Inheritance anxiety discussed

Social and psychological issues, such as fear of negative outcomes and a lack of confidence in heirs, are the greatest barriers to creating and sustaining generational wealth, according to participants at a recent round-table discussion.

“Since very few creators of wealth actually inherited wealth themselves, they often doubt that their heirs have the same motivation or ability,” said David McLaughlin, senior managing director of the SEI Wealth Network, which hosted the discussion last month in Philadelphia. “Family leaders come to the table with that fear and often end up playing not to lose, rather than playing to win.”

The round table featured 14 parents and children from six families discussing insights and experiences related to helping heirs create and sustain wealth. The SEI Wealth Insight Initiative moderated the panel.

The participants ranged from 19 to 62, with family net worth of $10 million to $40 million. Their feedback focused on avoiding the negative outcomes of passing on wealth, and a need to instill the values needed to fortify and build assets.

Concerns over losing wealth stem from the desire of younger generations to continue their affluent lifestyle without understanding how to generate the wealth to fund it. However, the most successful families were found to have spent time communicating their heirs’ accountability to managing their legacies.

Among other families, the taboo of discussing money is to blame for heirs’ lack of financial education. SEI found that younger generations may know that they are affluent but often are unaware of the size or history of their holdings and don’t have a plan to maintain them.

The fear of spoiling children also competes with the parental desire to nurture them. Parents will talk about personal values, hoping that they will guide their children toward spending less, but leave explicit talk of financial values out of their conversation, SEI found.

Related Topics: Wealth Management