From now until 2048, it’s anticipated that $124 trillion in family assets will shift from Generation X to millennials and Gen Z. This momentous change, called the Great Wealth Transfer, is a major event that began in the mid-2010s, primarily due to the Baby Boomers reaching retirement age.

Cerulli and Associates, a market research company, predicts that about $105 trillion of these assets will go directly to heirs, with an additional $18 trillion earmarked for charitable causes. UBS, a significant player in the banking industry, forecasts in its 2024 wealth report that $83 trillion globally is expected to be transferred over the next two decades, much of which will be concentrated in the Asia Pacific region. Insights from a recent McKinsey report suggest that by 2030, the value of these assets in the Eastern region may reach $5.8 trillion.

As a descendant of the Kowloon Motor Bus Company, Hong Kong’s most long-standing transportation firm, I found myself inheriting our family fortune early in life due to untimely familial losses. Despite these challenges, I managed to further the business as both a director and symbol of leadership. This is quite noteworthy, given that studies suggest nearly 90% of family wealth dissipates by the third generation. This topic is personal to me, as a Baby Boomer contemplating the transfer of wealth to younger cohorts.

As the older generation navigates the Great Wealth Transfer, they face several key challenges in managing this transition effectively. Here, I highlight three major concerns.

1. Gauging millennial and Gen Z’s financial interest

In many Asian families, elders are particularly anxious about how best to educate their offspring about the family’s financial assets and enterprises. They worry about their heirs’ readiness and willingness to lead a century-old business, given the prevailing view that some of the world’s oldest family businesses reside in the East.

This anxiety is intensified by the generational divide in financial perspectives. Baby Boomers and Gen X typically view financial stability through the lens of long-term employment and retirement savings. In contrast, a Financial Times article notes that millennials, born between 1981 and 1996, often lack robust financial literacy and are prone to accumulating credit card debt. Meanwhile, Gen Z tends to approach their financial planning with a more short-sighted focus compared to their predecessors.

2. Emotions can get in the way of discussions

There may be different types of emotions at play whenever the Great Wealth Transfer is mentioned in a family business. Older generations are generally more reluctant to discuss financial affairs more openly with younger generations, which can act as a barrier to effective communication. Moreover, younger generations may find it distressing to have discussions about inheriting wealth and business, as they often have connotations of death.

Younger generations can also have significantly differing views to their elders when it comes to running a company, with evidence showing that they are more socially aware of issues that affect the world, such as climate change, AI revolution and globalization, while some members of older generations may have a more conservative attitude, with a greater focus on wealth preservation and conservation. These differences can make discussions about business succession more heated and prone to disagreements and family conflicts. This is one of the main reasons families delay these important conversations from taking place, which could negatively affect a smooth transfer.

3. A rush to transfer wealth

An article written by the Guardian showed that the 2020 pandemic has accelerated the intergenerational wealth transfer due to unforeseen, untimely deaths. Many members of younger generations, especially in the UK, are beneficiaries of unexpected windfall, according to Treasury figures, which found that a record-breaking volume of inheritance tax was collected during 2021 and 2022: £6.1 billion.

Research from Capital Group also found that high-net-worth families are actually accelerating the transfer of wealth to their heirs, in a survey conducted with 600 individuals across Europe, Asia Pacific and the U.S. The report found that 65% of Gen X and millennial inheritors who participated in the research said they had regrets about how they used their inheritance money, with nearly two in five respondents wishing they had invested more of their assets after the transfer.

With these concerns percolating in older generations’ minds, it is only wise for family businesses to plan well ahead for the Great Wealth Transfer. Have those difficult conversations with your heirs early on so that unpredictable shifts will not shake up your family’s assets. And more importantly, it is important to ensure that the family wealth’s purpose is well-defined in this increasingly complex and volatile world, and for that, meaningful conversations between the generations need to continue. Family businesses can no longer rest on their laurels.