How family wealth survives the next generation

Ageing baby boomers are set to pass down nearly $5 trillion by 2030. Mutual Trust helps them avoid the pitfalls of bequeathing great wealth.

Inheriting a large family fortune may sound like a boon. The reality is: It can be complex. In fact, many families cite a successful transfer of wealth as their single biggest challenge. 

“In the past, we’ve seen too many situations where family members receive a large transfer of wealth from their parents or grandparents and simply have no idea what to do with it,” says Robert Hemphill, Partner and Head of Development at Mutual Trust, Australia’s largest multi-family office. The firm’s purpose is to help families achieve what matters most and, in turn, ensure a smooth wealth transfer. 

“It’s quite a challenge when suddenly this amount of wealth, with all this expectation and complexity and the history of how it was created, is dumped on someone. It can become a real stress.” 

Hemphill knows what he is talking about. He has been advising some of the wealthiest families in the country on how to bequeath their fortunes successfully. Now, as Australia faces its largest generational wealth transfer in history, Hemphill is eager to share his expertise. 

Boomers will soon pass down $4.9 trillion

Baby boomers, people currently in their 60s and 70s, have amassed assets worth $4.9 trillion that they are set to pass down over the next 10 to 15 years, according  to CoreData research from 2023. Despite the magnitude of wealth involved, it is common for families to avoid the topic. 

“The old-fashioned approach is to do nothing,” says Hemphill. But in his experience, shying away from an honest conversation only increases the risk of leaving inheritors overwhelmed. At worst, family wealth that was painstakingly built over decades is scattered or squandered – with no positive impact for younger generations and society at large. 

“There are three key factors why wealth transfers fail: lack of communication and trust, failure to prepare the inheritors, and failure to define a family’s purpose,” says Hemphill, citing global studies (see chart) and his own long-term observations. 

“When we sit down with a family, the most important asset we bring is our ears.”

Robert Hemphill

Mutual Trust helps Australians of significant wealth to avert these pitfalls. Originally established over 100 years ago to provide accounting and trustee services for the prominent Baillieu dynasty (see box), Mutual Trust today serves hundreds of notable families; from winemakers, farmers, executives, entrepreneurs and family business owners, to artists and philanthropists. Its core program, Purpose of Wealth, provides all family members with a voice and acts as a catalyst to help start the conversation, build trust, align on a strategy of giving, and leave a legacy that lasts. 

Talking about wealth can be uncomfortable. It might bring up unresolved conflict between family members, or force patriarchs and matriarchs to confront their own mortality. Siblings may be estranged. Parents may feel pressured to continue the family business. There might also be friction over generous gifts: Will they thwart the lesson of working hard for your money? Sometimes, the older generation has no clue about the hopes and dreams of the young. That’s when Mutual Trust comes in. Partners like Hemphill can help to break the silence simply by listening to everyone involved. “When we sit down with a family, the most important asset we bring is our ears,” says Hemphill. 

Private conversations are crucial. Hemphill says this helps to create a space where every family member feels encouraged to speak up about what matters to them. It’s often hard for individuals to do that themselves, says Hemphill, because “there’s generally someone who is dominant in any conversation and won’t listen”. 

The modern family office approach is to give everyone a voice about what they think should happen with family assets in the future. Should we keep the farm? Should we give our fortune away to charity? If so, which one? Mutual Trust works as the conduit to help families agree on the best path forward. 

This doesn’t mean mending every rift. “Families sticking together is not always the right answer,” says Hemphill. He recalled a case where two daughters had stopped talking to each other. The family business had been sold, and Mum and Dad wanted to discuss where to put the money. But the daughters didn’t get on. 

Things changed when Hemphill took them aside. “You don’t need to work together to make this transition work successfully,” he says. Mutual Trust was the mediator. This took the pressure off, says Hemphill. “Slowly by slowly, as we talked about all this, the family got a lot closer.” 

Wealthy families are vital to Australia. They provide more than 6.3 million jobs and pay over $294 billion in wages, according to research by Mutual Trust and the University of Adelaide. Ensuring a smooth wealth transfer is also a macroeconomic matter. Many families come to see Mutual Trust when a sudden event forces a rethink: the sale of a business, a death, an illness or a lack of capacity. 

Mutual Trust’s program is designed to give families fresh direction and peace of mind. It also helps to define their purpose. For some, this may also result in a shared storybook or video about how the family created its wealth and what it stands for. Others simply enjoy having an impartial expert such as Hemphill as their sounding board. 

Hemphill acknowledges that every family is different, and every engagement is unique. Still, he says, “Trust and communication are fundamental in every family”. 

It’s the one truth that has endured since William Lawrence Baillieu and his siblings first lent Mutual Trust its name to ensure an inheritance can indeed be a blessing. 

To learn more or speak to one of Mutual Trust’s modern Advisors, email purposeofwealth@mutualtrust.com.au or visit mutualtrust.com.au