LONDON, January 31, 2017 /PRNewswire/ --
New study from RBC Wealth
Management reveals the perils of failing to create and discuss
inheritance plans
- Less than one quarter of high net worth Britons have a full
wealth transfer strategy or plan in place
- Majority of parents with a full wealth transfer strategy in
place feel confident that their wealth will go on to create a
lasting legacy
- Early education and open family conversations are key to
preparing the next generation for inheritance
When it comes to transferring and inheriting wealth, most
Britons 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-quarter (24 per cent) of high net worth Britons
have a full plan in place for how they will pass their assets on to
the next generation, the study found. Thirty per cent say they've
done nothing to prepare the transfer of their estate to heirs.
The lack of planning appears to continue through generations as
these same individuals report receiving no specific preparation
themselves when they inherited their wealth. In fact, only 35 per
cent of UK respondents discussed the reasons behind their specific
wealth transfer plans with their parents or benefactors before
inheriting assets.
"US$4
trillion(1) of wealth is expected to pass to
the next generation over the coming years. Yet inheritors are being
left in the dark by their parents or other benefactors, leaving
them at risk of being underprepared to protect and grow that wealth
for future generations," said Tony
Johnson, head, Sales & Relationship Management, RBC
Wealth Management - International.
"There is a cycle of unpreparedness in wealth transfer that
needs to be broken. Family discussions around estate and succession
planning can be daunting, meaning they are often put off until it's
too late, which may result in damaging consequences. Open
conversations, financial education for heirs, and advance planning
are therefore critical to protecting the future of estates and
assets that UK families have built."
The research - undertaken from June to August 2016 - surveyed 3,105 individuals of
wealth from the United Kingdom,
Canada and the United States, who have an average net
worth of $4.5 million. These included
men and women, professionals, retirees and business owners, as well
as benefactors and heirs.
"Despite the apparent lack of intergenerational conversations
around wealth transfer, there are encouraging signs that high net
worth Britons have a healthy appetite for self-education, with 64
per cent conducting their own research and 46 per cent managing
their own investments to improve their financial understanding,"
said Julian Washington, head,
Intermediary Relationship Management, RBC Wealth Management. "This
will stand them in good stead, but they would greatly benefit from
building on their financial literacy, as well as their confidence
levels, by pursuing more structured education from financial
professionals and experts."
Other key findings from the report include:
- High net worth Britons are the most proactive when it comes to
educating themselves; 64 per cent of UK respondents conduct their
own research to improve their financial literacy, compared with 55
per cent in the US and 52 per cent in Canada.
- Despite their proactive approach, UK respondents rated their
confidence in financial matters at only 6.6 out of 10, so there is
room for improvement.
- Experience is the best teacher. High net worth individuals are
far more likely to have a wealth transfer strategy if they
themselves have received an inheritance already: 32 per cent of
those who have inherited wealth now have a full strategy, and 58
per cent have a will. But preparedness levels drop noticeably among
those who have not yet inherited: only 17 per cent have a full
wealth transfer strategy and 47 per cent have a will.
- 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 children will be capable
of preserving family wealth: 58 per cent of those fully prepared
are confident that their fortunes will endure.
- More than half of high net worth Britons (53 per cent) say they
have started to educate their children on wealth and money topics,
but a surprising 14 per cent of UK respondents said they have no
intention of educating their children about money at all.
- The evidence indicates that the earlier children begin
learning, the more confident they will feel when making financial
decisions. In fact, two-thirds of those who received a formal
education on wealth matters before the age of 18 reported a high
confidence rate for financial affairs, scoring themselves 7 out of
10 or higher.
- UK investors are most open to lifetime wealth transfer, with 35
per cent intending to pass on wealth this way compared to 30 per
cent in Canada and just 25 per
cent in the US. Meanwhile 55 per cent of high net worth Britons
intend to pass on their entire wealth upon death.
In addition to the main report, RBC Wealth Management 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 Britons to compare their answers to the
findings, is available on RBCWealthManagement.com.
About RBC Wealth Management
RBC Wealth Management is one of the world's top five largest wealth
managers*. RBC Wealth Management directly serves affluent, high net
worth and ultra high net worth clients globally with a full suite
of banking, investment, trust and other wealth management
solutions, from our key operational hubs in Canada, the United
States, the British Isles, and Asia. The business also provides asset
management products and services directly and through RBC and third
party distributors to institutional and individual clients, through
its RBC Global Asset Management business (which includes BlueBay
Asset Management). RBC Wealth Management has more than C$875 billion of assets under administration,
C$580 billion of assets under
management and 4,780 financial consultants, advisors, private
bankers, and trust officers. For more information, please
visit www.rbcwealthmanagement.com.
About RBC
Royal Bank of Canada is Canada's largest bank,
and one of the largest banks in the world, based on market
capitalization. We are one of North America's leading
diversified financial services companies, and provide personal and
commercial banking, wealth management, insurance, investor services
and capital markets products and services on a global basis. We
have over 80,000 full- and part-time employees who serve more than
16 million personal, business, public sector and institutional
clients through offices in Canada, the U.S. and 36 other
countries. For more information, please
visit http://www.rbc.com/.
RBC helps communities prosper, supporting a broad range of
community initiatives through donations, community investments and
employee volunteer activities. For more information please
see: http://www.rbc.com/community-sustainability/.
*Scorpio Partnership Global Private Banking KPI Benchmark
2016.
(1) This research program includes individuals
with a minimum net worth of USD500,000. The findings reveal that 55% of
respondents anticipate receiving an inheritance and that the
average inheritance value is $547,691. These figures were applied to Scorpio
Partnership's proprietary market sizing database, which models the
size of the population across North
America, the UK and Canada
(with a net wealth of greater than USD500,000) to predict the potential value of
future inheritance among individuals in these markets.
Currency: US$
Dafina Grapci-Penney, dafina.grapci-penney@greentarget.co.uk,
Greentarget, +44-207-324-5484
