The generation gap causes fiduciary headaches – Wealth & Asset Management


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“The problem with stereotypes is not that they are not true, but that they are incomplete,” said author Chimamanda Ngozi Adichie. “They make a story become the only story”.

Today’s executors and trustees must navigate a difficult landscape in which older and younger generations may disagree about how wealth is managed and passed on. That the two see each other through the prism of stereotypes doesn’t help.

We saw it in a case involving a trust that owned a family business. The older generation had seen steady returns for several decades and saw no reason for the directors to change their reinvestment policy. However, the younger generation saw all their eggs in one basket and wanted to create cash that they could invest in other asset classes.

The debate has heated up, with older recipients condemning Millennials’ apparent desire for instant gratification, and younger ones complaining about “Boomer” paternalism. We supported and protected directors as they worked to rebuild communication channels and ensure they fulfilled their professional obligations. A compromise was found, with some income from the business used to diversify the trust.

Digital assets are a particular area of ​​tension, with trustees increasingly being asked to settle cryptocurrency and NFTs in trusts. This is a brand new asset class for the sector, and which some professionals apprehend: it is a daring fiduciary who seizes an asset that he does not understand.

There are also pressures on the executors. Previously, it was relatively rare to find unknown possessions such as artwork in the attic. Now they are dealing with unknown unknowns in the form of digital assets. We recently advised a family who thought their deceased relative had a significant amount of bitcoin, but were unable to locate it and were concerned about how to deal with it with the tax authorities.

Some advisors are inquiring now, with an administrator who had never heard of a particular token a few years ago now quite an expert on the subject. Their knowledge will likely be in demand in years to come, with surveys showing that swaths of millennial millionaires hold some form of cryptocurrency.1

Another big change is the preference of young people for ethical investments. A Morgan Stanley study found that 86% of millennials were interested in sustainable investing.2In the future, it is highly likely that they will use the wealth passed down to them by the baby boomers to try to influence climate change. However, older investors aren’t necessarily convinced by their choices – as one customer recently pointed out to us, electric cars will always need power, while some ‘evil’ oil and gas companies are making efforts to clean up their act and have excellent social responsibility credentials.

These intergenerational tensions force trustees to make a particular commitment to fulfill their missions, promote communication between the different parties and find the right investment manager to balance their priorities. Those who sympathize too strongly with one generation could find themselves failing in their duty to the other.

For settlors and beneficiaries themselves, the best advice is to set aside negative stereotypes and start communicating. In our view, baby boomers and millennials have a lot to learn from each other. Balancing the two perspectives is likely to create better financial and family outcomes, with diversified asset portfolios that have been thoroughly shriveled. It’s a story that both generations should want to tell.




The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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