Wealth Solutions & Wealth Planning

Wealthy Families Lag in Succession Planning, Citi Survey Reveals

A recent survey by Citi Private Bank, encompassing 268 high and ultra-high net worth family offices with a combined net worth of $565 billion, has unveiled concerning trends in the realm of succession planning among wealthy families.

While the survey touches upon various financial matters, including concerns about inflation, interest rates, and geopolitical issues, one glaring issue that stands out is the lack of preparation for succession planning among affluent families.

Despite the overwhelming importance of wealth management (74% cite it as their primary focus) and investment management (55%), the survey reveals a disconnect when it comes to succession planning. Only 24% of respondents consider "managing leadership transitions" as their primary concern, with "strengthening family governance" and "enhancing philanthropic impact" receiving even less attention at 23% and 18%, respectively.

This disconnect is particularly surprising in light of the fact that wealthy millennials and Gen Z individuals are increasingly interested in philanthropy, potentially making them more focused on giving away money than previous generations.

The survey also highlights the dearth of foundational documents and plans in place for wealth transfer and leadership succession. Only 32% of families have a constitution or charter in place, 28% have a succession plan, and a mere 21% have a tailored financial education program for the next generation.

Europe, the Middle East, and Africa show notably low figures in these areas, raising concerns about the lack of leadership succession planning among affluent families.

Citi's report underscores the urgent need for improved succession planning and alignment between wealth management and leadership transition preparation. While wealthy families aspire to seamless succession, the survey reveals that they often fall short in taking the necessary steps to ensure the longevity of their wealth beyond their lifetimes. Despite their financial acumen, they are sometimes challenged in making their wealth endure, much like the broader population.