As a result, originators can underestimate the ability of the younger adults in the family. More than half (57 per cent) say that they are concerned about the next generation’s ability to manage the business, and a similar proportion (53 per cent) say that they are concerned about trusting the next generation with the family’s wealth and investments.
There is also a belief amongst almost two in three originators (63 per cent) that the next generation are not as committed to managing the family business as them. As a result, most originators (67 per cent) are highly cautious about relinquishing authority – and, with a natural tendency to stick to the methods that made them successful, originators often maintain a position of authority well into old age.
Barclays' research has found that 57 percent of wealth originators among global high net-worth families believe that the younger generation (24- to 39-year-olds) are not currently fully prepared to take over the family business, and 40 percent in the Middle East (compared to 63 percent globally) believe that Millennials are not as committed to maintaining the established wealth as the previous generation was.
According to the report the new generation of millionaires in Saudi Arabia feel a high sense of commitment towards bequest, with other Gulf nations (Qatar and UAE) report similar feelings. Statistics reveal that respondents in the Middle East confer a high value to leaving a positive legacy, which is highly reflective of societal culture in the region, and the importance of shielding and enhancing the family name.
In this environment, only 45 per cent of Millennials globally currently feel prepared to take over the family business, and an additional 23 per cent feel nervous about the prospect of inheritance. In the GCC, 49 percent of respondents feel that they are better prepared to run the family business as they have been raised in a business-owning background. In the UAE, Qatar and Saudi Arabia, there is an expectation to take over the family business.
Rahim Daya, Head of Private Banking, Barclays in the Middle East, said: "Family businesses across the Gulf Cooperation Council which have prospered in the past, are facing new challenges as a result of the pandemic and falling oil prices."
"As wealthy investors steer through the COVID-19 crisis, they are becoming more agile and digitally savvy, seeking the latest insights and bespoke advice on how to diversify, manage wealth and achieve their financial ambitions," he added.
Contributing to a general sense of preparedness, 78 per cent of the younger relatives of family business owners say they have received on-the-job training. Meanwhile, 71 per cent have undergone formal education and 45 per cent report that they have received a large amount of emotional support from family members.
Millennials in the GCC states revealed that the family business is discussed with them to a great extent. Consequently, they have a strong sense of commitment and duty towards their inheritance and family business.
Effie Datson, Global Head of Family Offices, Barclays Private Bank, said: “The transfer of wealth between generations is an emotive subject for families and one that has risen to the top of the agenda recently, accelerated by the pressures of COVID-19. It is important for families to have open, honest dialogue about their priorities and concerns, and build trust between the generations."
“One way we see families successfully transition wealth between the generations is by establishing strong governance within their family office. By clarifying their values, their investment and management principles, and building a shared vision of the future, the family commits itself to an identity that is forward-looking and focused on building a better world for many generations to come,” Datson added.
(Reporting by Seban Scaria; editing by Daniel Luiz)
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