INSIGHTS ON WEALTH AND WORTH
INSIGHTS ON WEALTH AND WORTH
INSIGHTS ON WEALTH AND WORTH
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2013 U.S. TRUST<br />
<strong>INSIGHTS</strong> <strong>ON</strong> <strong>WEALTH</strong> <strong>AND</strong> <strong>WORTH</strong><br />
Key Findings<br />
FOR MEDIA INQUIRIES, C<strong>ON</strong>TACT:<br />
Susan McCabe<br />
U.S. Trust Media Relations<br />
646.855.4111<br />
susan.mccabe@bankofamerica.com
Overview: 2013 Insights on Wealth and Worth<br />
U.S. Trust Insights on Wealth and Worth is one of the<br />
most in-depth studies of its kind to explore the attitudes,<br />
behavior, goals and needs of high net worth and ultra<br />
high net worth adults in the United States. U.S. Trust has<br />
been periodically surveying the perspective of wealthy<br />
individuals and families since 1993.<br />
In 2013, U.S. Trust commissioned an independent,<br />
nationwide survey of 711 high net worth and ultra high net<br />
worth adults across the country.<br />
The findings build on U.S. Trust Insights on Wealth and<br />
Worth studies conducted in 2011 and 2012, providing new<br />
insight on topics of emerging importance as well as<br />
revisiting previously explored themes.<br />
Methodology<br />
Profile of survey respondents<br />
• 711 adults over the age of 18<br />
• Investable assets: $3M-$5M; $5-$10M; $10M+<br />
• Age of respondents: Average 53 years old<br />
− Age 18-32: 15 percent (Gen Y or Millennials)<br />
− Age 33-48: 23 percent (Gen X)<br />
− Age 49-67: 47 percent (Baby Boomers)<br />
− Age 68+: 15 percent<br />
• 62 percent men<br />
• 38 percent women<br />
The online survey was conducted by the independent research firm Phoenix Marketing International in February and March of 2013. Asset information was self-reported by the<br />
respondent. Verification for respondent qualification occurred at the panel company, using algorithms in place to ensure consistency of information provided, and was confirmed with<br />
questions from the survey itself. All data have been tested for statistical significance at the 95 percent confidence level.<br />
2
Key findings<br />
Sources of wealth<br />
Investing attitudes and behavior<br />
Retirement expectations and planning<br />
Managing family wealth<br />
3
Most of the wealthy created their wealth<br />
Three-quarters of respondents<br />
created the majority of their own<br />
wealth, through a combination of<br />
earned income from work, business<br />
ownership or investments.<br />
Only one-quarter inherited the<br />
majority of their wealth.<br />
Gen Y (age 18-32) are twice as likely<br />
as Gen X and Baby Boomers to have<br />
inherited a majority of wealth.<br />
Q1. How have you accumulated the majority of your financial assets?<br />
Source of majority of wealth, all respondents<br />
Inherited, 25%<br />
Earned, 75%<br />
Source of majority of wealth, by age<br />
44%<br />
56%<br />
Source of earned assets:<br />
• Income from work<br />
• Financial investments<br />
• Real estate<br />
• Sale of business<br />
19% 21% 28%<br />
81% 79% 72%<br />
Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
Inherited<br />
Earned<br />
4
Annual income split between investments and work<br />
Approximately one-half of annual<br />
household income comes from a<br />
combination of earned and<br />
investment income.<br />
Women and those with the greatest<br />
net worth are the most likely to rely<br />
on earned income.<br />
Those over age 68 rely primarily on<br />
investment income.<br />
Q82. Approximately what percent of your annual<br />
household income comes from each of the<br />
following sources (investments, earned income?<br />
Base: Source of income (excluding “Don’t knows.”)<br />
45%<br />
55%<br />
Source of annual income, all respondents<br />
Investments,<br />
48%<br />
63% 67% 68%<br />
37% 33% 32%<br />
Earned, 52%<br />
Source of annual income, by gender, age, asset level<br />
Male Female Age 18-32 Age 33-48 Age 49-67 Age 68+ $3M-$5M $5M-<br />
$10M<br />
Investment Earned<br />
50%<br />
50%<br />
19%<br />
81%<br />
51%<br />
49%<br />
47%<br />
53%<br />
71%<br />
29%<br />
$10M+<br />
5
Most of the wealthy grew up in middle class families<br />
Nearly two-thirds of all<br />
respondents, including 78 percent<br />
of Baby Boomers, came from<br />
middle class or lower families.<br />
Gen Y is the most likely to have<br />
grown up with wealth.<br />
64%<br />
Q8. Which of the following best describes the financial and socioeconomic<br />
status of your family as you were growing up?<br />
Socio-economic status growing up<br />
4%<br />
10%<br />
22%<br />
36%<br />
23%<br />
15%<br />
26%<br />
40%<br />
14%<br />
6%<br />
13%<br />
24%<br />
36%<br />
18%<br />
0% 0%<br />
5% 7%<br />
16%<br />
42%<br />
21%<br />
41%<br />
31% 24%<br />
5%<br />
6%<br />
0%<br />
4% 5% 7%<br />
Total Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
Wealthy<br />
Affluent<br />
Upper-Middle<br />
Class<br />
Middle Class<br />
Lower-Middle<br />
Class<br />
Poor<br />
6
Perceptions of wealth shaped by upbringing and source of wealth<br />
More than half (57%) do not think<br />
of themselves as wealthy now,<br />
despite their net worth.<br />
Those who came from middle class<br />
or lower backgrounds and those<br />
who created the majority of their<br />
wealth are less likely to consider<br />
themselves wealthy now.<br />
Q3. Do you consider yourself wealthy?<br />
Q1. How have you accumulated the majority<br />
of your financial assets?<br />
Q8. Which of the following best describes the<br />
financial and socioeconomic status of your family<br />
as you were growing up?<br />
46%<br />
54%<br />
% who consider themselves wealthy<br />
61%<br />
39%<br />
Inherited Created<br />
No<br />
57%<br />
46%<br />
54%<br />
Yes<br />
43%<br />
64%<br />
36%<br />
Upper Middle-class Middle-class<br />
Affluent/wealthy Lower middleclass/poor<br />
Source of majority of wealth Upbringing<br />
59%<br />
41%<br />
51%<br />
49%<br />
70%<br />
30%<br />
$3M-$5M $5M-$10M $10M+<br />
Assets<br />
7
Financial security to meet current and future needs<br />
88 percent of the wealthy feel<br />
financially secure today, and 70<br />
percent feel they will have the<br />
security to meet their future<br />
financial needs.<br />
Women and Gen X (age 33-48) are<br />
less likely to feel secure about<br />
meeting their current and future<br />
financial needs.<br />
Q4. Do you feel financially secure, meaning you have the income and<br />
assets to comfortably meet your current financial needs and goals?<br />
Q6. Do you feel more/less financially secure today than five years ago?<br />
Q7. Do you feel financially secure when you think about the future,<br />
meaning you are likely to always have the financial means to<br />
comfortably meet your financial needs and goals?<br />
% who feel financially secure to meet<br />
current / future needs<br />
All<br />
Age 18-32<br />
Age 33-48<br />
Age 49-67<br />
Age 68+<br />
Women<br />
Men<br />
54%<br />
Current needs Future needs<br />
62%<br />
% who feel more/less financially secure compared<br />
to five years ago<br />
48%<br />
24%<br />
28%<br />
64%<br />
17%<br />
43% 49%<br />
34% 23%<br />
19% 23% 28%<br />
70%<br />
75%<br />
72%<br />
33%<br />
18%<br />
49%<br />
All Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
The same Less More<br />
74%<br />
76%<br />
80%<br />
84%<br />
88%<br />
87%<br />
90%<br />
93%<br />
95%<br />
8
Top five reasons for lack of financial security<br />
Although the majority feel<br />
financially secure, there are subtle<br />
differences by age and gender.<br />
Among those who don’t feel<br />
financially secure, the top five<br />
reasons cited for not feeling<br />
financially secure are concerns<br />
about:<br />
− Retirement income<br />
− Sense of fleeting financial<br />
success<br />
− Job security<br />
− Lifestyle expectations<br />
− Investment performance<br />
Q5. Why don’t you feel financially secure? Base:<br />
Those who do not feel financially secure now.<br />
“I am worried I will not have enough income<br />
in retirement”<br />
• Felt most strongly by Gen X and women<br />
“My financial situation could change<br />
tomorrow”<br />
• Felt most strongly by Gen X, Baby Boomers and those<br />
with $3M to $5 M<br />
“I am uncertain about my job security and<br />
income potential”<br />
• Felt most strongly by Gen X<br />
“I can’t afford the lifestyle I want to live”<br />
• Felt most strongly by Gen Y<br />
“I am worried about the performance of<br />
my investment portfolio”<br />
• Felt most strongly by those over age 68.<br />
9
Investing attitudes and behavior<br />
10
HNW investment priorities shift from preservation to growth<br />
Growing assets is a higher investment<br />
priority than protecting existing assets<br />
for six in 10 high net worth investors, a<br />
reversal of the focus of one year ago.<br />
• In 2012, nearly six in 10 (58 percent)<br />
said asset protection was a higher<br />
priority<br />
• Women and younger investors are<br />
slightly more likely to be focused on<br />
asset growth.<br />
Q21. When it comes to managing your wealth and<br />
investment portfolio, which of the following is closest<br />
to your investment priority?<br />
Investment priority for managing wealth<br />
Preserve<br />
assets<br />
40%<br />
Grow assets Preserve assets<br />
41%<br />
59%<br />
37%<br />
63%<br />
Grow<br />
assets<br />
60%<br />
23% 28%<br />
77% 72%<br />
47% 51%<br />
53% 49%<br />
Male Female Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
11
Lower risk still trumps higher returns<br />
Nearly two-thirds of HNW investors<br />
say that lowering risk, and achieving a<br />
lower potential return, is a higher<br />
priority than pursuing higher returns<br />
by taking on more risk.<br />
HNW households have become<br />
somewhat less risk-averse. In 2013, 37<br />
percent said pursuing higher return<br />
with high risk is a priority, versus 30<br />
percent in 2012.<br />
Younger investors (under age 49) are<br />
slightly less risk-averse than those age<br />
49 or older.<br />
Q21. When it comes to managing your wealth and<br />
investment portfolio, which of the following is<br />
closest to your investment priority?<br />
Investment priority for<br />
managing wealth<br />
61% 65%<br />
39% 35%<br />
Pursuing higher<br />
potential return<br />
with higher risk<br />
Lowering risk 37%<br />
while lowering<br />
potential returns<br />
63%<br />
48% 53%<br />
52% 47%<br />
70%<br />
30%<br />
68%<br />
32%<br />
Male Female Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
12
A substantial amount of cash is on the sidelines<br />
Despite investment growth goals, more<br />
than half (56 percent) of high net worth<br />
investors have a substantial amount of<br />
funds in cash positions.<br />
Women and Generations X and Y are<br />
more likely to have cash sitting on the<br />
sidelines.<br />
− Women: 65%<br />
− Men: 51%<br />
− Gen X: 62%<br />
− Gen Y: 69%<br />
− Baby Boomers: 52%<br />
Q22a. Does your portfolio currently have a<br />
substantial amount of funds in a money market<br />
account, savings account or other type of cash<br />
accounts?<br />
$$$<br />
on the<br />
sidelines<br />
% of all respondents with substantial<br />
funds in cash<br />
No<br />
44%<br />
Yes, Have a<br />
substantial<br />
amount of funds<br />
in cash<br />
56%<br />
13
HNW investors not content letting cash sit idle<br />
Approximately one-half (49%) of<br />
HNW investors are not content<br />
leaving money in cash positions<br />
until the market stabilizes.<br />
Younger investors – Gen X and Gen<br />
Y – have a higher degree of<br />
comfort leaving cash on the<br />
sidelines than those over the age<br />
of 49.<br />
Q22. Based on your experience, to what extent do<br />
you agree with each of the following statements<br />
about your investing behaviors and attitudes?<br />
% not content leaving money in cash positions until<br />
the market stabilizes<br />
All<br />
Men<br />
Women<br />
Age 18-32<br />
Age 33-48<br />
Age 49-67<br />
Age 68+<br />
30%<br />
38%<br />
44%<br />
49%<br />
53%<br />
58%<br />
60%<br />
14
Generational agreement on investing; generational gap on<br />
approach and comfort level<br />
HNW investors overwhelmingly<br />
agree (86%) that long-term buyand-hold<br />
investing is the best way<br />
to grow money over time.<br />
However, there are generational<br />
differences in perceptions about<br />
investing in the stock market.<br />
One-half (51%) of Gen Y feel that<br />
traditional investing in equities is<br />
over-rated and fear they will lose<br />
their money by putting it in the<br />
stock market.<br />
Q22. Based on your experience, to what extent do<br />
you agree with each of the following statements<br />
about your investing behaviors and attitudes?<br />
% who agree<br />
All<br />
Men<br />
Women<br />
Age 18-32<br />
Age 33-48<br />
Age 49-67<br />
Age 68+<br />
19%<br />
12%<br />
8%<br />
29%<br />
23%<br />
29%<br />
21%<br />
28%<br />
24%<br />
21%<br />
42%<br />
33%<br />
51%<br />
51%<br />
84%<br />
81%<br />
81%<br />
86%<br />
86%<br />
88%<br />
91%<br />
Long-term buy and hold<br />
investing is the best way to<br />
grow money over time<br />
Investing in the stock market<br />
is over-rated<br />
I don't think I will ever be<br />
comfortable investing money<br />
in the stock market for fear<br />
of losing it<br />
15
HNW investors will invest cash over time, not immediately<br />
Two in five HNW investors plan to<br />
move large cash positions into<br />
investments gradually over the next<br />
two years, while another third have<br />
no plans to move the funds into<br />
other investments.<br />
Women and investors over age 68<br />
are most likely to have no plans for<br />
investing cash.<br />
Q22b. Which one of the following best describes your plans<br />
for the funds in your cash accounts?<br />
Base: Respondents who have large funds in cash accounts<br />
HNW plans for funds in cash accounts<br />
Move much<br />
of it into<br />
investments<br />
within the next<br />
few months,<br />
16%<br />
Move much<br />
of it into<br />
investments<br />
gradually over<br />
the next 12 to<br />
14 months,<br />
44%<br />
19%<br />
45%<br />
11%<br />
42%<br />
57%<br />
Other, 5%<br />
43%<br />
No plans to<br />
move any<br />
of it into<br />
investments at<br />
this time, 35%<br />
19% 18% 14% 13%<br />
43%<br />
28%<br />
54%<br />
41%<br />
31%<br />
34% 36%<br />
24%<br />
5% 6% 0% 5% 7%<br />
5%<br />
Male Female 18-32 33-48 49-67 68+<br />
16
Many of the wealthy don’t feel well informed about the impact<br />
of tax law changes on investments, income<br />
Pursuing higher returns regardless of<br />
taxes is considered more important<br />
than letting taxes drive investment<br />
decision-making.<br />
Most (69%) HNW investors aren’t<br />
changing investment strategy to seek<br />
tax-efficient investments or minimize<br />
taxes.<br />
Two-thirds (66%) do not feel wellinformed<br />
about the impact of tax law<br />
changes on investment returns.<br />
More women (73%) than men (62%)<br />
do not feel well-informed about tax<br />
law changes.<br />
Q21. When it comes to managing your wealth and investment<br />
portfolio, which of the following is closest to your investment<br />
priority?<br />
Q44a. Do you plan to change your investment strategy or seek<br />
tax efficient investments to minimize taxes due to recent tax<br />
law change?<br />
Q44. To what extent do you feel you have an informed<br />
understanding about each of the following?<br />
Investment priority for<br />
managing wealth<br />
Making<br />
investment<br />
decisions to<br />
minimize<br />
taxes<br />
43%<br />
Pursuing<br />
higher<br />
returns<br />
regardless<br />
of tax<br />
implications<br />
57%<br />
% not well-informed about tax law changes<br />
73%<br />
66%<br />
70%<br />
62% 63%<br />
58%<br />
Impact of tax<br />
changes on total<br />
investment return<br />
Impact of tax<br />
changes on income<br />
70%<br />
74%<br />
67% 70% 67%<br />
Impact of tax<br />
changes on estate<br />
Total Male Female<br />
Plan to change investment<br />
strategy to minimize taxes<br />
No<br />
69%<br />
Yes<br />
31%<br />
76%<br />
Tax savings<br />
strategies available<br />
17
Younger HNW investors showing interest in tangible assets<br />
Approximately two-thirds (65%) of<br />
all respondents own some type of<br />
tangible asset, ranging from art to<br />
infrastructure.<br />
Except for investments in<br />
residential real estate, investments<br />
in other tangible assets are more<br />
aspirational, with the strongest<br />
aspirations being among younger<br />
investors to invest in a wider<br />
range of investment properties.<br />
Q23. Indicate if you own or have as an investment,<br />
and are likely to own/invest in each of the<br />
following within the next two years, or do not plan<br />
to own/invest in the next two years.<br />
% who currently/likely to invest in tangible assets, by age<br />
Infrastructure<br />
Renewable energy<br />
Timber<br />
Oil, coal, gas properties<br />
Residential real estate<br />
Commercial real estate<br />
Farmland/Ranchland<br />
4%<br />
7%<br />
9%<br />
8%<br />
14%<br />
13%<br />
14%<br />
16%<br />
15%<br />
17%<br />
19%<br />
21%<br />
21%<br />
24%<br />
25%<br />
28%<br />
28%<br />
32%<br />
31%<br />
27%<br />
33%<br />
36%<br />
36%<br />
36%<br />
36%<br />
38%<br />
39%<br />
44%<br />
45%<br />
52%<br />
52%<br />
56%<br />
56%<br />
Age 68+<br />
Age 49-67<br />
Age 33-48<br />
Age 18-32<br />
All<br />
63%<br />
75%<br />
18
HNW Millennials more comfortable with tangible assets than<br />
stocks<br />
Nearly two-thirds (64%) of Gen<br />
Y investors say they are more<br />
comfortable investing in a<br />
physical asset than in the stock<br />
market.<br />
Gen Y is almost twice as likely<br />
as other age groups to feel that<br />
investing in tangible assets has<br />
become a more important part<br />
of their overall wealth strategy.<br />
Q24. To what extent do you agree with each of<br />
the following statements.<br />
Q31. Thinking about the current tax, political and<br />
economic environment, would you say that your<br />
investment in each of the following is more or less<br />
important to your overall wealth management<br />
strategy?<br />
% who agree<br />
62%<br />
70%<br />
73%<br />
55%<br />
55%<br />
Investments in a tangible asset such as<br />
real estate, farmland and timber offer a<br />
stable income and hedge against<br />
inflation<br />
All Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
36%<br />
64%<br />
52%<br />
23%<br />
23%<br />
I am more comfortable owning a<br />
physical asset that has underlying value<br />
than traditional asset classes (such as<br />
stock) that are subject to market<br />
volatility<br />
18%<br />
35%<br />
18%<br />
15%<br />
13%<br />
Investing in tangible assets is a more<br />
important part of my overall wealth<br />
strategy given the current economic,<br />
political environment<br />
19
Social impact of investment decisions is important<br />
The wealthy are conscious of the<br />
impact made by companies in which<br />
they invest, and 45 percent consider<br />
their investment decisions as a way<br />
to express their values.<br />
The younger the investor, the more<br />
likely to consider the impact of<br />
investment decisions, and the<br />
greater their willingness to accept<br />
higher risk or lower return on<br />
companies that have a positive<br />
impact.<br />
Regardless of the investment<br />
potential, nearly two-thirds (63%) of<br />
all respondents would not invest in<br />
companies that are harmful.<br />
Q24. To what extent do you agree with each of the<br />
following statements?<br />
% who agree<br />
Investment decisions are a way to express my<br />
social, political and environmental values<br />
I would be willing to accept a lower return from<br />
investments in companies that have a greater<br />
positive impact on society or the environment<br />
I would be willing to accept a higher risk on<br />
investments in companies that have a greater<br />
positive impact on society or the environment<br />
I would not invest in a company that has a<br />
negative impact on society or the environment,<br />
even if I thought I could make a lot of money<br />
I would rather invest in companies that will have a<br />
positive social or environmental impact than<br />
boycott investments in companies that are<br />
harmful<br />
36%<br />
31%<br />
35%<br />
37%<br />
45%<br />
44%<br />
50%<br />
56%<br />
46%<br />
61%<br />
58%<br />
39%<br />
37%<br />
69%<br />
72%<br />
63%<br />
71%<br />
64%<br />
62%<br />
55%<br />
71%<br />
80%<br />
72%<br />
71%<br />
66%<br />
All<br />
Age 18-32<br />
Age 33-48<br />
Age 49-67<br />
Age 68+<br />
20
Despite importance, most investors haven’t screened for impact<br />
About half (51%) of the wealthy<br />
believe it is at least somewhat<br />
important to consider the impact of<br />
investment decisions on society.<br />
Women and younger investors<br />
(Generations X and Y) are most<br />
likely to consider social impact<br />
important.<br />
Only about one-quarter of all<br />
respondents have screened their<br />
investment portfolio to evaluate its<br />
impact.<br />
Q26. When evaluating investments, how<br />
important is positive or negative social, political or<br />
environmental impact of the investment in your<br />
decision on whether or not to invest?<br />
Q25. Have you ever reviewed your investment<br />
portfolio to evaluate the social, political or<br />
environmental impact of the companies in which<br />
you have investments?<br />
Importance of social, political, environmental impact of investing<br />
Not important Somewhat unimportant Somewhat important Extremely important<br />
10%<br />
41%<br />
30%<br />
19%<br />
8%<br />
34%<br />
34%<br />
24%<br />
13%<br />
52%<br />
23%<br />
18%<br />
51%<br />
23%<br />
11% 8%<br />
14%<br />
52%<br />
22%<br />
6% 7%<br />
34% 35%<br />
36% 31%<br />
Total Male Female Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
% who have reviewed investment portfolio for social,<br />
political, environmental impact<br />
24% 24% 24%<br />
31%<br />
36%<br />
13%<br />
17%<br />
23%<br />
21%<br />
All Men Women Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
26%<br />
21
Men and women place different importance on impact investing<br />
Women generally have stronger<br />
feelings about the importance of<br />
investment for social and<br />
environmental impact.<br />
More women than men would be<br />
willing to accept a higher risk or a<br />
lower return from companies that<br />
positively affect society.<br />
Q24. To what extent do you agree with each of the<br />
following statements?<br />
% agree, by gender<br />
Investment decisions are a way to express<br />
my social, political and environmental values<br />
I would be willing to accept a lower return<br />
from investments in companies that have a<br />
greater positive impact on society or the<br />
environment<br />
I would be willing to accept a higher risk on<br />
investments in companies that have a<br />
greater positive impact on society or the<br />
environment<br />
I would not invest in a company that has a<br />
negative impact on society or the<br />
environment, even if I thought I could make<br />
a lot of money<br />
I would rather invest in companies that will<br />
have a positive social or environmental<br />
impact than boycott investments in<br />
companies that are harmful<br />
Women Men<br />
39%<br />
41%<br />
39%<br />
53%<br />
56%<br />
53%<br />
58%<br />
67%<br />
72%<br />
79%<br />
22
Six in 10 HNW households have valuable collectibles as assets<br />
The wealthy are avid collectors, with<br />
nearly six in 10 (59%) owning some<br />
type of valuable collection related<br />
to a personal interest or passion.<br />
Q27. Which of the following valuable assets do<br />
you own or collect? own/invest in the next two<br />
years.<br />
% who own/don’t own valuable collections<br />
No, 41%<br />
Yes, 59%<br />
Types of valuable collections owned<br />
Fine watches or jewelry<br />
Fine art (paintings, photographs,<br />
sculptures)<br />
Antiques<br />
Rare coins or stamps<br />
Fine wine<br />
Classic, vintage or high-performance cars<br />
or motocycles<br />
Rare books or papers<br />
Something else<br />
2%<br />
7%<br />
13%<br />
12%<br />
22%<br />
20%<br />
31%<br />
35%<br />
23
Collectibles are assets of personal passion<br />
The primary reason for owning<br />
valuable collectibles is purely for<br />
personal enjoyment.<br />
Only about one-third collect<br />
because they see the collection as<br />
an investment. More men (40%)<br />
than women (19%) expect a return<br />
on their investment.<br />
Q28. Which of the following are reasons you<br />
own/collect these assets?<br />
Reasons given for owning collectibles<br />
I enjoy the intrinsic value of the items<br />
I consider the asset(s) a family heirloom for<br />
which I am the caretaker<br />
I expect an increase in value and return on<br />
the investment<br />
I enjoy being part of a community of people<br />
who share a similar interest<br />
It is a safe asset that will hold its value<br />
It is part of a philanthropic commitment or<br />
strategy<br />
It is a tax strategy<br />
2%<br />
6%<br />
19%<br />
26%<br />
32%<br />
38%<br />
79%<br />
24
Assets of passion not protected like financial assets<br />
About 45 percent of HNW households<br />
have collections valued at over<br />
$100,000. 1 Nearly one in 10 own<br />
collections worth over $1 million.<br />
Six in 10 have formal documentation<br />
of authenticity and purchase/sale<br />
records, yet only about four in 10<br />
(39%) have an up-to-date appraisal,<br />
which is crucial for valuation in estate<br />
settlement and has tax implications<br />
for future heirs.<br />
Only one in five has outlined wishes<br />
for the collection in an estate plan or<br />
talked with future heirs about it.<br />
1 Data not charted. From Q30: What is the total<br />
monetary/market value of the collectibles you<br />
own?<br />
Q29. Which of the following have you ever done to<br />
protect the value of your collections?<br />
Actions taken to protect value of collectible assets<br />
Maintain formal documentation of<br />
authenticity and purchase/sale records<br />
Purchased supplemental insurance coverage<br />
Have up-to-date appraisal of market value<br />
Clearly outlined wishes for disposition of the<br />
collection in an estate plan<br />
Discussed wishes for division of the assets<br />
with future heirs<br />
Sought professional tax, legal or financial<br />
advice<br />
Retained a curator<br />
7%<br />
12%<br />
20%<br />
19%<br />
39%<br />
52%<br />
61%<br />
25
Retirement expectations and planning<br />
26
The wealthy are confident in their retirement planning<br />
The wealthy are generally confident<br />
they will have the income they need<br />
in retirement.<br />
Among non-retirees, just over half<br />
(52%) are very confident they will<br />
reach retirement income goals.<br />
Non-retired women and<br />
Generations X and Y are less<br />
confident than non-retired men and<br />
Baby Boomers.<br />
Younger people want to retire<br />
before reaching age 65. Baby<br />
Boomers expect to keep working<br />
past age 65.<br />
Q71. How confident are you that you have<br />
calculated the income you will need in retirement<br />
and have a plan to attain your goals?<br />
Q69. At what age do you want to retire?<br />
* Data excludes respondents who indicated they<br />
never want to retire (1% Gen X, 3% Baby Boomer,<br />
14% age 68+) Thus chart does not add up to 100.<br />
Confidence about reaching retirement income goals (nonretirees)<br />
12% 13% 10% 14%<br />
37%<br />
52%<br />
28%<br />
59%<br />
47% 41%<br />
18%<br />
40%<br />
43% 45% 42%<br />
6%<br />
31%<br />
3%<br />
34%<br />
63% 64%<br />
Total Male Female 18-32 33-48 49-67 68+<br />
Very confident Somewhat confident Not confident<br />
Desired age to retire (% by age group)*<br />
< Age 64<br />
Gen Y: 73%<br />
Gen X: 67%<br />
Baby Boomers: 38%<br />
Age 65+<br />
Gen Y: 26%<br />
Gen X: 31%<br />
Baby Boomers: 59%<br />
27
Retirement income planning is incomplete<br />
Large numbers of non-retirees<br />
have not adequately accounted<br />
for the impact of important<br />
factors on retirement income,<br />
including taxes, inflation,<br />
healthcare and long-term care<br />
costs and financial support<br />
needed by family members.<br />
Three-quarters of non-retirees<br />
have not accounted for changes<br />
in real estate values, yet more<br />
than half say their primary real<br />
estate is important for funding<br />
retirement.<br />
Q72. Which of the following favors have you<br />
adequately accounted for in calculating your income<br />
in retirement? (Base: Non-retirees)<br />
Q73. How important is the value of your primary<br />
residential real estate to being able to fund your<br />
retirement?<br />
Factors not accounted for in calculating retirement income<br />
(among non-retirees)<br />
Distributions from retirement savings accounts<br />
Lifestyle expectations/spending level<br />
Cost of living increases/inflation<br />
Cost of out-of-pocket healthcare<br />
Impact of taxes on investment gains<br />
Likely amount of Social Security benefits<br />
Life expectancy<br />
Likely amount of Medicare benefits you will receive<br />
Cost of long-term care, if needed<br />
Loss/gain in the value of real estate<br />
Financial support needed by your children/heirs<br />
Financial support needed by your parents/in-laws<br />
% who say value of primary residence is important to funding retirement<br />
Non-retirees<br />
Retirees<br />
23%<br />
52%<br />
40%<br />
44%<br />
47%<br />
51%<br />
52%<br />
53%<br />
56%<br />
62%<br />
62%<br />
75%<br />
80%<br />
82%<br />
28
Serious retirement planning delayed until later in life<br />
Calculations for retirement income<br />
become more comprehensive<br />
with age.<br />
Financial support for<br />
parents/children and loss/gain in<br />
real estate value top list of factors<br />
not being considered by all ages.<br />
Q72. Which of the following favors have you<br />
adequately accounted for in calculating your<br />
income in retirement? (Base: Non-retirees)<br />
Factors not accounted for in calculating retirement income<br />
(among non-retirees, by age)<br />
Financial support needed by parents/in-laws<br />
Financial support needed by children/heirs<br />
Loss/gain in the value of real estate<br />
Cost of long-term care, if needed<br />
Impact of taxes on investment gains<br />
Life expectancy<br />
Likely amount of Medicare benefits to receive<br />
Cost of out-of-pocket healthcare<br />
Cost of living increases/inflation<br />
Lifestyle expectations/spending level<br />
Likely amount of Social Security benefits to<br />
receive<br />
Distributions from retirement savings accounts<br />
0%<br />
21%<br />
21%<br />
23%<br />
21%<br />
28%<br />
21%<br />
18%<br />
15%<br />
36%<br />
36%<br />
24%<br />
34%<br />
46%<br />
61%<br />
52%<br />
52%<br />
49%<br />
Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
65%<br />
60%<br />
66%<br />
82%<br />
81%<br />
83%<br />
83%<br />
78%<br />
79%<br />
88%<br />
76%<br />
82%<br />
70%<br />
68%<br />
48%<br />
39%<br />
67%<br />
79%<br />
40%<br />
44%<br />
64%<br />
57%<br />
41%<br />
66%<br />
68%<br />
63%<br />
62%<br />
79%<br />
72%<br />
77%<br />
29
Managing family wealth<br />
30
Better off financially than parents, siblings and children<br />
Baby Boomers and those who came<br />
from middle class backgrounds are<br />
somewhat of a phenomenon in<br />
their own families, generally better<br />
off than all other adult family<br />
members – parents, siblings and<br />
adult children.<br />
In many cases, they are not only the<br />
first generation in their family to<br />
become wealthy, they may be the<br />
only member of the immediate<br />
family to achieve such financial<br />
success. It can be a blessing and a<br />
burden when it comes to taking on<br />
financial responsibility for extended<br />
family.<br />
Q9. Would you say your current financial and<br />
socioeconomic status is better, worse, or about the<br />
same as each of the following family members?<br />
* Does not include comparison with adult children<br />
given age of children.<br />
% who are financially better off than<br />
adult family members<br />
78%<br />
82%<br />
61% 59%<br />
Middle class or<br />
lower upbringing<br />
48%<br />
69%<br />
Upper-middle<br />
class/wealthy<br />
upbringing<br />
Better off than<br />
41%<br />
51%<br />
45%<br />
42%<br />
83% 85% 83%<br />
72%<br />
56%<br />
72%<br />
Age 18-32* Age 33-48* Age 49-67 Age 68+<br />
Parents Siblings Adult children<br />
31
Financial responsibility is felt for extended family<br />
Whereas few people over age 33<br />
ever expect their parents to become<br />
financially reliant on them, nearly<br />
half (46%) of Gen Y expects their<br />
parents to rely on them for financial<br />
support at some point in their lives.<br />
Approximately one-half of<br />
respondents feel responsible for<br />
providing financial support to<br />
parents and adults siblings, if it<br />
were needed.<br />
Q35. At any point in your lifetime, do you expect<br />
your parents or in-laws to rely on you for financial<br />
support or assistance to help meet their expense<br />
and income needs? Base: Those who have<br />
parents/in-laws still living.<br />
Q38. To what extent do you agree or disagree with<br />
the following statements about the use of your<br />
wealth for extended family members?<br />
* Base: Those who are better off financially than<br />
their parents/siblings and have parents/in-laws<br />
still living.<br />
% who ever expected parents / in-laws to become<br />
financially reliant<br />
All<br />
Age 18-32<br />
Age 33-48<br />
Age 49-67<br />
Age 68+<br />
16%<br />
27%<br />
33%<br />
% who feel responsibility to provide financial support<br />
to parents / siblings<br />
Financial support for less-financially fortunate<br />
siblings, if they needed it.<br />
Financial support for parents / in-laws even if it<br />
jeopardized personal financial security*<br />
34%<br />
55%<br />
46%<br />
63%<br />
32
Expectations of support for parents assumed by financially<br />
well-off and younger generations<br />
Many of those who are financially<br />
better off than other adult family<br />
members expect to shoulder a<br />
greater share of the costs to care for<br />
aging, infirm parents.<br />
The youngest generation is most<br />
likely to feel greater financial<br />
responsibility for parents.<br />
One-half expect siblings to share<br />
equitably the total time and<br />
resources devoted to care for<br />
aging parents.<br />
Q38. To what extent do you agree or disagree with<br />
the following statements about the use of your<br />
wealth for extended family members?<br />
*Base: Among respondents whose parents /siblings<br />
are still living and who are better off financially<br />
than other adult family members.<br />
% who feel that because of their financial success,<br />
they are expected to provide a disproportionate share<br />
of cost to care for aging or infirm parents *<br />
48%<br />
% who expect siblings to equitably share<br />
responsibilities for the physical, financial and<br />
emotional support needed by aging or infirm<br />
parents *<br />
54%<br />
69%<br />
82%<br />
46%<br />
63%<br />
40%<br />
50%<br />
20%<br />
All Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
25%<br />
All Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
33
Extended family financial support is a reality not planned for<br />
Nearly half (46%) of all respondents<br />
say they provide substantial<br />
financial support for adult members<br />
of their family.<br />
Yet more than two-thirds (69%) do<br />
not have a financial plan that factors<br />
in the needs of any adult family<br />
member, other than their spouse or<br />
partner.<br />
Men are nearly twice as likely as<br />
women to say they provide financial<br />
support for parents / in-laws.<br />
Q34. Do you, or have you ever, provided<br />
substantial financial support (not a loan) to any of<br />
the following?<br />
Q36. Do you have a financial plan that accounts for<br />
substantial financial support/assistance needed by<br />
adult family members, other than your spouse?<br />
% who have provided, or are providing, substantial<br />
financial support for the following adult family<br />
members:<br />
Adult children<br />
Parents<br />
In-laws<br />
Adult siblings<br />
Adult nieces/nephews<br />
8%<br />
10%<br />
19%<br />
18%<br />
% who have a financial plan for adult family<br />
members other than spouse/partner<br />
No, 69%<br />
Yes, 31%<br />
56%<br />
34
Family health is new threat to family wealth<br />
Nearly half (47%) have a financial<br />
plan to cover long-term care costs<br />
for themselves and a spouse or<br />
partner, but only 18% have a plan to<br />
cover long-term care costs for their<br />
parents.<br />
Younger respondents (Gen Y) are<br />
more likely than Baby Boomers to<br />
have personally paid for parents’<br />
healthcare and long-term care<br />
costs.<br />
Younger respondents are far more<br />
likely than Baby Boomers to have a<br />
financial plan or purchased longterm<br />
care insurance for parents.<br />
Q37. Please indicate which of the following you have<br />
ever done.<br />
* Base: Respondents whose parents are still living<br />
Actions taken to plan for healthcare and long-term care costs<br />
Established a financial plan to cover longterm<br />
care costs for self and spouse/partner<br />
Established a financial plan to cover longterm<br />
care costs for parents / in-laws or other<br />
aging relatives*<br />
Personally financed the cost of long-term<br />
care for parents*<br />
Personally paid out-of-pocket medical<br />
expenses for parents and other aging<br />
relatives*<br />
Calculated cost of assisted, living nursing or<br />
private care and how it will affect parents'<br />
assets/financial plan*<br />
Purchased long-term care insurance for self<br />
and spouse/partner<br />
Purchased long-term care insurance for<br />
parent or other relative*<br />
2%<br />
0%<br />
9%<br />
10%<br />
18%<br />
13%<br />
19%<br />
16%<br />
8%<br />
6%<br />
11%<br />
13%<br />
17%<br />
24%<br />
25%<br />
27%<br />
20%<br />
23%<br />
27%<br />
34%<br />
36%<br />
35%<br />
41%<br />
32%<br />
31%<br />
31%<br />
32%<br />
34%<br />
All Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
38%<br />
47%<br />
46%<br />
43%<br />
48%<br />
52%<br />
50%<br />
35
Care giving is a family resource not planned or accounted for<br />
Eight in 10 families don’t have a<br />
family plan to support the needs of<br />
aging parents and relatives.<br />
Married women are more likely<br />
than married men to say they<br />
devote more time as a family<br />
caregiver and to have done so at the<br />
expense of their income and career.<br />
Few families (19% overall) have<br />
calculated the monetary value of<br />
time spent care giving.<br />
Q37. Please indicate which of the following you<br />
have ever done.<br />
Q38. To what extent do you agree or disagree with<br />
the following statements about the use of your<br />
wealth for extended family members?<br />
% who have established a family plan to support needs (physical,<br />
emotional, financial) of aging or infirm parents and relatives<br />
No<br />
84%<br />
Yes<br />
16%<br />
% who agree / have done the following<br />
I devote more time than my spouse /<br />
partner as a caregiver to aging parents and<br />
relatives<br />
I have forfeited income or advancment of<br />
my career to care for the special needs of<br />
children / or parents<br />
Have calculated the monetary value of time<br />
spent by a family caregiver to support the<br />
needs of parents or other family members<br />
Men Women<br />
17%<br />
21%<br />
21%<br />
23%<br />
26%<br />
37%<br />
36
Long-term care wishes discussed primarily with spouse<br />
Three-quarters (78 percent) of<br />
people have discussed long-term<br />
care plans and wishes with their<br />
spouse or partner.<br />
Only about one-third (35 percent)<br />
have shared any long-term care<br />
plans or wishes with adult children.<br />
Women are somewhat more likely<br />
than men to discuss long-term care<br />
plans with their children.<br />
Approximately one-quarter have<br />
never discussed their long-term<br />
care wishes with anyone.<br />
Q39. With whom have you discussed your plan for<br />
long-term care decisions?<br />
* Base: Married respondents<br />
** Base: Parents with children<br />
% who have discussed long-term care plans<br />
With a spouse or partner*<br />
With children**<br />
With a financial advisor<br />
Have not discussed with anyone<br />
27%<br />
28%<br />
25%<br />
23%<br />
22%<br />
24%<br />
35%<br />
31%<br />
44%<br />
Total Male Female<br />
78%<br />
80%<br />
74%<br />
37
Estate planning goals and actions not aligned<br />
The top three cited goals of estate<br />
planning are meeting the needs of<br />
a spouse / partner, minimizing<br />
taxes and minimizing the burden of<br />
estate settlement.<br />
Though three-quarters (74%) of<br />
the wealthy have a will, 72 percent<br />
do not have a comprehensive<br />
estate plan.<br />
Both revocable and irrevocable<br />
trusts are being underutilized. At<br />
least two-thirds of respondents<br />
have never established a trust.<br />
Q40. Which of the following documents/vehicles<br />
do/don’t you currently have in place?<br />
Q43. Which of the following do you consider to<br />
be an important goal of your estate plan.<br />
% who identify the following as the most<br />
important goals of estate planning<br />
To ensure financial needs of spouse or<br />
partner are met<br />
To minimize estate taxes<br />
To minimize the burden of estate<br />
settlement<br />
To treat all heirs relatively equal<br />
To protect assets from falling into the<br />
wrong hands<br />
To preserve family wealth for future<br />
generations<br />
To ensure financial needs of children are<br />
met<br />
% who do not have the financial documents listed below<br />
Comprehensive Estate Plan<br />
Healthcare Proxy/Living Will<br />
Durable Financial Power of Attorney<br />
Revocable Trust<br />
Irrevocable Trust<br />
Life Insurance Trust<br />
21%<br />
20%<br />
20%<br />
30%<br />
29%<br />
47%<br />
49%<br />
56%<br />
58%<br />
66%<br />
72%<br />
80%<br />
81%<br />
38
Underutilization of trusts<br />
The top reasons cited for not using<br />
trusts are simple procrastination<br />
and belief that a will precludes the<br />
need for a trust.<br />
Other reasons suggest a general<br />
lack of awareness and<br />
misunderstanding about trusts.<br />
Only about one-quarter of<br />
respondents, men and women alike,<br />
feel very well-informed about how<br />
various trusts can be used to<br />
protect assets and minimize taxes.<br />
Q41. Which of the following describes why you have<br />
not included a trust as part of your estate plan?<br />
Base: those who have not established a trust.<br />
Q44. To what extent do you feel you have an<br />
informed understanding of the following?<br />
Top three reasons given for not establishing trusts<br />
25%<br />
“My wishes are spelled out in my will,<br />
so I don’t need a trust.”<br />
“I haven’t gotten around to it.”<br />
“I don’t know what the benefits are of<br />
having a trust.”<br />
% who feel very informed<br />
27% 26% 27%<br />
22%<br />
Pros and cons of various trusts for<br />
minimizing estate taxes<br />
24%<br />
Trust provisions that will protect<br />
estate assets for future heirs or<br />
beneficiaries<br />
All<br />
Men<br />
Women<br />
39
Spouse is most often chosen as executor of estate<br />
Six in 10 people say they have<br />
named or plan to name their spouse<br />
or partner as executor of their<br />
will/estate, primarily because of<br />
their level of trust in the person.<br />
Four in 10 will name at least one<br />
child as executor.<br />
Only 32 percent of people choose<br />
an executor based on the person’s<br />
financial knowledge and skills.<br />
Q45. Who have you/will you name as the executor<br />
of your estate?<br />
Q46. Why have you named this person?<br />
% who have named spouse or<br />
children as an executor<br />
60%<br />
34%<br />
11%<br />
Spouse or partner One child More than one<br />
child<br />
Reason executor was chosen<br />
I trust this person most<br />
This person understands my wishes<br />
better than anyone else<br />
This person has financial<br />
knowledge and skills<br />
To honor this person<br />
I don't trust anyone else<br />
8%<br />
13%<br />
32%<br />
52%<br />
78%<br />
40
Financial skills, time are biggest challenges for executors<br />
Those who have already served<br />
as an executor of an estate<br />
identified the most difficult<br />
part of fulfilling the<br />
responsibilities as having<br />
sufficient legal or financial<br />
knowledge.<br />
More women (44%) than men<br />
(26%) cited knowledge/skills as<br />
a difficulty.<br />
More men (32%) than women<br />
(25%) cited difficulty accessing<br />
or knowing the whereabouts of<br />
records and information.<br />
Q49. Which of the following was the most difficult<br />
part of serving as an executor or trustee of an<br />
estate?<br />
* Base: Those who have previously ever served as<br />
an executor.<br />
Most difficult part of being an executor*<br />
Having sufficient legal/financial knowledge<br />
Having access to records and information<br />
Commitment of time required<br />
Managing disagreement among heirs<br />
Filing tax returns<br />
Paying bills or debts owed<br />
Determining value of assets<br />
Sharing decision-making with co-executor<br />
3%<br />
9%<br />
9%<br />
12%<br />
14%<br />
16%<br />
All Men Women<br />
20%<br />
25%<br />
26%<br />
22%<br />
22%<br />
23%<br />
18%<br />
26%<br />
25%<br />
32%<br />
30%<br />
32%<br />
30%<br />
30%<br />
30%<br />
28%<br />
32%<br />
44%<br />
41
Executors, heirs need better access to important documents<br />
The vast majority (87%) of married<br />
respondents know the whereabouts<br />
of important records, and most<br />
have updated and organized their<br />
important information.<br />
Only about half (54%) have<br />
informed the person named as<br />
executor of their estate how to<br />
access records/information.<br />
45 percent say they have not<br />
organized passwords for accessing<br />
digital accounts and assets, and 63<br />
percent have not outlined their<br />
wishes for their digital assets, such<br />
as social media sites, email and<br />
music and media downloads.<br />
Q42. Which of the following have you done?<br />
% who have taken steps to organize personal financial<br />
information<br />
Outlined wishes for authorized access to<br />
digital passwords or online assets<br />
Organized all passwords for access to digital<br />
assets or accounts in one place<br />
Informed executor about how to access all<br />
important medical, financial and legal records<br />
Organized all personal, financial, medical and<br />
legal records in one place<br />
Updated financial, medical and legal records<br />
and information,if changed<br />
Informed spouse / partner where important<br />
medical, financial and legal records are kept<br />
37%<br />
55%<br />
54%<br />
67%<br />
72%<br />
87%<br />
42
Importance of leaving an inheritance varies by generation<br />
and family values/tradition of passing on wealth<br />
Two-thirds of respondents overall think<br />
it is important to leave a financial<br />
inheritance to the next generation.<br />
The youngest and oldest age groups<br />
(Generation Y and those over age 68)<br />
place greater importance on leaving an<br />
inheritance than those in the middle<br />
age groups (Baby Boomers and Gen X).<br />
Those who already have received, or<br />
expect to receive, an inheritance place<br />
greater importance on leaving an<br />
inheritance.<br />
Q15. Do you consider it important to leave a<br />
financial inheritance to your children/heirs?<br />
*Base: Among parents who have ever received a<br />
financial inheritance (from Q10) and those who do<br />
not/do not expect to ever receive a financial<br />
inheritance ( Q13).<br />
% who consider it important to leave a<br />
financial inheritance<br />
All<br />
Age 18-32<br />
Age 33-48<br />
Age 49-67<br />
Age 68+<br />
67%<br />
63%<br />
64%<br />
72%<br />
78%<br />
% who consider it important to leave a financial inheritance, sorted by<br />
those who have/have not received an inheritance themselves*<br />
Have or expect to receive an inheritance<br />
Have not/don't expect to receive an<br />
inheritance<br />
57%<br />
Yes No<br />
72%<br />
33%<br />
37%<br />
43%<br />
36%<br />
28%<br />
28%<br />
22%<br />
Yes<br />
No<br />
43
Parents not fully confident their children can handle inheritance<br />
More than half (58%) of wealthy<br />
parents are not fully confident their<br />
children will be well-prepared to<br />
handle a financial inheritance.<br />
Younger parents are more confident<br />
than older parents in the next<br />
generation’s ability to handle an<br />
inheritance.<br />
Q51. Please indicate the extent to which you<br />
agree or disagree with the statement: “My<br />
children will be well-prepared to handle the<br />
inheritance I plan to leave them.”<br />
Percent of parents who are not fully confident their<br />
children will be well-prepared to handle a financial<br />
inheritance<br />
All<br />
Age 18-32<br />
Age 33-48<br />
Age 49-67<br />
Age 68+<br />
36%<br />
55%<br />
58%<br />
61%<br />
64%<br />
44
Parents think children can’t handle wealth until age 25<br />
Part of the reason many parents<br />
lack confidence in their children’s<br />
ability to handle wealth may be<br />
that they don’t think children will<br />
be mature enough until well into<br />
adulthood.<br />
Most don’t think their children will<br />
be mature enough to handle wealth<br />
until they are at least age 25.<br />
Approximately one-half (57%)<br />
believe their children will be<br />
mature enough between ages 25-<br />
34.<br />
Nearly half (49%) of those age 68 or<br />
more believe the next generation<br />
isn’t mature enough until they are<br />
older than 40.<br />
Q50. At what age do you think your<br />
(child/children) will have achieved the maturity<br />
necessary to handle the money they will receive?<br />
Age at which parents think children can handle their<br />
wealth<br />
5%<br />
27%<br />
30%<br />
16%<br />
22%<br />
15%<br />
42%<br />
33%<br />
2%<br />
8%<br />
7% 4% 2%<br />
43%<br />
24%<br />
11%<br />
15%<br />
23%<br />
37%<br />
19%<br />
17%<br />
14%<br />
13%<br />
22%<br />
49%<br />
All Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
18-24<br />
25-29<br />
30-34<br />
35-39<br />
40+<br />
45
Wealthy parents haven’t fully disclosed wealth to adult children<br />
About four in 10 (39%) wealthy<br />
parents have fully disclosed their<br />
wealth to children over the age of<br />
25, while just about half (53%) have<br />
disclosed only a little.<br />
The older generation is less likely to<br />
have fully disclosed family wealth to<br />
the next generation.<br />
Q52. To what extent have you disclosed the level<br />
of your wealth to your child/children?<br />
Base: Parent with children over age 25.<br />
Extent of Disclosure of Level of Wealth to Children Over 25 Years Old<br />
39% 42%<br />
34%<br />
53% 49% 61%<br />
8% 9% 5%<br />
All respondents Age 49-67 Age 68+<br />
full<br />
little<br />
no<br />
46
Top three reasons for not fully disclosing wealth to children<br />
The most common reason for not<br />
discussing wealth with children is<br />
overall resistance toward<br />
discussing wealth. Baby Boomers<br />
and those over age 68 are<br />
somewhat more likely to say this<br />
than Gen X and Gen Y, who<br />
appear to be more willing to<br />
discuss wealth with children at an<br />
earlier age.<br />
Q53. Which of the following best describes why you<br />
haven’t fully disclosed your level of wealth with your<br />
child/children? Base: Those who have not fully<br />
disclosed wealth to their children.<br />
“I was taught never to discuss wealth.”<br />
“I am concerned it will negatively affect<br />
child/children’s work ethic.”<br />
“I never thought about it.”<br />
47
Wealthy parents want to instill strong values about money<br />
Almost all wealthy parents<br />
consider themselves to be positive<br />
role models in managing money,<br />
and most believe their parents<br />
were role models for them.<br />
While nine in 10 wealthy parents<br />
believe their children appreciate<br />
the privileges of family wealthy,<br />
nearly half are concerned that they<br />
feel entitled to it, and that this will<br />
hold them back from achieving<br />
their own success.<br />
Q51. To what extent do you agree/disagree<br />
with the following statements:<br />
% of wealthy parents who agree<br />
I am a positive role model to my children in<br />
the way I manage money<br />
My parents were a positive role model in<br />
how to manage money<br />
My children appreciate the value of a dollar<br />
and the privileges of growing up in a family<br />
with good fortune<br />
I would rather my children grow up to be<br />
charitable than wealthy<br />
My children feel entitled to the lifestyle I<br />
worked hard for<br />
My children are not likely to achieve the<br />
financial success I have because thgey've<br />
never known what it's like to go without<br />
51%<br />
47%<br />
65%<br />
86%<br />
89%<br />
97%<br />
48
Younger generation inheriting greater wealth<br />
One in five wealthy households has<br />
received an inheritance of at least $1<br />
million. Nearly two-thirds (63%) have<br />
received $500K or less.<br />
Adults younger than 49 are most likely<br />
to have received $1 million+.<br />
The average size of inheritances<br />
already received is $526,263.<br />
Q14. What is the approximately value of the<br />
financial inheritance you or your spouse received?<br />
*Base: Among those who have received an<br />
inheritance. Excludes “Don’t knows”<br />
Some data do not add to 100 due to rounding.<br />
Amount of inheritance received<br />
(by those who have received any inheritance, regardless of if it was a major source of wealth)<br />
8%<br />
21%<br />
9%<br />
31%<br />
32%<br />
14%<br />
26%<br />
6%<br />
31%<br />
13%<br />
41%<br />
12%<br />
15%<br />
23% 20%<br />
5%<br />
16%<br />
8%<br />
39%<br />
33%<br />
10%<br />
14%<br />
11%<br />
23%<br />
42%<br />
All Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
Don't know<br />
$1 million or more<br />
$500,000 to less than $1<br />
million<br />
$100,000 to less than $500,000<br />
Less than $100,000<br />
49
Future inheritances to be larger than those already received<br />
The average size of future expected<br />
inheritances is more than $700,000,<br />
34 percent larger than the average<br />
inheritance already received.<br />
Those who inherited a majority of their<br />
wealth have/expect to receive an<br />
inheritance nearly twice that of those<br />
who created most of their own wealth.<br />
Q14. What is the approximately value of the<br />
financial inheritance you or your spouse received?<br />
*Base: Among those who have received an<br />
inheritance. Excludes “Don’t knows”<br />
Some data do not add to 100 due to rounding.<br />
Average actual and future expected inheritance<br />
$526,263<br />
$708,115<br />
$337,644<br />
$582,464<br />
$818,125<br />
$938,480<br />
All Created majority of wealth Inherited majority of wealth<br />
Avg. actual received Average expected<br />
50
Majority of inheritance money received as cash<br />
Among those who have received an<br />
inheritance, two-thirds received a<br />
lump sum payout of cash, which,<br />
unlike funds in a trust or investment<br />
portfolio, needs to be acted on.<br />
The receipt of cash, particularly at<br />
an early age, reinforces the<br />
importance of financial education<br />
for the next generation.<br />
Q11. Which of the following describes the financial<br />
inheritance you received?<br />
Type of inheritance received<br />
Lump sum of cash<br />
Investments such as stocks and bonds<br />
Property, such as a house or land<br />
Distribution of assets in a trust<br />
Payout from insurance policies<br />
Pensions or other qualified retirement<br />
savings<br />
Business or business assets<br />
6%<br />
4%<br />
24%<br />
23%<br />
37%<br />
45%<br />
67%<br />
51
Benefits of professional financial education<br />
Four in 10 wealthy parents believe<br />
their children would benefit from<br />
discussions with a financial<br />
professional.<br />
More than three-quarters of<br />
parents have a professional advisor<br />
who has not formed a relationship<br />
with their children.<br />
Q51. Please indicate the extent to which you agree that your children would<br />
benefit from discussions with a financial professional. *Base: Parents with<br />
children of any age.<br />
Q78. Please indicate if each of the following regarding your financial<br />
advisor applies to you or not (“Has a relationship with your children/heirs.)<br />
**Base: Respondents who have a primary financial advisor.<br />
% of parents who strongly agree their children would<br />
benefit from discussions with a financial professional*<br />
39% 38%<br />
32%<br />
43%<br />
36%<br />
All Age 18-32 Age 33-48 Age 49-67 Age 68+<br />
% of those whose primary financial advisor has a<br />
relationship with their children/heirs**<br />
No., 69%<br />
Yes, 31%<br />
52
Financial skills and knowledge were primarily self-taught<br />
The vast majority of wealthy adults<br />
are confident in their financial skills<br />
and knowledge.<br />
The majority say they taught<br />
themselves the financial skills and<br />
knowledge they have, with about<br />
half saying it was through trial and<br />
error.<br />
Men are more likely to say they<br />
learned on their own whereas<br />
more women say they were<br />
taught by their parents.<br />
Only about one in three received<br />
financial training from a<br />
professional.<br />
Q55. How did you gain the financial<br />
skills/knowledge you have?<br />
% who are confident in the financial<br />
skills/knowledge they have<br />
95%<br />
All<br />
96%<br />
Men<br />
92%<br />
Women<br />
Source of financial skills/knowledge<br />
Self-taught<br />
Trial and error<br />
Taught by parents or other family<br />
Formal training/advice from a<br />
professional advisor<br />
Learned from mistakes of others<br />
85%<br />
31%<br />
34%<br />
27%<br />
30%<br />
30%<br />
30%<br />
96%<br />
46%<br />
47%<br />
44%<br />
52%<br />
97%<br />
Age 18-32 Age 33-48 Age 49-67<br />
46%<br />
40%<br />
55%<br />
65%<br />
73%<br />
98%<br />
Age 68+<br />
All<br />
Men<br />
Women<br />
53
Men feel better prepared with financial skills than women<br />
While many of the wealthy feel<br />
they were well-prepared in life<br />
with technical financial skills and<br />
protecting privacy, fewer than onequarter<br />
feel well-prepared for the<br />
responsibilities and personal<br />
implications of having wealth.<br />
More men than women feel they<br />
were well-prepared with financial<br />
skills in every area, with the<br />
greatest gender gaps in saving for<br />
retirement, investment decisionmaking<br />
and the strategic use of<br />
debt.<br />
Q54. Which of the following financial<br />
skills/knowledge do you feel you were wellprepared<br />
for in your own life?<br />
% who feel they were well-prepared in life with financial<br />
skills<br />
Managing credit card use<br />
Saving for retirement<br />
Establishing and adhering to a budget<br />
Making investment decisions<br />
Protecting privacy about personal/family<br />
wealth<br />
Strategically using debt<br />
Receiving an inheritance<br />
Being a steward of family wealth<br />
Using wealth for social good<br />
Handling implications of wealth on<br />
personal relationships<br />
25%<br />
24%<br />
25%<br />
23%<br />
22%<br />
25%<br />
18%<br />
20%<br />
21%<br />
19%<br />
24%<br />
28%<br />
18%<br />
53%<br />
55%<br />
49%<br />
52%<br />
59%<br />
41%<br />
42%<br />
45%<br />
36%<br />
39%<br />
48%<br />
76%<br />
77%<br />
74%<br />
73%<br />
80%<br />
62%<br />
All<br />
Men<br />
Women<br />
54
Greatest influence on personal success of next generation<br />
is tied more to values than to money<br />
Eight in 10 wealthy people say they<br />
inherited a strong work ethic from<br />
their parents, and that it played a<br />
very important role in their own<br />
personal success.<br />
Work ethic, financial discipline and<br />
harmony in the home all played an<br />
important role in achieving personal<br />
success, far more than money or<br />
connections.<br />
While fewer than half say their<br />
families paid for/provided access to<br />
the best education, those who did<br />
receive this say it was very<br />
important to their success.<br />
Q19 Which of the following was provided for or<br />
passed to you by parents, grandparents or other<br />
relatives?<br />
Q19a. How important a role did this have in your<br />
own success?<br />
Family influence passed down and importance to<br />
financial success<br />
Work ethic<br />
Financial skills/discipline<br />
Emotional stability /harmony at home<br />
Exposure to education, cultural or intelletual<br />
enrichment<br />
Freedom to pursue personal passions or skills<br />
Lessons learned/mistakes not to repeat<br />
Access/payment to the best education<br />
Charitable traditions and values<br />
Financial gifts<br />
Payment or loan for housing/mortgage<br />
Introductions to influential people<br />
13%<br />
20%<br />
Provided for or passed along by family<br />
36%<br />
30%<br />
38%<br />
37%<br />
38%<br />
47%<br />
45%<br />
Played a very important role in personal success<br />
58%<br />
57%<br />
55%<br />
53%<br />
50%<br />
61%<br />
71%<br />
71%<br />
80%<br />
80%<br />
78%<br />
87%<br />
92%<br />
55
Important Disclosures<br />
Methodology<br />
The U.S. Trust 2013 Insights on Wealth and Worth survey is based on a nationwide survey of 711 high net worth and ultra high net<br />
worth adults with at least $3 million in investable assets, not including the value of their primary residence. Among respondents,<br />
33% have between $3 million and $5 million in investable assets, 33% have between $5 million and $10 million and 34% have $10<br />
million or more. The survey was conducted online by the independent research firm Phoenix Marketing International in March of<br />
2013. Asset information was self-reported by the respondent. Verification for respondent qualification occurred at the panel<br />
company, using algorithms in place to ensure consistency of information provided, and was confirmed with questions from the<br />
survey itself. All data have been tested for statistical significance at the 95% confidence level.<br />
U.S. Trust operates through Bank of America, N.A., and other subsidiaries of Bank of America Corporation. Bank of America, N.A.,<br />
Member FDIC.<br />
© 2013 Bank of America Corporation. All rights reserved. | ARE33846 | 5/2013<br />
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