Wealthy Americans are increasingly thinking about the
effects of their money throughout their lives and beyond, according to a recent
survey commissioned by RBC Wealth Management.
The poll found that high-net-worth Gen Xers and millennials
are in the vanguard leading to a notion of American legacy influenced both by
socially responsible spending and investing and by charitable giving.
“Americans have witnessed vast social and economic change
in recent decades, and as a result they are thinking critically about deploying
their assets in ways that will make the greatest impact,” Ann Senne, head of the U.S. advice and
solutions group at RBC Wealth Management, said in a statement.
“Increasingly, they are turning to their advisors to help
build a wealth plan that aligns with their values throughout their lives and
sets the tone for the legacy they leave behind.”
The findings were based on a survey The Economist Intelligence Unit conducted
this spring among 1,051 high-net-worth individuals, including 365 respondents
in the U.S., with minimum investable wealth of $1 million.
EIU researchers asked the American respondents how they
defined “legacy.” Sixty-eight percent named relationships with family, six
percentage points ahead of the global average. Only 42% of the Americans cited
what they were able to do for their families financially.
The American sample more than twice as often considered
social impact on the world to be an important part of their legacy as opposed
to financial impact on the world. Other key components of their vision of
legacy were relationships with friends, for 33%; professional accomplishments,
for 27%; and both relationships with and financial impact on their local
community, for 12% and 9%.
A recent study found that a growing number of
high-net-worth American investors are basing investment decisions on companies’
environmental, social and governance track records.
Even as wealthy Americans in the EIU survey prioritized
personal relationships over material assets, 61% recognized that wealth was the
chief enabler of their legacy.
They were fairly optimistic about wealth building, with 90%
expecting to acquire more wealth than their parents over the course of their
lifetime. At the same time, only 51% expected the next generation to accumulate
even more wealth than they will.
The survey found that the concept of wealth carries
personal and complex meanings. Seventy-two percent of the American respondents
defined it as financial security and independence, compared with 62% for the
Fifty-five percent of the Americans said wealth was a
measure of total financial asset value, about on par with the global sample.
According to the survey, 61% of Americans considered
investments as the main factor that allows people to generate wealth. Fifty-six
percent said it was better education, 55% new technologies and 52% greater
access to information.
Nine in 10 Americans surveyed said financial
instrument-based investments were among the top three ways in which they had
accumulated their wealth, followed by 41% who cited real assets and 22%
inheritance from their parents.
While more than a third of the U.S. sample said increasing
their own wealth and creating a path to wealth for their children were
important life goals, many cited nonfinancial ones: improving mental and
physical well-being, 53%, and strengthening their relationship with their
Making a Difference
Socially responsible financial activities are becoming
hallmarks of wealth planning for high-net-worth Americans, according to the
survey. Two-thirds of younger Americans said they felt a personal
responsibility to use their wealth to benefit broader society, compared with
39% of their older counterparts.
Younger U.S. respondents were also much likelier to agree
that societal causes had become more important than wealth accumulation in
defining a legacy.
Forty-nine percent of the younger U.S. cohort said they
planned to distribute their wealth through giving or spending mostly while they
were still alive, versus 22% of older Americans.
Nearly two-thirds of Gen Xers and millennials said they had
an obligation to transfer wealth to the next generation, and three-quarters
said they had a duty to transfer values.
While keeping an eye on the future, younger wealthy
Americans are also thinking about how their day-to-day money moves can make a
difference. Thirty-nine percent said they aligned spending with social causes,
compared with 32% of their older counterparts.
And 29% of the former said they aligned their investments
with their charitable giving goals, versus just 12% of the latter.
“As we assist the next generation in mapping out their
wealth plan and ultimately their legacy, we are keenly aware that our clients
want to feel good about how they’re deploying their assets, even how they make
their spending decisions — both within their families and communities as well
as in society at large,” Angie O’Leary, head of wealth planning at RBC
Wealth Management in the U.S.
“While in many ways deeply personal, notions of wealth and
legacy can also define a generation. The data suggests that millennials and Gen
Xers know the power of wealth in improving the world for those who succeed
for the original article from Think Advisor.