With the largest intergenerational shift of wealth now underway, it is critical that advisors understand the dynamics of these changes – what can we be doing better? – and consider ways to adapt. Not only to better position investors on their journey to realizing their family wealth management and legacy planning goals, but also to remain relevant and attract a new generation of clients before assets change hands.
During the first quarter of 2015, State Street Global Advisors’ Practice Management conducted a study among a nationally representative sample of financial advisors and individual investors to explore their perspectives on the topic of multigenerational wealth transfer and uncover ways to thoughtfully navigate the challenges of transition.
This findings summary document is one in a series of practice management offerings that explore topics within multigenerational wealth management of interest to both advisors and clients.
Wealth Transfer | Philanthropy | Aging Investor | Family Education
Investment professionals can obtain program resources by contacting their Regional Consultant or the SSGA Sales Desk at 866.787.2257.
Money in Motion Multigenerational Wealth ManagementQuantitative Research Frequencies
I. Wealth Transfer
1. n Which of the following services do you offer your clients?
n Which of the following services does your advisor provide for you?
Wealth management
Estate planning
Philanthropic planning and gift strategies
Business succession planning
Tax planning
Other
73 97
40 69
15 59
14 35
44 44
8 6
% Advisors Investors
2. What approximate percentage of your clients have a wealth transfer/estate plan?
Clients with wealth transfer/estate plan
50
% Advisors
3. Do you expect to transfer wealth/pass on your estate?
Yes, I plan to transfer my remaining wealth to others
No, I won’t have anything to pass on
No, I do not want to and plan to spend all my wealth before I pass on
81
10
9
% Investors
State Street Global Advisors 2
Money in Motion: Multigenerational Wealth Management
6. What proportion of your wealth/estate will you leave to the following?
Spouse/partner
Descendants
Other relatives
Charitable causes
Other
66
26
4
3
1
Investors%
7. On what basis do you plan to divide your estate (property, assets, holdings, etc.)?
First born/eldest child will inherit everything
Equally split among family members
Leave specific share of assets to different family members
I haven’t thought about it yet
Other
5
51
28
12
4
Investors%
8. n At a guess, what do you anticipate the value of your estate will be at time of wealth transfer?
Below $100,000
$100,000–$250,000
$250,000–$500,00
$500,000–$1 million
$1 million–$5 million
$5 million–$10 million
Above $10 million
I don’t know
3
7
11
19
37
9
6
7
Investors%
5. n What are the primary triggers for your clients in terms of thinking about wealth planning?
n What were the primary triggers that made you start thinking about wealth planning?
Encouragement from myself or other advisors
Starting a family
Liquidity event
Illness/health scare
Death in the family
Questions or pressure from the next generation
Reaching a certain age
Discussions about family legacy or values
Hearing stories or advice from friends
Changes in tax and trust laws
17 10
4 11
6 4
19 6
20 5
1 2
16 37
7 11
5 5
7 8
Advisors Investors%
4. Have you made a wealth transfer/estate plan?
Yes
No, and it is not in my plans to do so
No, but I plan to do so in the future
45
10
45
Asked to only those who plan to transfer wealth/pass on their estate (%) Investors
State Street Global Advisors 3
Money in Motion: Multigenerational Wealth Management
10. At what age did you receive the inheritance?
Birth–20
21–30
31–40
41–50
51–60
Above 60
6
9
20
22
28
14
% Investors
Birth–20
21–30
31–40
41–50
51–60
Above 60
50
21
38
38
25
17
Asked to only those who have received more than one inheritance (%) Investors
11. n What strategies do you most often recommend to clients to minimize taxes on their estate/transfer to heirs?
n What strategies do you intend to use in order to minimize tax on your estate/transfer to heirs?
If married, use both spouses‘ estate tax exemptions — living trust with tax planning
Give to family or friends
Remove assets from estate — make annual tax-free gifts
Remove assets from estate — charitable gift planning
Remove assets from estate — transfer ownership of life insurance
Remove assets from estate — establish a trust to remove home (qualified personal residence trust) and/or income-producing assets (grantor-retained annui)
Remove assets from estate — establish a limited liability company or family limited partnership
Buy life insurance — irrevocable life insurance trust
32 51
3 36
20 26
7 11
6 7
16 22
4 6
13 12
% Advisors Investors
12. How much is wealth planning discussed within your family?
Wealth is not openly discussed in the family
We openly discuss wealth in the family
We have regular meetings to discuss wealth matters with the family
The family is fully aware of my/our plans with regard to wealth planning for the future
45
31
4
21
% Investors
9. n Have you ever received or do you expect to receive an inheritance?
I have recieved an inheritance
I have recieved an inheritance more than once
I expect to recieve an inheritance in the future
No
33
4
20
42
Investors%
State Street Global Advisors 4
Money in Motion: Multigenerational Wealth Management
Provide my family with security and comfort
Fund experiences and the purchase of luxury items
Fund education forfamily members
Support wider family members who are in financial difficulty
Give back/philanthropy
Fund the medical needs of family members
Provide power and the ability to influence
Fund new business ideas and interests
Keep the family together for future generations
404255
971
2518
8
867
485
87
10
221
242
46
10
■ Millennials (1981–2000)■ Generation X (1965–1980)
■ Baby Boomers (1946–1964)
Generational (%) Investors
13. What are the likely primary purposes of your wealth when you pass it on?
Provide my family with security and comfort
Fund experiences and the purchase of luxury items
Fund education forfamily members
Support wider family members who are in financial difficulty
Give back/philanthropy
Fund the medical needs of family members
Provide power and the ability to influence
Fund new business ideas and interests
Keep the family together for future generations
Overall (%) Investors
49
4
13
7
6
8
2
3
8
14. How big a threat are the following to the wealth/estate you plan to leave?
Large unexpected expenses (health care, accidents, etc.)
My long-term care needs
Future financial crisis
Taxes on inheritance
Insufficient estate planning
Insufficient advice from my financial advisor
My children’s lack of financial knowledge
My children’s poor judgment
Overall (%) Investors
19
29
16
17
6
2
6
5
Large unexpected expenses (health care, accidents, etc.)
My long-term care needs
Future financial crisis
Taxes on inheritance
Insufficient estate planning
Insufficient advice from my financial advisor
My children’s lack of financial knowledge
My children’s poor judgment
■ Millennials (1981–2000)■ Generation X (1965–1980)
■ Baby Boomers (1946–1964)
259
21
192232
131617
132117
—77
—41
6114
25102
Generational (%) Investors
State Street Global Advisors 5
Money in Motion: Multigenerational Wealth Management
15. How big a threat are the following to the wealth/inheritance you already received/you anticipate receiving?
Large unexpected expenses (health care, accidents, etc.)
Long-term care needs of the person from whom I will receive the inheritance
Future financial crisis
Taxes on inheritance
Insufficient estate planning
Insufficient advice from my financial advisor
My children’s lack offinancial knowledge
My children’s poor judgment
26
18
20
19
4
2
7
5
Asked to only those who have received or who expect to receive an inheritance in the future (%) Investors
Large unexpected expenses (health care, accidents, etc.)
Long-term care needs of the person from whom I will receive the inheritance
Future financial crisis
Taxes on inheritance
Insufficient estate planning
Insufficient advice from my financial advisor
My children’s lack of financial knowledge
My children’s poor judgment
■ Millennials (1981–2000)■ Generation X (1965–1980)
■ Baby Boomers (1946–1964)
131330
131920
172117
132518
1043
741
1748
1084
Generational (%) Investors
16. n A majority of my clients have made suitable wealth transfer arrangements in case they pass on unexpectedly.
n I have made a wealth transfer/estate plan arrangement in case I pass on unexpectedly.
Agree
Disagree
67 57
34 43
Investors% Advisors
17. n I encourage my clients to have arrangements in place in case they pass on unexpectedly.
n My advisor encourages me to have a wealth transfer/estate plan arrangement in place in case I pass on unexpectedly.
Agree
Disagree
98 85
2 15
Investors% Advisors
18. n I have played a role in getting my clients’ children involved in their parents’ wealth transfer arrangements.
n My advisor has played an important role in involving my children in my wealth transfer/estate plan arrangement.
Agree
Disagree
76 48
25 52
Investors% Advisors
19. I have a clear strategy on how to engage the next generation of clients.
Agree
Disagree
49
51
% Advisors
State Street Global Advisors 6
Money in Motion: Multigenerational Wealth Management
20. I’m making efforts to engage the next generation of clients.
Agree
Disagree
88
12
% Advisors
21. Engaging the next generation is not a key priority.
Agree
Disagree
28
72
% Advisors
22. I need better optimized products and solutions to meet the needs of the next generation of clients.
Agree
Disagree
64
36
% Advisors
23. Which of the following steps have you taken to retain and cultivate the next generation of clients?
Initiate wealth transfer conversations with existing clients
Suggest existing clients involve their children in our wealth transfer conversations
Start building relationships with heirs of existing clients
Bring in younger advisors who can connect better with the next generation
Use social media and other communication strategies to connect with the next generation
72
75
79
21
31
% Advisors
24. In which areas do you need most support from product providers and/or your home office to succeed in the context of the Baby Boomer generation triggering the greatest wealth transfer in history?
At-retirement solutions for an aging client base
Best practices to retain the next generation as clients
Tax-efficient wealth transfer solutions
Thought leadership on planning for longevity
Technology and communication tools to engage the next generation
Best practice on team development
24
24
15
13
14
11
% Advisors
State Street Global Advisors 7
Money in Motion: Multigenerational Wealth Management
25. Which of the following do you think will be increasingly important for your business in the context of shifting demographics?
Increased communication with clients via social media
Giving clients access to online investing tools
More interest in ethics and social justice/ESG investments
Adopting a more collaborative approach with clients
Improving transparency and simplicity of approach with clients
Lowering client costs
Providing more one-on-one time with clients
Giving clients real-time access to investment information
Increasing focus on higher value-added clients
6
9
25
9
11
9
13
5
14
% Advisors
26. How is/will your business adapting/adapt in order to succeed in the context of the demographic shift due to the retirement of the baby boomer generation?
Increase focus on at—retirement products and solutions (decumulation strategies, annuities, etc.)
Offer personalized goals-based investment solutions adapted to the next generation
Increase use of digital technology to meet the needs of the next generation
Increase focus on multi-generational wealth transfer strategies
Offer solutions to fund long-term care and other longevity needs
Adding junior advisor to the team to partner with the next generation
25
24
7
28
11
5
% Advisors
27. For which of the following three client segments are the following factors most commonly reflected?
More risk tolerant
More accepting of non-traditional asset allocation (e.g., not just stocks and bonds)
More interest in ethics and social justice/ESG investments
More emphasis on philanthropy
More emphasis on short-term rather than long-term gains
More conservative
Will be an influential investor — demand for a more personalized experience and performance supporting their objectives
More reliance on technology (e.g., online services, apps, and other tools)
Greater concern with tax planning strategies
■ Millennials (1981–2000)■ Generation X (1965–1980)
■ Baby Boomers (1946–1964)
324821
185923
483320
41482
463321
171073
105238
22474
81154
% Advisors
State Street Global Advisors 8
Money in Motion: Multigenerational Wealth Management
II. Philanthropy
28. n Do you offer philanthropy solutions as part of your suite of client services?
n Does your advisor offer philanthropic/charitable asset management solutions?
Yes
No
Don’t know
66 19
34 51
— 30
% InvestorsAdvisors
29. What percentage of your clients are involved in philanthropy/charitable causes as part of their wealth management strategy?
Involved in philantrophy 24
% Advisors
30. Do you currently donate to philanthropy/charitable causes?
Yes
No
56
44
% Investors
31. n I believe philanthropy is an integral part of intergenerational wealth management strategies.
n I believe philanthropy is a very important part of wealth transfer strategies across generations.
Agree
Disagree
74 47
26 53
% InvestorsAdvisors
32. n Philanthropy should not be limited to high-net-worth clients; it can be an effective cross-generational planning for all types of clients.
n Philanthropy should not be limited to the wealthy as it can be used for effective cross-generational planning for all types of investors.
Agree
Disagree
75 59
25 41
% InvestorsAdvisors
33. n Philanthropy is a useful tool for me to engage the children of clients.
n Philanthropy is an effective way for parents to involve their children in estate planning arrangements.
Agree
Disagree
56 50
44 50
% InvestorsAdvisors
34. Philanthropy is a key component of tax planning strategies.
Agree
Disagree
80 34
21 66
% InvestorsAdvisors
State Street Global Advisors 9
Money in Motion: Multigenerational Wealth Management
35. How likely are you to offer philanthropic services to the following client segments?
Not likely at all
Somewhat likely
Likely
Very likely
■ Mass-Market Investors (up to $249,999 of Investable Assets)■ Mass Affluent Investors ($250,000–$499,999 of Investable Assets)■ Emerging High-Net-Worth Investors ($500,000–$999,999 of Investable Assets)■ High-Net-Worth Investors ($1 Million–$4.9 Million of Investable Assets)■ Ultra High-Net-Worth Investors (More than $4.9 Million of Investable Assets)
573118
75
34453013
8
823433918
229
4270
% Advisors
36. n In your opinion, what are the main motivations for your clients to pursue philanthropy?
n What are your main motivations for pursuing philanthropy?
A sense of duty or giving back to society
Family engagement
Care about specific causes
Creating a lasting legacy
Tax deductions
Ethics and/or religious reasons
Remaining active after retirement
17 30
4 3
24 2
16 34
18 9
15 16
6 5
% InvestorsAdvisors
37. What are the main challenges of offering philanthropic solutions?
Difficulty navigating the tax system
Educating myself about various philanthropic strategies
Not enough interest from clients
Accountability
Tax deductions are too small
Requires knowledge in areas beyond my expertise
Less profitable than other services
Lack of transparency
13
20
26
5
5
19
7
5
% Advisors
38. In your opinion, what are the main challenges of philanthropy?
Difficulty navigating the tax system
Educating myself about various philanthropic strategies
Accountability (i.e., checking to see if my donations were put to good use)
Not donating enough to make an impact
Charitable organizations are not efficient enough
I do not get enough tax deductions from my donations
Insufficient social impact
Lack of transparency
Lack of expert guidance
11
15
24
16
14
7
6
4
3
% Investors
State Street Global Advisors 10
Money in Motion: Multigenerational Wealth Management
39. n What philanthropic strategies do you offer to your clients?
n What philanthropic strategies do you use?
Giving tax-deferred assets to charitable organizations
Donations in the formof appreciated securities and assets
Donor-advised funds
Grantor-retained annuity trust (GRAT)
Private foundations
Charitable remainder trust (CRT)
Charitable lead trust (CLT)
Pooled-income funds (PIF)
Mission-related investments (MRI)
Charitable gift annuities
Income tax benefit
Exemption on gift tax and estate tax
None of the above
% Yes InvestorsAdvisors
62 22
69 9
41 10
29 3
23 14
49 4
18 3
6 4
5 4
24 8
39 22
39 3
9 43
40. n If you’re offering the following strategies, which do you use to maximize tax deductions?
n Which do you use to maximize tax deductions?
Giving tax-deferred assets to charitable organizations
Donations in the formof appreciated securities and assets
Donor-advised funds
Grantor-retained annuity trust (GRAT)
Private foundations
Charitable remainder trust (CRT)
Charitable lead trust (CLT)
Pooled-income funds (PIF)
Mission-related investments (MRI)
Charitable gift annuities
Income tax benefit
Exemption on gift tax and estate tax
% Yes InvestorsAdvisors
40 32
53 8
26 12
14 4
12 17
29 6
9 3
1 5
1 3
10 7
19 33
23 2
State Street Global Advisors 11
Money in Motion: Multigenerational Wealth Management
41. Approximately, what percentage of your current wealth do you allocate towards charitable causes annually?
Percentage of wealth allocated towards charitable causes 8
% Investors
42. How satisfied are you with your philanthropic ventures?
Very satisfied
Satisfied
Dissatisfied
Very dissatisfied
Investors
34
60
3
2
%
43. Regarding your philanthropic activities, how satisfied are you with the role your advisor plays in the following?
Very satisfied
Satisfied
Dissatisfied
Very dissatisfied
Investors
—
2
51
47
Actual planning of philanthropic activities (%)
Aid in establishing and administrating charitable administrations (%)
Very satisfied
Satisfied
Dissatisfied
Very dissatisfied
Investors
—
2
58
29
Due diligence (%)
Very satisfied
Satisfied
Dissatisfied
Very dissatisfied
Investors
—
6
46
40
Very satisfied
Satisfied
Dissatisfied
Very dissatisfied
2
—
58
31
Advice received regarding technical/operations management of charities (%) Investors
Very satisfied
Satisfied
Dissatisfied
Very dissatisfied
Investors
2
2
46
31
Grant-making foundations and trusts (%)
State Street Global Advisors 12
Money in Motion: Multigenerational Wealth Management
Very satisfied
Satisfied
Dissatisfied
Very dissatisfied
2
6
46
33
Donation strategy guidance (%) Investors
44. Regarding your philanthropic activities, how satisfied are you with the role your advisor plays in the following? (cont’d)
Very satisfied
Satisfied
Dissatisfied
Very dissatisfied
—
2
52
38
Organization of charitable activities (%) Investors
Very satisfied
Satisfied
Dissatisfied
Very dissatisfied
—
2
50
40
Tax planning/deductions (%) Investors
Very satisfied
Satisfied
Dissatisfied
Very dissatisfied
—
2
54
29
Aid in bringing both parents and children together on the philanthropy topic and activities (%) Investors
45. Why do you offer philanthropy solutions?
Because clients demand it
It enhances my practice's tax planning services
It's my way of giving back to society
It offers opportunities to retain the next generation as clients
It's an opportunity to generate extra income for my business
45
50
48
49
22
% Advisors
46. Which of the following themes/issues are you giving to/planning to give to over the next 12 months?
Health/quality of life
Food
Job creation
Water and sanitation
Anti-discrimination
Climate/clean energy/green technologies
Affordable housing
Education and skills
Poverty alleviation
Microfinance/microinsurance
Multi-thematic
Cultural integration
Women/gender equality
Sports
Arts
■ Currently Giving■ Planning to Give in the Next 12 Months■ Neither Currently Giving nor Planning to Give in the Next 12 Months
531532
521731
111277
161371
141076
191664
161570
322147
311950
99
82
159
75
91081
141472
101080
201763
% Investors
State Street Global Advisors 13
Money in Motion: Multigenerational Wealth Management
III. Aging Investor
47. Have any of your clients exhibited diminished financial decision making due to mental illness or aging?
Yes
No
65
35
% Advisors
48. What are the most common indicators a client has diminished capacity to make financial decisions?
Makes inappropriate investment decisions
Is the victim of fraud or scams
Falls into debt
Has trouble understanding simple advice or concepts
A family member alerts me of it
I don't know
37
35
5
72
65
12
Advisors%
49. Which of the following, from either product providers and/or your home office, best support(s) your role in helping clients deal with mental aging?
Providing informative materials for clients and their families on the issue
Offering training materials/sessions on communicating with clients who show signsof losing mental acuity
Providing informative materials for advisors on planning for aging investors
Creating products and solutions tailored to the needs of those planning for a potential decision making impairment
Other
34
24
21
20
1
% Advisors
50. n If a client is showing signs of diminished mental capacity in making financial decisions due to aging, who would you talk to about it first?
n If you feel you or a family member are showing signs of a diminished mental capacity to make financial decisions due to aging, who would you talk to about it first?
My client
Spouse/partner
Children
Financial advisor
Attorney
Accountant
Health care provider
I wouldn’t talk about it to anyone
Other
29 —
57 52
9 16
— 8
3 8
1 3
— 12
1 —
— 2
% InvestorsAdvisors
51. What are the main barriers for clients initiating an open conversation with you about their diminished decision making capabilities?
Family doesn't talk openly about money
Lack of trust (family member or advisor)
Fear of losing independence
Embarrassment
Refusal to recognize problem
Fear of losing privacy
9
4
24
26
33
4
Advisors%
State Street Global Advisors 14
Money in Motion: Multigenerational Wealth Management
52. What are the main barriers for clients initiating an open conversation with their family about their diminished decision making capabilities?
Family doesn't talk openly about money
Lack of trust (family member or advisor)
Fear of losing independence
Embarrassment
Refusal to recognize problem
Fear of losing privacy
18
9
28
13
29
5
Advisors%
53. If you began experiencing diminished financial decision making capabilities, how big an obstacle would the following be to initiating an open conversation with your family and financial advisor about it?
I don’t talk openly about money
Lack of trust in family members
Lack of trust in financial advisor
Fear of losing independence
Embarrassment
Refusal to recognize problem
Fear of losing privacy
Other
Investors
10
7
9
31
9
22
9
4
%
54. n My clients often express fear that aging may impair their ability to make adequate financial decisions.
n I fear getting old will impair my ability to make adequate financial decisions.
Agree
Disagree
50 48
50 52
% InvestorsAdvisors
55. n My clients’ family members have expressed fear that aging may impair my client’s ability to make adequate financial decisions.
n I fear one of my family members may experience diminished financial decision making due to mental illness or mental aging.
Agree
Disagree
65 53
36 47
% InvestorsAdvisors
56. n I encourage my clients to have a plan in place in case their decision making is diminished due to mental aging or illness.
n I think my financial decision making capabilities may decrease with age and I should have a plan in place.
Agree
Disagree
85 41
16 59
% InvestorsAdvisors
State Street Global Advisors 15
Money in Motion: Multigenerational Wealth Management
59. n I provide my clients with information and support regarding the potential impact of aging on their financial decision making.
n I’m satisfied with the level of of information and support my advisor has given me regarding the potential impact of aging on my financial decision.
Agree
Disagree
72 27
29 73
% InvestorsAdvisors
60. n I believe I need to talk more with my clients about the potential impact of aging on financial decision making.
n I believe I need to talk more with my financial advisor about the potential impact of aging on my financial decision.
Agree
Disagree
86 44
15 56
% InvestorsAdvisors
61. n If your client’s ability to make adequate financial decisions is affected, what measures would you recommend to safeguard their investments against the potential effects of an aging brain?
n If your ability to make adequate financial decisions is affected, what measures would you take to safeguard your investments against the potential effects of an aging brain?
Obtaining guaranteed income (e.g., an annuity)
Actively involving someone I strongly trust (e.g., a family member)
Sticking to a passive buy-and-hold strategy
Power of attorney
Continue working with a trusted financial advisor
Training themselves to avoid making fast decisions
4 27
32 59
3 13
37 56
22 36
3 20
% InvestorsAdvisors
57. n The majority of my clients have a suitable plan in place in case their decision making is diminished due to mental aging or illness.
n I have a suitable plan in place in case my decision making is diminished due to mental aging or illness.
Agree
Disagree
52 39
49 61
% InvestorsAdvisors
58. n My clients need to talk more with their families about the potential impact of aging on financial decision making.
n I believe I need to talk more with my family about the potential impact of aging on financial decision making.
Agree
Disagree
91 46
9 54
% InvestorsAdvisors
State Street Global Advisors 16
Money in Motion: Multigenerational Wealth Management
64. What are the most important criteria for you when choosing a trustee for your estate?
Trust
Whether the person is a member of my family
Investment expertise
First-born child
Impartiality
Someone who is a stakeholder outside the family
Other
Investors
56
34
26
12
26
8
1
%
62. n If a client experiences diminished mental capacity in making financial decisions due to aging, who should be trusted in making financial decisions on their behalf?
n If you experienced a diminished mental capacity in making financial decisions due to aging, who would you trust with making financial decisions on your behalf?
70 59
11 16
7 9
8 9
3 4
1 2
2 1
% InvestorsAdvisors
Spouse/partner
Children
Myself/Financial Advisor
Attorney
Accountant
Health care provider
Other
63. n What measures are you currently adopting to protect clients from financial predators?
n What measures are you currently adopting to protect yourself from financial predators?
Using an independent custodian
Implementing trades myself
Performing thorough due diligence on all my staff
Safeguarding against computer attacks
Other
37 20
39 30
55 40
60 44
6 4
% InvestorsAdvisors
State Street Global Advisors 17
Money in Motion: Multigenerational Wealth Management
IV. Family Education
65. Ideally, when do you think your clients should start involving the next generation in the family’s wealth transfer/estate plan?
At an early age (adolescence–early 20s)
Once they becomefinancially independent
Once the previousgeneration retires
Once the previousgeneration passes on
23
52
23
2
% Advisors
67. n When investing assets clients intend to pass on to their children, clients should prioritize their own investment goals (retirement, etc.) over those of their children.
n When investing assets intended for my children, I tend to prioritize my own investment goals (retirement, etc.) over those of my children.
Agree
Disagree
86 72
15 28
% InvestorsAdvisors
68. n My clients are sometimes conflicted between using an investment philosopshy that suits their own life objectives and one that suits their children’s objectives.
n I am sometimes conflicted between using an investment philosophy that suits my own life objectives and one that suits my children’s objectives.
Agree
Disagree
57 38
43 62
% InvestorsAdvisors
66. When did you get/do you expect to be involved in your family’s wealth transfer planning?
At an early age (adolescence–early 20s)
Once they become financially independent
Once I retire
Once I pass on
It is up to my children to decide whether they want to engage with my financial advisor/another financial advisor
Other
Investors%
24
40
18
7
9
2
At an early age (adolescence–early 20s)Once I became/become financially independent
Once the person I inherit from retired/retires
Once the person I inherit from passed/passes on
Other
Asked to only those who have received an inheritance or who expect to recieve an inheritance in the future (%) Investors
14
31
15
35
6
State Street Global Advisors 18
Money in Motion: Multigenerational Wealth Management
69. n Typically, how financially savvy are your clients?
n How financially savvy would you say you are?
0 — Not financially savvy at all
1
2
3
4
5
6
7
8
9
10 — Extremely savvy
— 2
1 1
1 2
3 3
5 5
18 15
22 15
33 20
15 23
2 6
2 8
% Advisors Investors
70. n It is my client’s responsibility to educate their children financially; I don’t expect to be involved in the process.
n It is my responsibility to educate my children financially; I don’t expect my financial advisor to be involved in the process.
Agree
Disagree
26 74
74 26
% InvestorsAdvisors
71. n I believe that when the time comes, I should engage my clients’ children directly and play an active role in educating them financially.
n I believe that when the time comes, my financial advisor should engage my children directly and play an active role in educating them financially.
Agree
Disagree
87 65
13 35
% InvestorsAdvisors
72. n I provide my clients with information and assistance on the process of financially educating their children.
n I would like to have more information and assistance from my financial advisor on the process of financially educating my children.
Agree
Disagree
81 62
19 38
% InvestorsAdvisors
73. Being financially literate is important despite having a trusted financial advisor.
Agree
Disagree
91 94
9 6
% InvestorsAdvisors
74. n It is important for my clients to proactively prepare their children for the responsibilities that come with wealth.
n I am proactively preparing my children for the responsibilities that come with wealth.
Agree
Disagree
96 64
4 36
% InvestorsAdvisors
State Street Global Advisors 19
Money in Motion: Multigenerational Wealth Management
75. Children do not need to be aware of or have a say in their parent’s financial arrangements for as long as their parents are alive.
Agree
Disagree
21 40
80 60
% InvestorsAdvisors
76. It’s a challenge to engage my clients’ children.
Agree
Disagree
74
26
% Advisors
77. Which of the following measures are most effective to prepare children to handle family wealth?
Financial education at home
Being given money to invest
Financial education externally (school, business courses, certifications, etc.)
Being introduced to advisers (bankers, accountants, trustees, etc.)
Family meetings
Family foundations (e.g., charitable trusts)
Work experience
47 30
19 9
28 17
68 10
58 12
10 4
25 18
% Advisors Investors
79. What are the main concerns you have regarding how your children will handle any inheritance?
They will not have sufficient knowledge to know what to do with the family assets
Financial decisions will be influenced by someone I do not approve of
They will become spoiled and not understand the value of money
Not enough engagement with my financial advisor
Not philanthropic enough
Other
56
33
31
13
12
8
Investors%
78. Who should play the most important role in educating the next generation financially?
Parents/family
Financial advisor in family office
Their employer
Educational system
81 94
52 67
3 45
15 83
% Advisors Investors
State Street Global Advisors 20
Money in Motion: Multigenerational Wealth Management
80. As an advisor, what role should you have in financially educating your client’s children?
Provide my clients with advice and informative materials on how to better educate their children
Organize mentoring meetings with both my clients and their children
Directly engage with my client’s children and offer them personalized, independent mentoringand advice
I have no role to play
36
26
37
2
% Advisors
81. How can product providers and/or your home office best support you in educating your clients and their children?
Provide me with educational materials to give to/talk through with clients
Facilitate training sessions for me on how to best educate my clients and their children
Create online tools for clients and their children directed at increasing their engagement with their finances and financial markets
Provide client seminar resources
86
50
57
32
% Advisors
State Street Global Advisors 21
Money in Motion: Multigenerational Wealth Management
84. Which of the following best describes you?
26
3
37
4
11
Independent broker/dealer
Multi-platform/direct advisor
I am part of a national broker dealer or wirehouse
Private bank
Regional broker dealer
Registered investment advisor (RIA)
%
20
Advisors
85. What are your total assets under management?
16
11
29
45
$20M–49.9M
$50M–74.9M
$75M–99.9M
$100M or more
% Advisors
86. What approximate percentage of your clients are:
Under 24
25–32
33–48
49–67
68–85
3
8
22
%
42
26
Advisors
82. Age
Millennials (1981–2000)
Generation X (1965–1980)
Baby Boomers (1946–1964)
Silent Generation (1928–1945)
11 9
42 29
43 50
5 11
% Advisors Investors
83. Gender
Male
Female
86 55
14 45
% Advisors Investors
87. How many years have you been a financial advisor?
7
61
22
11
Less than 5 years
6–20 years
21–30 years
More than 30 years
% Advisors
88. What approximate percentage of your clients are:
16
20
28
25
11
Mass market investors
Mass affluent investors
Emerging high-net-worth investors
High-net-worth investors
Ultra high-net-worth investors
% Advisors
V. Participant Profile
State Street Global Advisors 22
Money in Motion: Multigenerational Wealth Management
91. What is your yearly household income?
$100k–$199,999
$200k–$299,999
$300k–$499,999
$500k–$699,999
$700k–$999,999
$1M+
81
9
5
1
3
1
% Investors
92. What is your marital status?
Single
Married
Living with partner
Separated
Divorced
Widowed
6
83
6
1
3
1
% Investors
93. Who makes the financial decisions in your household?
I am solely responsible for my household’s financial decisions
My spous/other member(s) in my family take care of our financial decisions
48
52
% Investors
93. Who makes the financial decisions in your household?
90. With regard to estate planning, which of the following applies to your firm?
63
57
54
22
1
%My firm has always engaged in estate planning
Not applicable
Estate planning is an important part of our business
My firm partners with an outside expert (e.g., estate planning attorney)
We want to offer estate planning in the years to come
Advisors
89. For which of the following three client segments are the following factors most commonly reflected?
More risk tolerant
More accepting of non-traditional asset allocation (e.g., not just stocks and bonds)
More interest in ethics and social justice/ESG investments
More emphasis on philanthropy
More emphasis on short-term rather than long term gains
More conservative
Will be an influential investor — demand for a more personalized experience and performance supporting their objectives
More reliance on technology (e.g., online services, apps, and other tools)
Greater concern with tax planning strategies
■ Millennials (1981–2000)■ Generation X (1965–1980)
■ Baby Boomers (1946–1964)
324821
185923
483320
41482
463321
171073
105238
22474
8115
4
% Advisors
Advised
Not advised
61
39
% Investors
State Street Global Advisors 23
Money in Motion: Multigenerational Wealth Management
95. Which of the following best describes your ethnicity/race?
White/Caucasian
African-American
Hispanic/Latino
Asian
Other
87
4
6
3
—
% Investors
97. Which of the following are the strengths of your financial advisor?
Risk management
Tax and legal advisory
Business advisory
Financial advisory
Business succession planning
Administrative services
Life management and budgeting
Record keeping/reporting
Investment management/asset location
Philanthropic/charity planning
Estate planning
5
8
2
26
3
3
8
4
31
3
7
% Investors
96. What is the highest level of education you have obtained?
Completed high school
Trade/technical school
Bachelor’s degree
Post-graduate degree
Other
8
12
43
35
2
% Investors
94. How many children do you have?
1
2
3
4
More than 4
None
16
43
14
4
3
21
% Investors
State Street Global Advisors 24
Money in Motion: Multigenerational Wealth Management
Research MethodologyDuring the first quarter of 2015, State Street Global Advisors’ Practice Management and CoreData Research conducted a study among a representative sample of 400 financial advisors and 560 individual investors to explore their perspectives on multigenerational wealth management in the areas of wealth transfer, philanthropy, family education and the aging investor.
The advisor sample is representative across different channels: independent broker/dealer; multi-platform/direct; national broker or wirehouse; private bank; and registered investment advisor. The investor sample is representative across both net asset bands (below $1 million in assets; $1 million to $5 million; and above $5 million) and age bands (ages 25 to 32; 33 to 48; 49 to 67; and 68 or older).
The quantitative surveys explored nearly identical themes, which allowed comparison of advisors’ assumptions regarding their clients against actual investors’ attitudes and behavior. Questions were grouped into six discussion areas.
• Are advisors encouraging their clients to make wealth transfer plans?
• Have clients already made concrete plans, or are they seemingly more intent on doing so at some undefined point in the future?
• What role do advisors play in the conversation regarding multigenerational wealth planning? Are clients’ children or other stakeholders involved?
• What are client expectations regarding philanthropy and other distributions of inheritance?
• How can advisors thoughtfully engage clients on the topic of mental health and aging?
• What awareness do clients have for how their advisors can advise them on these and other multigenerational wealth planning issues?
The data collected from this survey were segmented and analyzed to extract insightful and actionable opportunities.
To further contextualize our learnings, we also conducted qualitative research with a range of leading industry, business and economic experts to help inform our key findings and practice techniques.
State Street Global Advisors 25
Money in Motion: Multigenerational Wealth Management
VI. Omnibus DataIn order to add context and deepen our learning, we conducted an Omnibus survey in August 2015. The sample consists of 912 adults who are responsible for investment decision-making of a portfolio of $200,000 or more.
1. Which of the following topics, and how it concerns or affects you, have you discussed with a family member (e.g., spouse, child) and with a professional (e.g., financial advisor, lawyer)?
Planning for retirement
Planning for death
Planning for long-term care
Planning for an inheritance
Planning for cognitive decline
Planning for dementia/Alzheimer’s
None of these
54 42
46 25
41 28
40 27
32 17
26 19
20 31
% ProfessionalFamilyMember
2. Who, if anyone, have you most recently inherited money from?
A spouse
A parent
A grandparent
Others, please specify
Nobody, I have not inherited money from anyone
19
27
9
2
43
Investors
6. Do you have a family history of cognitive decline, including dementia and/or Alzheimer’s?
Yes
No
Don’t know
31
65
4
% Investors
3. Which of the following statements best describes what happened when you inherited money from that person?
He/she did not have a financial advisor so I put the money where my money already was
He/she had a financial advisor and I stayed with his/her financial advisor
He/she had a financial advisor, but I transferred the money to my financial advisor
He/she had a financial advisor, but I moved the money to an account that I manage myself
31
33
29
33
% Investors
4. Who, if anyone, do you expect to inherit money from next?
A spouse
A parent
A grandparent
Others, please specify
Nobody, I do not expect to inherit money from anyone
18
28
7
2
46
Investors
5. Which of the following statements best describes what you plan to do when you inherit money from that person?
He/she did not have a financial advisor so I put the money where my money already is
He/she has a financial advisor and I will stay with his/her financial advisor
He/she has a financial advisor, but I will transfer the money to my financial advisor
He/she has a financial advisor, but I will move the money to an account that I manage myself
26
31
33
33
% Investors
State Street Global Advisors
Money in Motion: Multigenerational Wealth Management
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