The U.S. Trust 2012 Insights on Wealth and Worth nationwide survey of 642 high net worth and ultra high net worth adults found distinct generational differences in response to new economic realities, uncertain financial security, a looming elder care crisis and dual financial responsibilities for both children and parents.
“Our survey points to a shift in generational behavior and outlook, most likely shaped by personal experience and societal responses to economic realities,” said Keith Banks, president of U.S. Trust. “The next generation has not experienced the consistently strong economic growth or investment returns that baby boomers experienced during the longest bull market in history.”
Wealth and family responsibilities: taking care of the generation before and after
With greater similarities in attitude to the generation before the baby boom, Gen-Xers and Gen-Yers are focused on the needs of the family and the continuity of family wealth, including leaving a financial inheritance to their children. They are pragmatic, proactive and disciplined in their approach to investing and wealth management, surpassing baby boomers in planning for wealth for themselves and their families.
The annual U.S. Trust Insights on Wealth and Worth study has consistently identified family harmony and financial security as top goals. Achieving these goals can be challenging amid the complexity of circumstances in families of significant wealth. The 2012 survey found that the majority of surveyed respondents (62 percent) feel that family and harmony in the home is the realm in their lives where they have the greatest ability to effect change. While the importance of family is a common denominator across all generations, U.S. Trust found that each generation emphasizes different elements of family responsibilities.
Survey highlights include:
Financially empowering children
Estate planning and intergenerational wealth transfer
Approaches to growing wealth
High net worth investors continue to be cautiously optimistic about the management of their investment portfolio, given ongoing market volatility and political and economic uncertainty. Most survey respondents described themselves as independent, opportunistic and smart when making investment decisions, although nearly one-quarter (23 percent) of the youngest generation of investors described themselves as “exhilarated.”
“These three generations of wealth all approach life, and investing, from different angles that reflect their diverse experiences,” said Banks. “Understanding these generational differences is important for the wealth advisors and other professionals who guide these families, since it will enable them to better serve their clients and build stronger relationships with them.”
Protecting family privacy and security
The U.S. Trust 2012 Insights on Wealth and Worth survey also explored privacy and security, an emerging area of wealth management that varies significantly by age and experience. Those in the younger, technologically savvy generation who have grown up in an online world of digital devices and information better understand the related potential risk to their privacy and security. As a result, they are more apt to have taken actions to protect themselves, their finances and personal and physical safety. However, U.S. Trust found a generally low level of proactive activity to protect family privacy and security compared to the level of concern.
For the first time since the survey’s inception, Insights on Wealth and Worth explored differences and similarities across three generations of wealth in America. U.S. Trust began surveying the high net worth market in 1993, Insights on Wealth and Worth explores distinct differences in the attitudes, aspirations and behaviors among three generations of wealth in America: baby boomers (between the ages of 47 and 66), the generation before them (aged 67 and older), and Generations X and Y (aged 18 to 46).
Additional information about the 2012 U.S. Trust Insights on Wealth and Worth survey can be found at www.ustrust.com/survey.
U.S. Trust 2012 Insights on Wealth and Worth is based on a nationwide survey of 642 high net worth and ultra high net worth adults with at least $3 million in investable assets, not including the value of their primary residence. Among respondents, 37 percent have between $3 million and $5 million in investable assets, 31 percent have between $5 million and $10 million and 32 percent have $10 million or more. The survey was conducted online by the independent research firm Phoenix Marketing International in March of 2012. Asset information was self-reported by the respondent. Verification for respondent qualification occurred at the panel company, using algorithms in place to ensure consistency of information provided, and was confirmed with questions from the survey itself. All data have been tested for statistical significance at the 95 percent confidence level.
About U.S. Trust
U.S. Trust is part of the Global Wealth and Investment Management unit of Bank of America, which is a global leader in wealth management, private banking and retail brokerage. U.S. Trust is responsible for $333.8 billion in client balances*. The firm employs more than 4,000 professionals and maintains 140 offices in 32 states.
*Source: Bank of America. As of March 31, 2012, U.S. Trust, Bank of America Private Wealth Management had client balances of $ 333.8 billion. Client Balances consists of assets under management (AUM), client brokerage assets, assets in custody, loan balances and deposits of U.S. Trust, Bank of America Private Wealth Management clients held at Bank of America, N.A. and affiliated banks.
Bank of America
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