trends in wealth transfer

Breaking the Cycle of Aimless Inheritance

Thirty percent of benefactors report having a full plan for how they will hand estate down to next generation

MINNEAPOLIS, February 8, 2017 , 2017 /PRNewswire/ – When it comes to giving and receiving wealth, most Americans have been and continue to be woefully unprepared, according to new research by RBC Wealth Management conducted in collaboration with Scorpio Partnership.

Less than one-third (30 percent) said they have a full wealth transfer plan in place and 30 percent of Americans surveyed said they’ve done nothing to ready for the transfer of their estate to their heirs.

Many of these same individuals report receiving no specific preparation themselves when they inherited their wealth. In fact, only 37 percent of American inheritors had conversations with their benefactors about their inheritance before receiving the assets.

“It’s a trend that appears to repeat itself generation after generation,” said Tom Sagissor, president of RBC Wealth Management-U.S. “But there are encouraging signs that the next generation of inheritors will fare better. Parents today are educating their children about wealth at an earlier age and doing a better job of engaging them in conversations about the inheritance they will one day receive.”

The research – undertaken from June to August 2016 – reached out to 3,105 individuals from the United States, Canada, and the United Kingdom, who have an average net worth of $4.5 million. These individuals included men and women, professionals, retirees and business owners, as well as givers and recipients of wealth.

Of respondents in the three geographies, Americans are the most proactive when it comes to educating the next generation on wealth matters: 60 percent of parents have already begun the education process, markedly ahead of the 51 percent of Canadian and 53 percent of British respondents who’ve started having the ‘money talk’ with their kids.

And knowledge appears to build confidence. Almost half of U.S. respondents said they are confident their children will be able to grow their wealth, compared to just 39 percent in the UK and 42 percent in Canada.

Other key findings from the report include:

  • Those going through an inheritance are often unsupported. More than one in three inheritors (36%) received no professional help or guidance in the aftermath of the bequest.
  • Experience is the best teacher. Individuals are far more likely to have a wealth transfer strategy if they themselves have received an inheritance already: 37 percent of those in the United States who have inherited wealth now have a full strategy, and 58 percent of those have a will. But preparedness levels drop noticeably among those who have not yet inherited but expect to in the future: only 20 percent have a full wealth transfer strategy and 50 percent have a will.
  • Evidence suggests that the earlier children in the U.S. start learning, the more confident they will feel when making financial decisions. 70% of those who received an education before age 18 are confident in their understanding of money matters*.
  • There’s a direct correlation between preparedness and confidence levels. When parents have a wealth transfer strategy in place, they feel more confident that their heirs will be capable of preserving family wealth: 58% of those fully prepared are confident that their fortunes will endure.*
Discussions around estate and succession planning can be emotionally charged, so families tend to shy away from them.

“Discussions around estate and succession planning can be emotionally charged, so families tend to shy away from them,” said Bill Ringham, vice president and senior wealth strategist, RBC Wealth Management-U.S. “But for families that want to leave a legacy and ensure the nest egg they have built is protected across generations, communication and planning are key.”

In addition to the main report, RBC WM will be releasing four additional research papers throughout 2017, which will delve further into the challenges and opportunities women, small business owners, blended families and millennials face when it comes to inheritance. The full details of the report, and a survey which allows Americans to compare their answers to the findings, is available here.




*Combined data from all three geographies
About RBC Wealth Management – U.S.
In the United States, RBC Wealth Management operates as a division of RBC Capital Markets, LLC. Founded in 1909, RBC Capital Markets, LLC. is a member of the New York Stock Exchange, the Financial Industry Regulatory Authority, the Securities Investor Protection Corporation, and other major securities exchanges. RBC Wealth Management has $279 billion in total client assets with 1,800 financial advisors operating in 200 locations in 41 states.