How to prepare your heirs for wealth management

When people think about building wealth, the focus is often limited to investment performance, asset allocation, or tax efficiency. These are all important, but in the context of generational wealth, they’re only part of a much bigger picture.

Effective intergenerational wealth management is about fostering continuity, strengthening financial literacy across generations, and aligning family values with long-term financial planning. In my view, one of the most overlooked aspects of wealth planning is preparing the next generation to manage the legacy they will eventually inherit.

From our experience at PSG Wealth, we’ve observed a gap in the market where investors tend to focus heavily on geopolitical shifts and short-term investment returns but often neglect estate planning – arguably the most important aspect of a long-term wealth strategy.

Let’s say you manage to squeeze out an extra 2% or 3% return on your portfolio. That gain can quickly be eroded by poor succession planning, avoidable taxes, or family conflict. In contrast, a well-structured estate plan enables a seamless and tax-efficient transfer of wealth, ensuring that your capital continues to benefit your family long after you’re gone.

But estate planning isn’t just a legal or tax exercise. It’s about creating a framework that preserves both wealth and purpose. A family trust, for example, can serve as more than just a legal structure. It can be a vehicle for aligning generations around shared goals, encouraging stewardship, and promoting financial literacy.

This is why I always advise involving beneficiaries early. Let them understand the logic behind your wealth strategy. Familiarise them with the structure of the trust and the rationale behind its investments. This helps reduce the friction that often arises when heirs are suddenly faced with responsibilities they’ve never prepared for.

Families are often reluctant to discuss financial matters, particularly across generations. But withholding this information only makes it harder for the next generation to pick up where you left off. Opening up about the strategy, the purpose, and the values attached to the wealth creates transparency and avoids surprises. It also creates space for the older generation to pass on hard-earned experience to younger family members – insights that can’t be learned from books or algorithms.

Equipping the next generation with basic financial tools is essential. Young people need to understand not just what they’re inheriting, but how money works. How do you draw up a budget? What does it mean to invest in a share? Where does that money go and how does it influence the economy? What is compound interest and how does it work to add value? These foundational concepts are critical if we want our children to be capable wealth custodians.

The unfortunate reality is that financial literacy is not formally taught in most schools. While children may learn to count money or balance a simple budget, the deeper concepts around investing, compound growth, and long-term wealth creation are often missed. This is where the family needs to step in.

Fortunately, in this digital age, we have powerful financial tools at our disposal to help bridge the gap. Podcasts, online courses, and even AI-driven platforms allow young people to learn in ways that suit their preferences. Many of these resources explain complex topics in intuitive, conversational formats and young users can interact with them at their own pace. It’s also an opportunity for younger generations to share knowledge with their elders by introducing them to these tools.

We’re also seeing a growing trend towards values-based investing, particularly among younger investors. Environmental, social, and governance (ESG) considerations, climate risk, and sustainability are now firmly part of the conversation. Families should be engaging in deliberate discussions around whether their investment strategy aligns with their values. What does the family care about? How can those principles be reflected in the trust’s investment policy?

Start small. Regular, modest contributions can serve as an entry point for younger members. You’re not trying to create fund managers overnight – you’re trying to encourage healthy habits, interest in the process, and an understanding of how long-term wealth is built. It’s never too early to begin.

There’s also a powerful compounding effect that applies not just to money, but to behaviour. Just as early investment leads to exponential financial growth, early exposure to sound money habits results in better financial discipline over time. I often think about the example of the chessboard where you start with one grain of rice on the first square and double it on each successive square. That exponential growth illustrates the concept of compounding perfectly – and it’s a simple, tangible way to explain it to children.

Wealth planning today is increasingly becoming a family activity – and with good reason. It gives advisers and planners a full view of the family’s financial position, leading to more accurate, holistic planning. It also helps ensure continuity. When younger generations are involved in the process, they are far more likely to uphold the structures and goals their parents or grandparents put in place.

Ultimately, managing intergenerational wealth effectively is about more than preserving capital; it’s about building resilience, fostering discipline, and encouraging collaboration. The older generation brings experience, stability, and long-term thinking. The younger generation brings innovation, adaptability, and a fresh perspective. If you can harness the strengths of both, you lay the foundation for sustainable wealth and a legacy that lasts.

* Pask is the chief investment officer at PSG Wealth.

PERSONAL FINANCE