Heirs don’t want to invest like their parents

The largest wealth transfer in modern history is underway, and the heirs who will inherit a trillion-dollar family fortune are preparing to use the money in a very different way than the generations who built it.

An estimated $83.5 trillion is expected to pass from baby boomers and older entrepreneurs to their children and grandchildren over the next two decades, according to UBS.

“The world is entering a historic intergenerational transfer of wealth,” UBS told CNBC. Billionaire families alone are expected to transfer approximately $6.9 trillion by 2040.

Wealth experts told CNBC that for many wealthy families, the first generation built wealth in areas they knew well: family businesses, estates or local prime shares. Their children are more likely to receive international education, be more mobile, and be open to broader investments.

“They were the first generation of ‘builders,’” said Elizabeth Hart, CEO and founder of Legacy Wealth Advisors. “Their wealth is often tied to a single asset class that they understand deeply, often family-owned or local blue-chip stocks.”

In contrast, younger heirs tend to “look at wealth through a global lens,” Hart said, adding that they are more open to diversified investments across asset classes and markets.

This shift could shift some inherited wealth away from traditional stores of family capital, particularly real estate. Hart said Asian families in particular have historically invested “almost exclusively in properties across generations,” but second- and third-generation heirs are increasingly looking to diversify into other assets and geographies.

Natixis Investment Managers research has found that millennials are much more likely to move into private assets than older investors, with 53% expressing interest. They are also more likely to discuss cryptocurrencies with advisors; 62% are doing so, while 44% plan to increase or start their crypto investments within the next year.

The younger generation also seems more comfortable with risk. Natixis found that 78% of millennials in the Asia-Pacific region want opportunities to beat the market, while 38% of baby boomers are willing to take risks to get ahead.

Tobias Prestel, founder of Prestel & Partner, said young asset owners increasingly view money as a means to an end and less as a means to achieve goals.

“For most older people, money is one thing and money is good for more, while for most younger people, money is just a tool,” Prestel said. “They’re looking at how the tool is used rather than enjoying the treasure chest.”

The changing mindset also affects spending habits. Some young heirs are prioritizing experiences, mobility and international lifestyles over building collections of traditional status symbols. Younger affluent individuals are less likely to collect cars and more likely to own homes around the world, combining travel with global property exposure, Prestel said.

Interest in sustainability and impact investing is also gaining momentum. UBS found that almost half of next-generation investors are already invested or want to learn more about impact and sustainable investing.

The transfer is also reshaping the way families manage wealth. The bank found that new generations of family members increasingly view inheritance as a transfer of responsibility rather than a financial windfall.

“My brother and I see an inheritance not as something we can inherit, but as our responsibility to do as good a job as our father did,” one participant told UBS.

But the transition is not without risks.

While wealth changing hands does not prevent large transfers from occurring more widely, advisers say the biggest risks to preserving wealth often come from within families themselves.

“The crack isn’t a lack of money; it’s a lack of communication,” said Hart of Legacy Wealth Advisors.

Many first-generation wealth creators remain reluctant to give up control, especially in Asia, where wealth is often closely tied to the head of the family or matriarch. Heirs, meanwhile, are pushing for more transparency, succession planning and formal management structures around family assets.

“Even with a succession plan, the biggest destroyer of wealth is family discord,” Hart added.

As wealth moves beyond the founding generation, successful transfers depend not only on structuring assets but also on preparing heirs to manage, advisors say.