Over the next two decades, hundreds of trillions of dollars in wealth will shift from Baby Boomers to Gen X, Millennials, and Gen Z. In the United States alone, that number will be over $80 trillion. Known as “The Great Wealth Transfer” by financial analysts, this will impact everything from national economies all the way down to individual families and businesses. But the kind of impact it will have for individuals can be hard to predict.
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The most important asset in your legacy? Your values.
The other angle on legacy
“The key lessons that you learn from high net worth and ultra high net worth families is that they think about the future and plan for the future quite early and they do it systematically.”
That’s according to Aya Taha, an ultra high net worth relationship manager at the HSBC Private Bank. Specifically, planning for business succession (where two-third of founders haven’t planned their exits), and not just family transitions, is critical. “The less things are planned, the higher the risk it is for the business to survive after the founder is gone,” she states.
Despite that, the majority of people have yet to engage in comprehensive future planning. HSBC’s Quality of Life Report shows that only 40% of affluent individuals have created a will, and a will is just one part of planning. Other considerations include how to provide for family members, whether to support charitable causes, or to provide guidelines for running existing businesses. There are rewards to starting this process. The Quality of Life Report also finds that individuals who take the time to plan are 50% more satisfied with their overall quality of life. In addition, planning transitions can open the door to new paths, as 73% of former entrepreneurs found new opportunities.
Future planning also needs to take into account a changing world, as assets like cryptocurrency or monetized social media accounts pose new challenges to estates. Similarly, an individual’s priorities can change over just a few years, and updates to plans can reflect new philanthropic goals or alter decisions on who to leave assets to. That’s one reason why Taha advises that the key to successful legacy planning is starting early. “The earlier you start, the better. It allows you sufficient time to craft your vision and embed the culture you want to pass on,” she says. Whether it’s for family, charitable causes, or future business endeavors, the conversation about what matters most to you is a crucial first step in this legacy journey.
Click here to explore other angles with HSBC.