Research indicates that 70% of generational wealth gets depleted by the second generation, and 90% by the third. Standard Bank Wealth and Investment SA understands the importance of successful generational wealth transfer, and believes that it is vital to educate the next generation on the principles of managing, growing and preserving generational wealth, so that it is sustainable beyond the third generation.
As the current generation of traditionalists and baby boomers move more deeply into retirement, wealth transfer is on the horizon. It is therefore vital that any sustainable wealth preservation strategy places emphasis on financial education. With over 60% of its population under the age of 25, the African continent is growing more youthful. This necessitates an intentional investment in financial literacy, which strongly accounts for the improvement of intergenerational wealth mobility.
According to Lucratia Mathe, Head of Client Value Proposition at Standard Bank Wealth and Investment SA, High-Net-Worth individuals are becoming increasingly aware of the need to create sustainable, long-term intergenerational wealth plans.
“A key concern of wealthy individuals, both locally and globally, is that poor financial planning will result in the next generation being ill-equipped to manage, grow and protect their family wealth,” she says. “We’ve all heard the horror stories of people inheriting millions, only to squander it all and be left with nothing three or four years down the line. A big contributor to this crisis is that over 25% of those due to inherit wealth are inadequately prepared for financial responsibility.”
“As Africa’s leading wealth manager, our goal is to contain this situation by helping our clients and their families to develop dynamic and future-proof wealth management strategies that will enable them to build and preserve their wealth so they can leave a legacy for generations to come,” Mathe continues.
Leadership Academy program
To ensure that this happens, Standard Bank Wealth and Investment SA has established a successful Leadership Academy program. Launched in 2014, the initiative is designed to empower and educate next generation clients on the principles of Financial Literacy; Entrepreneurship and Innovation; Mental Wellness and Social Impact.
“Our Leadership Academies are designed to inspire our delegates to take ownership of their lives,” says Mathe. “The Academies honor our purpose of banking the family and our belief in empowering the next generation of leaders. We invite our next generation of clients, what we call our “NextGen”, to deepen their knowledge of the world of wealth, learn and apply principles of investing and discover their personal strengths.”
Research has shown that when it comes to engaging the youth on how to manage their money, it is better to start young in order to build money knowledge and habits that will last a lifetime.
“Our Leadership Academy programs feature age-appropriate content that is backed by research and behavioral science,” Mathe continues. “This allows us to deliver content that is effective at igniting a growth mindset for personal development purposes, while simultaneously educating the current generation on financial literacy and what it means to give purpose to wealth.”
While it is clear that families will always face challenges when transferring wealth from one generation to the next, initiatives like the Standard Bank Wealth and Investment SA Leadership Academy program create opportunities that enable the next generation to protect their family legacy while still forging their own paths.
“As a country, there is a critical need to do more to educate the next generation on financial matters, and to improve the financial literacy of all South Africans. We are committed to playing our part by providing a foundation through education upon which future generations can grow and preserve wealth successfully,” Mathe concludes.
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