UBS reported last week that 34% of high-net-worth and
affluent investors lived in “modern” families” compared with 35% who live in
traditional ones, but 70% of investors felt financial advice was designed only
for traditional families. The report said modern families included blended ones
involving children from a prior relationship, same-sex couples and homes shared
by parents and adult children.
UBS surveyed 2,715 affluent and high-net-worth investors in
mid-June, of whom 1,787 investors had at least $1 million in investable assets,
including 422 with at least $5 million. It said the rise of modern families was
a growing trend as traditional families have become increasingly less common by
generation, currently comprising 46% of the WWII/swing generation, 37% of baby
boomers and 25% of millennials.
Blending Gets
Complicated
Blended families represented 14% of the survey population,
and experienced heightened financial and emotional challenges relative to
traditional families. The survey found that 55% of blended families felt their
lives were more complicated than those of traditional families. This was true
with regard to finances, and especially retirement planning.
Forty-four percent said they had underestimated how much it would
cost to support more children. As well, emotional strains came into play: 63%
acknowledged that their spouse’s children for whom they had taken on
responsibility did not fully accept them. This, in turn, made inheritance
planning more difficult. Sixty-seven percent said they did not know how they
would divide up their wealth, physical assets or business interests, compared
with 50% of traditional families who said this.
According to the survey, blended families were less likely
than traditional ones to openly discuss wealth transfer, and were less
confident that what they eventually decided would satisfy their heirs. Thirty-one
percent of investors in blended families reported conflicts among potential
heirs, compared with just 12% in traditional families.
Same-Sex Couples
Half of same-sex couples in the survey felt the Supreme
Court’s June decision guaranteeing them the right to marry across the country
would positively affect their personal life, especially with regard to the
extension of certain health and retirement benefits, and 42% believed it would
benefit their career. However, 60% bemoaned inadequate financial guidance for
families like theirs. Seventy-two percent were actively seeking guidance to
understand how the legalization of same-sex marriage would affect their
benefits.
Financial planning for same-sex couples becomes increasingly
complicated in terms of estate planning, the survey found. Twenty-five percent
of respondents did not feel accepted by their parents, and believed their
inheritance was, or could, be affected by their sexual orientation. Moreover,
their own legacy planning was often fraught with conflict among potential heirs
because few have children of their own.
Multigenerational Mix
More adult children and aging parents are sharing homes,
challenging conventional lifestyles and adding pressure to loved ones to
support them financially, UBS said. The survey found that for families with
adult children still in the home, 53% worried about maintaining their current
financial situation.
Families living with aging parents had a harder time balancing
the financial needs of everyone in their family and being able to retire on
their own timeline. Fifty-six percent said that retirement planning was at
least “somewhat complicated” for them, compared with 42% of families not living
with an aging parent.
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