Money and its soft facts. Ensuring harmonious succession in families.
The meaning of wealth can vary across family generations: security for the first generation, freedom for the second, and often responsibility or even a burden for the third.
"Emotions are involved in every kind of wealth transfer within a family. It isn't simply wealth that is being passed on. You're passing on something you have created and are very proud of," says Viola Steinhoff Werner, Head of Credit Suisse's newly launched Next Generation and Families department. This emotional dilemma arises not only to the generation that built the family wealth, often over many decades. It is also shouldered by the inheriting generation: "As the next generation, you feel the responsibility not to fail and to carry on the family's success, while at the same time wanting to pursue your own ideas, aspirations and dreams," says Steinhoff Werner.
Money. Responsibility. Pressures faced by the next generation.
Learning to cope with this dilemma is part of the Young Investor Program (YIP), a one-week course developed over a decade ago by Credit Suisse and Wolfgang Jenewein, Professor for Business Administration at the University of St. Gallen (HSG). It addresses the emotional aspects – such as the obligations – the next generation of wealthy clients feel when inheriting. All this while also providing them with a solid understanding of finance and investment knowledge. "A lot of parents give the younger generation the feeling that taking over the family business, for example, is the best thing they can do. But the danger is that you end up blackmailing them and hindering them from pursuing their true desires. This is not good for the family business in the long run," says Jenewein.
Door opener for wealthy families. Bliss across generations.
To prevent such situations from arising, Prof. Jenewein highlights the importance for wealthy families to talk about money and the responsibilities and obligations that come with it. "Most families ignore this discussion, which puts a lot of pressure on a young person," he says. "If you don't address the soft facts associated with inheriting family wealth, it can easily lead to family fights and to the loss of that wealth." The YIP deals with this issue head-on. Thanks to the exclusivity of the program – the number of attendees is limited – participants are able to connect with peers and like-minded people, to speak about their concerns, build self-confidence and find ways to address the wealth transition together with their families.
Speaking about the particularities of the YIP attendees, Viola Steinhoff Werner points out the drive and ambitions these young people have. "They not only want to become better investors or business owners. They have a clear vision to leave a mark in this world and change it for the better," says Steinhoff Werner, who has established a number of designated programs for Credit Suisse's next generation of clients over the past decade. "That's where Credit Suisse can play a crucial role: Supporting families in their discussions between the generations, covering both their financial and non-financial needs, and be an intermediary to connect them with the right experts inside or outside the bank to help them realize their visions."