digital environment.

It is of critical importance that families take professional advice to explore the most appropriate communication strategy.



Next-generation family members are likely to have priorities that differ from previous generations and those who have advised them. For example, younger generations may be more passionate about sustainable investing, and that can put the investment professionals at the family office in the possibly unfamiliar position of having to craft and present investment strategies that go beyond maximizing returns.

Having an independent facilitator can add invaluable oversight to the investment process and decisions made.



A key goal for professionals and advisors in the family office is to establish an ongoing and trusted relationship with every generation of the family. Trust, of course, takes time to build.

Trust can be engendered through a shared sense of belonging. Ideally, a family office would have a team that mirrors the family itself in terms of age and experience. At the very least, the younger generation should feel there is someone within the family office who is a champion for their point of view.

Many Family Office advisory firms offer training programs through which younger family members can be taken through.



Every family is different, and each member of it absorbs and processes information in a unique way. However, there are some foundational takeaways that should be included in next gen education.

Young family members should also learn the process of setting goals, working toward them, and achieving them. An always popular choice for an advisor to work with young people on is purchasing a new car. Beyond that, as young family members near completion of their higher education, it’s a good time for advisors to help them understand more sophisticated financial analysis – what it means to have a mortgage and purchase a house, for example, and financial planning for their own potential family.

As part of the educational process, advisors should lay the groundwork for key family decision makers to be financially literate.



For many family offices and their clients, educating the next generation is part of the broader process of preparing all family members to collaborate and establish guidelines for family governance. It’s important to note family governance is distinct from the governance of the family’s business interests.

The most important aspect of family governance is helping family members get along with each other and for all family members to be “pulling” in a similar direction.

Independent input into this process is of fundamental importance.

Every family should have a Family Office, by that we mean a formal process that takes on board these principles.

Contact the Activ8 Group and let our team be your professional Family Office Advisor.