The very richest families have misgivings about how the younger generation will manage the family money, and dealing with family dynamics is top of the agenda in planning for the future, according to research by Smith & Williamson.

In a survey of ultra-high net worth (UHNW) families, with a combined wealth of over £1bn, half of the families taking part said they were concerned about passing responsibility for the finances to younger members, with financial mismanagement cited as the greatest threat to wealth. Tax and legal changes were identified as the second most serious matters with volatility in financial markets and children 'squandering' wealth equal third.

Charles Gowlland, investment management partner at Smith & Williamson, said: 'However, despite concerns regarding the younger generation taking responsibility there is greater willingness to involve the next generation at an earlier age than previously. Participants typically commented that "30s' is the watershed age".'

Three quarters of respondents (76%) report organising some kind of formal or informal family meeting to discuss financial matters, with the majority (79%) having one or more such events a year. Despite this, the survey found that one in four respondents commented that family members are poor at communicating on financial issues, and improving dialogue between generations was a priority.

When asked about succession planning, only half of respondent families had changed their plans in the last ten years, which Smith & Williamson said was surprising.

Tax partner Frank Akers-Douglas said: 'Finding effective ways to train younger family members to take control are also issues for many participants. Besides improving communication between generations, there is widespread feeling that young adults need to establish their own careers and independence before benefiting from significant family wealth.'