Three Common Missteps Families Make When Preparing the Next Generation

By: Andrew Fay

Early in my career, I believed the technical side of wealth was the hardest part—and, frankly, the most important. For years, I watched wealthy families and family offices devote enormous energy to building the perfect wealth transfer plan, trying to anticipate every possibility and stay one step ahead.

After spending decades working with successful families, I've come to realize that families rarely struggle because of the technical aspects of wealth. Don't get me wrong—technical planning is essential. But I've found that families are more likely to struggle because they overlook the human side of wealth. Conversations about purpose, family dynamics, and preparing the next generation are often what determine whether a family's wealth becomes a lasting blessing or an unexpected burden.

Throughout my career in financial services and now as a family advisor, I've had the privilege of working at the intersection of the technical and the human sides of wealth. I've learned that while investments, estate plans, governance structures, and tax strategies provide an essential foundation, they are rarely what determines whether a family thrives across generations.

Today, my work focuses on helping families think not only about financial capital, family office structures, and governance, but also about the people who will one day steward them.

In my experience, the families that successfully sustain wealth across generations tend to focus on four areas: Purpose, People, Practice, and Process. Purpose gives wealth meaning. People remind us that we must prepare the next generation, not just the assets. Practice creates opportunities to develop judgment before significant responsibility arrives. Process provides a framework for making thoughtful decisions together as a family.

When I see families struggle, it is often because one or more of these four areas has been overlooked.

Here are three of the most common missteps I encounter.

1. Waiting Too Long to Prepare the Next Generation

The missed opportunity: People and Practice

Many parents hesitate to involve their children in conversations about wealth because they worry it will diminish their work ethic or create a sense of entitlement. While those concerns are understandable, delaying these conversations often delays the development of good judgment.

Preparing the next generation doesn't begin when wealth is transferred. It begins years earlier by creating opportunities to practice.

No one would expect a child to become a great musician by attending one recital or a great athlete by watching one game. Stewardship develops the same way—it requires years of thoughtful practice.

Families can establish a donor-advised fund to introduce philanthropy and thoughtful giving. A modest investment account for a young family member can teach patience, long-term thinking, and the realities of markets. A small opportunity fund can allow children to evaluate ideas, make decisions, experience setbacks, and learn from both successes and failures.

Sometimes these experiences should be independent. Other times, they create opportunities for parents and children to sit on the same side of the table, discussing decisions together and learning how each person thinks.

The objective isn't simply to teach financial skills. It is to develop judgment, responsibility, and confidence before significant wealth is ever placed in the next generation's hands.

2. Assuming Silence Protects the Family

The missed opportunity: Purpose

Many families avoid discussing wealth because they believe that if they don't talk about it, their children won't focus on it.

The reality is quite different.

Children already know their family has resources. They recognize the opportunities they have, the homes they live in, the vacations they take, and the lifestyle they experience. When parents avoid the conversation, children simply create their own narratives.

The better approach is to have thoughtful, age-appropriate conversations that focus less on how much the family has and more on why the family has it. What values guided the creation of this wealth? What responsibilities come with it? How can these resources improve the lives of others?

Sometimes these conversations are easier with the help of a trusted advisor or family facilitator. When my child was four, I tried to teach them to ski. It was a miserable experience for both of us. The next day, I enrolled them in ski school, and they thrived. Just as children often learn differently from a teacher or coach than they do from a parent, they may feel more comfortable asking honest questions in a setting led by someone else.

Purpose gives wealth context. Without it, wealth can easily become an entitlement rather than an opportunity to serve others.

3. Believing the Estate Plan Is the Finish Line

The missed opportunity: Process

Families often devote enormous time and energy to creating the perfect estate plan. While thoughtful legal and tax planning is essential, documents alone cannot prepare a family for every future challenge.

Tax laws change. Markets change. Families change.

The most successful families recognize that estate planning is only part of the journey. They also establish a process for teaching and educating the rising generation, making decisions together, resolving disagreements, and adapting to changing circumstances.

Good governance is less about organizational charts and legal documents than it is about communication, trust, and shared decision-making. Those skills are developed over time, not created when an estate plan is signed.

Without these skills, beneficiaries often feel controlled by prior generations rather than empowered by them.

The strongest plans combine excellent technical advice with a family that knows how to work together.

A Final Thought

While every family is unique, I've found that many of the challenges surrounding multigenerational wealth can be traced to one of four areas: a lack of shared Purpose, insufficient investment in People, too few opportunities to practice stewardship before responsibility arrives, or the absence of a thoughtful Process for making decisions together.

Over the years, I've come to believe that successful multigenerational wealth transfer isn't primarily about transferring assets. It's about preparing people. Families that invest as much energy in purpose, people, practice, and process as they do in legal documents and investment strategies give themselves the best opportunity to flourish for generations.

After all, wealth is transferred in a moment. Stewardship is developed over a lifetime.