Investing in unprepared inheritors for lasting family wealth

With more than $83tn in wealth poised to change hands across generations over the next two decades, according to UBS, families are discovering that sustaining wealth is not just about managing money — it is about raising grounded, emotionally intelligent heirs.

Human capital, long overlooked in wealth management, is emerging as the most valuable asset.

Jessica McGawley, founder of Dallington Associates, a London-based mentoring firm for ultra-wealthy families, built her practice on this premise. “No one was preparing the next generation until they were well into adulthood,” she says, recalling the firm’s early days 16 years ago.

Drawing on both her advisory experience and her own family’s history of business collapse, Ms McGawley developed a model that blends education, psychology and pastoral care. Her work supports 16- to 30-year-olds in ultra-high net worth families and multi-generational businesses.

Preparing heirs

Emotional fluency, self-awareness, and a sense of agency are skills that must be nurtured from a young age, much like learning an instrument or a new language, she argues. Yet many of her clients struggle with issues that go unnoticed: low self-esteem, lack of motivation, isolation, or the pressure of being known before they have spoken.

“Some carry shame about their wealth and say, ‘I don’t want any of it, I’ll just give it all away.’ But without strategy, that kind of philanthropy can do more harm than good,” she says. “Wealth is a magnifying glass. Good or bad, it makes everything bigger.”

Dallington typically works with a dozen families at a time, offering tailored, modular programmes over 12 to 18 months. Sessions range from trust education and psychological support to real-life coaching on visibility and dating. “We don’t parachute in. We take time to understand the family’s history and the young person’s needs,” says Ms McGawley.

Parental involvement is vital. “The best outcomes come when parents engage early, not to control, but to support,” she says. “We help parents tolerate not fixing. That’s very hard for wealth creators. Their success comes from solving problems fast. But their children need to learn by doing, failing and recovering.”

Advisers are under growing pressure to adapt. “Private wealth management has long operated in silos — lawyers, trustees, investment managers all working in silos. That no longer works. The next generation expects transparency and teamwork.”

US firms are already bringing in psychologists and cross-disciplinary teams, but Europe is lagging. “Today’s young adults won’t accept outdated models. Private bankers shouldn’t be playing therapist to their clients, they need to know what to listen for, and when to refer. It’s not just about money, it’s about understanding people.”

But progress is happening. Dallington is increasingly being called in to help draft family constitutions and trusts — something that, 15 years ago, would have been unthinkable, she says. “So often a constitution is written without input from the people who will inherit it, and then it just sits in a drawer. No 16-year-old is going to read something that looks like the Bible, it needs to be alive and used.”

Blending education, psychology and governance, the firm helps young heirs discover their identity, values and purpose. “They should leave knowing themselves better and navigating life with confidence,” she says. “We support the family system as scaffolding, not part of the structure.”

These future stewards of wealth and enterprise, she adds, must become grounded, empathetic leaders, not just for their sake, but for the greater good.

All-gen learning

In the US, the idea that families thrive when they invest in themselves is more deeply rooted. Matter Family Office, a multi-family office headquartered in St Louis and established in 1990, places human capital — family culture, communication, and learning — at the heart of its model.

“We realised 20 years ago that good investment decisions weren’t enough,” says co-founder and CEO Kathy Lintz. “Families need advisers with both analytical depth and emotional intelligence.”

Matter’s three-pillar approach — investment management, wealth planning, and family culture and learning — reflects that shift. The third pillar, Ms Lintz says, is the umbrella: “Without it, you might have a well-run portfolio but a family in turmoil.”

The industry has long focused on investment returns because those have been the “cash cow”, says Ms Lintz. “But the next frontier is human capital. Meaningful change requires EQ, not just IQ, and a commitment to training our team and educating our clients. Families want it, even if many firms still don’t know how to deliver it.”

Matter delivers more than 50 technical and human capital training modules through structured family meetings spanning investment strategy, governance, communication and shared purpose.

“Wealth tends to exacerbate existing fault lines,” says Courtney Pullen, Matter’s chief learning officer and a trained psychologist. “It heightens comparison, magnifies entitlement concerns, and complicates identity, particularly for children.”

Education must span generations. The firm calls this “all gen learning”, based on the belief that everyone, from the founder to the youngest heir, needs the tools to become an effective steward.

“Parents often come to us asking for help with their kids — they don’t want them to grow up entitled or disempowered,” says Mr Pullen. “But kids watch what their parents do more than what they say. That’s why we tell parents: values have to be modelled, not just taught.”

A cornerstone of their work is the ‘What Matters’ retreat, where families define their values and wealth purpose. “If a family says integrity matters, we ask how that shows up in their financial parenting.”

The process results in custom learning plans and decision-making tools to support each family member, whether joining a board, purchasing a home, or navigating public life.

“It’s not poor investing that destroys families; it’s emotional immaturity, lack of preparation, and a breakdown in communication,” adds Mr Pullen.

Succession is treated as a gradual, intentional process. Matter engages rising generation members early, often at university, starting with basic financial concepts — such as who pays for school and what that means — and gradually building involvement in governance and investment decisions. Progress can be slow but is designed to deepen over time.

The firm hosts around 100 family meetings a year, ranging from half-day workshops to multi-day retreats, using storytelling, values-sharing and simulations of real-life scenarios to build trust. “It’s not about talking at the next generation, it’s about listening,” says Ms Lintz. “We want the first generation to stop preaching and start learning.”

That trust becomes the foundation for inclusion in philanthropy, investment committees, and succession planning. Spouses are supported too via a dedicated “new couple process”.

Stronger families, argues Ms Lintz, build stronger systems that ripple outwards, to employees, businesses and communities. “This isn’t only about financial outcomes. We work for 150 families and, collectively, they employ 100,000 people. That’s the scale of impact.”

Families are beginning to recognise the value, but they must be willing to invest in it, she says. “The best solutions are deeply integrated into broader family office services. Otherwise, advisers will keep delivering lightweight solutions that do not move the dial for families.”

That change in mindset is finally beginning to take hold. For years, adds Mr Pullen, the industry dismissed wealth psychology as soft. “I’d go into private banks and get blank stares. But over the past decade, there’s been a significant shift across the industry.”

Evolving advisers

But converting advisers into a human-centric family governance service team will take time, potentially decades. As demand grows for integrated, people-focused advice, training advisers, and giving wealth managers access to external support is essential. For many, engaging with the emotional side of the role does not come naturally.

“Most advisers don’t know how to talk about purpose or fear or entitlement,” says Brian Weiner, founder of the Family Office Resource Group (Forg). “But they might be the only adult a young person trusts. They need training.”

Mr Weiner, with 25 years of experience delivering outsourced services globally, launched his firm in 2024, to provide wealth managers, lawyers and financial advisers with a full family office “platform”, delivered on a white-label basis. Services range from governance and philanthropy to citizenship, mental health and cyber security.

“We assess needs, deliver roughly 70 per cent of services in-house, and bring in trusted, vetted partners to handle the rest. The need for services is exploding, but advisers don’t know how to deliver or even sell these services to their clients.”

At the core of the firm’s work is fixing what Mr Weiner sees as the biggest flaw in multigenerational wealth transfer: neglect of governance and family dynamics. “Only 10 per cent of family wealth gets beyond the third generation,” he says. “It’s not just about tax planning or investments. It’s the family dynamic that breaks down.”

He advocates practical tools like family boards, clear estate documents and flexible trusts. “Who said 30 is the magic age to inherit $30m?” he asks, warning that transferring wealth without responsibility and wisdom can tear families apart.

Health — mental, physical, emotional and societal — is essential. “Without passing on values and wellbeing, wealth won’t last. That’s been the real issue of the last 50 years, we’ve focused too much on transferring money.”

Time, he tells parents, is their greatest asset and they should spend it well. That is what sets successful families apart. Transparency also matters: “Kids know they’re rich, they just don’t know what it means.” Keeping it a mystery only creates anxiety, he says.

To support both wealth creators and heirs, the firm offers tailored curriculums, mentors, and coaches with expertise from succession to emotional wellbeing, with a focus on cultural sensitivity, because “a French family isn’t the same as one in LA.”

He urges wealth managers to serve families as complex systems, not just portfolios. “It’s the principle of most religions: teach them how to fish, don’t just give them the fish. That’s how resilience and legacy are built.”

Underfunded areas

Families, increasingly spread across borders, are recognising that governance, education and engagement are key to long-term success. Over the past two years, nearly half of family offices have expanded their service offerings, to meet evolving needs — with family engagement and education emerging as the most frequently added (23 per cent), according to a recent report by Campden Wealth and AlTi Tiedemann Global (see chart).

Yet these areas still receive the least investment. On average, just 17 per cent of family office spending goes to the “family pillar”, even as concerns such as conflict, next-generation readiness and lack of shared purpose top the agenda.

“The family pillar is the most important area, but the one families are least willing to pay for,” says Erik Christoffersen, head of Family Office Practice at AlTi Tiedemann Global. “And yet, when asked what they fear most, it’s that wealth will divide or damage the family.”

Next-gen education is most effective when linked to the articulation of a shared purpose of wealth — a framing that asks not just how to preserve capital, but why. Indeed, “purpose of family capital” was mentioned as the top educational priority by family offices globally (see chart).

He likens the emerging best-in-class model to an “accordion”: a flexible structure that expands when families face transitions or gaps, whether in talent, strategy or engagement, and contracts when in-house capabilities are strong. This flexibility helps families scale support when key employees depart or needs evolve.

Strategic outsourcing partners, he adds, can play a key role in delivering continuity, multidisciplinary support, and bespoke services across all three pillars of a family office: office, administrative and family.

But outsourcing alone is not enough. “These partners must be integrated into the family office’s communication flow and culture,” notes Mr Christoffersen. “The work around family dynamics, governance and human capital requires a multi-year investment. Families need to recognise that it’s not intangible or optional, but central.”