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Six Things About Millennials That Could Damage Your Estate Plan

Millennials and Intergenerational Wealth Transfer

Family members who became adults around the turn of the century in 2000 are Millennials. Today, these people are fast approaching their fortieth birthdays and their parents, typically, are entering their late-60s and early-70s. Millennials are the “next” generation when it comes to intergenerational wealth planning. They are also the ascendant and rising group in family enterprise business transitions. Successful family wealth succession (or transition) demands an understanding of their disposition, needs and goals.

Millennials are often characterized by a lack of institutional loyalty or attachment. They also tend to transition and change their employment on a more frequent basis than their parents and grandparents would ever have dreamed. In fact, a recent report from Gallup Inc. suggested there were six major functional changes ahead in relation to the disruptive influences Millennials would have in the future. Understanding some of these changes will help make purposeful intergenerational wealth planning more successful.

The changes summarized in the report were:

1. They don’t just work for a paycheque – Millennials seek purpose;
2. They are pursuing personal development over job satisfaction;
3. They don’t want bosses or people that tell them what to do – they want coaches;
4. In employment, they don’t want annual reviews but instead prefer authentic and regular conversations;
5. Work is not simply a job, it is an expression of life choices and purposes;
6. Millennials are less interested in shoring up weaknesses than they are in developing their strengths.

This latter observation was identified as the most profound in the survey. The authors state “Gallup has discovered that weaknesses never develop into strengths, while strengths develop infinitely.”

Consider this conclusion in the context of your own estate planning or business continuity planning. Many people consider wills with incentive clauses to encourage the development of better behaviour around money management, relationship choices or career and education commitment. This research suggests that is the wrong approach and that, instead, you should be focussing on the strengths of the inheritor and investing in those qualities.

Investing in the strengths of a person, while being mindful of their weaknesses, is effective and purposeful estate planning. However, it is a rare estate plan that features strategies and tactics coordinated on the investment of the strengths of the family’s human capital. Yet, it is well understood that investing in the human, social and intellectual capital of the inheritor and the family in general is the greatest purpose for financial capital. It is also a key method of ensuring that financial and other sources of family wealth are able to survive into the third generation and avoid the old adage “shirtsleeves to shirtsleeves in three generations”.

I will address more of these findings in later posts. However, it is worth noting that every one of them highlights the transition from top down “do as I say” approaches to more collaborative and holistic methodologies and processes. This also has fundamental implications for all planners including philanthropic gift planners, insurance agents, private bankers, lawyers, financial advisors, family business consultants and accountants. Relationship management will be about taking the time to truly understand core values, develop mission direction and a strategic intergenerational wealth plan based on purpose.

Chris is the author of “The Naked Opus: Growing Your Family Wealth for the Long Term”. It will be available in Chapters/Indigo on August 24 and elsewhere soon after. For speaking, facilitation and more information visit www.nakedopus.com

 

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