Business owners have been urged to tap into the enthusiasm of young heirs by providing them with hands-on experience through philanthropic pursuits to prepare them for future succession and foster prosperity.

More than two-thirds (69 per cent) of young heirs aged between 18 and 40 felt happy about stepping into leadership roles within their family business, according to a Nedbank Private Wealth study.

However, many understood that there were significant challenges ahead, and 30 per cent were worried that they lacked the practical experience in leading an organisation.

Furthermore, a quarter (25 per cent) feared the financial burden of their future position, which was “further undermined” by the potential for a lack of autonomy in having to operate in the shadow of their parent, which was cited by 22 per cent of young heirs.

Other concerns highlighted by respondents were the fear of failure (26 per cent), stress (25 per cent), and seeing the reality of the toll the business took on their parent (33 per cent).

Nedbank stated that its research emphasised the crucial role of effective communication and trust in family dynamics when considering wealth transfer and succession planning.

While nearly all (98 per cent) of 18-24 year old heirs felt prepared to manage family wealth, analysis by HSBC suggested that only 10 per cent of family wealth remained intact by the third generation, on average.

However, Nedbank noted that it was not the perceived wealth risks that was the primary culprit of ‘financial destruction’ across families, it was communication, or lack thereof, and not being listened to that worried heirs most.

Nedbank said that philanthropy can play a pivotal role in fostering family unity, preparedness, and prosperity.

However, 57 per cent of Millennials with wealth of more than £25m said their family had no philanthropic focus.

“There are several practical ways to enhance communication, foster trust, and better prepare heirs; we must nurture the enthusiasm of younger generations by providing gradual hands-on experience to bridge the readiness gap, and the anxieties of older heirs must also be addressed,” commented Nedbank Private Wealth senior investment specialist, Rebecca Cretney.

“Philanthropy is a powerful way to do both. By establishing a philanthropic strategy, you can enhance financial literacy for younger generations, as they gain valuable experience in managing charitable assets. It also provides board or trustee experience, reinforces family values and a sense of responsibility, and strengthens family bonds through shared passion projects.

“Additionally, it promotes personal growth, develops leadership skills, and deepens understanding of societal issues. Ultimately, a philanthropic approach transforms wealth management into a multiplier of wealth, ensuring legacy continuity rather than diminishing it.”

Nedbank Private Wealth executive head of wealth management, Simon Gibbons, added: “Philanthropy can serve as a powerful bridge between generations, creating a lasting impact not just on family wealth but also on the communities they care about. By integrating philanthropic initiatives into succession planning, we can equip heirs with the tools and confidence they need to navigate their future roles, ultimately strengthening their connection to family legacies and fostering meaningful relationships.

“We urge business owners in particular to tap into the enthusiasm of young heirs, providing them with hands-on business experience through philanthropic endeavours, or otherwise. This not only trains them and grows their skills but also creates a legacy that all family members can be proud of.

“By educating families about the opportunities and benefits of philanthropy, we can foster innovative thinking and strengthen family bonds, ensuring a win-win situation in increasing wealth while supporting causes that matter.”

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