RY Royal Bank of Canada

Survey from The Economist Intelligence Unit commissioned by RBC Wealth Management shows that the concepts of wealth and legacy are transcending net worth as younger generations acquire assets

MINNEAPOLIS, MN, June 12, 2018 /PRNewswire/ - The definition of legacy in the U.S. is shifting from value to values, as high-net-worth Americans increasingly prioritize the impact of their money throughout their lives and beyond. This is according to a new survey from The Economist Intelligence Unit (EIU), commissioned by RBC Wealth Management. While respondents understand that financial wealth is the primary enabler of their legacy, many are focused on familial relationships and social contributions as they think about making their mark.

The EIU polled 1,051 high-net-worth individuals (HNWIs) across regions, genders and generations, including 365 respondents in the U.S., with at least $1 million in assets. It found that, by and large, younger HNWIs in the U.S. are leading the charge toward a notion of American legacy influenced by socially responsible spending and investing as well as charitable giving.

"Americans have witnessed vast social and economic change in recent decades, and as a result they are thinking critically about deploying their assets in ways that will make the greatest impact," said Ann Senne, Head of the RBC Wealth Management – U.S. Advice & Solutions group. "Increasingly, they are turning to their advisors to help build a wealth plan that aligns with their values throughout their lives and sets the tone for the legacy they leave behind."

The New American Legacy
When asked which of several factors was most important in defining their legacy, more than two-thirds (68%) of American HNWIs named relationships with family, exceeding the global average (62%). Less than half (42%) cited what they are able to do for their families financially.

American HNWIs more than twice as often consider social impact on the world to be an important part of their legacy as they do financial impact on the world (16% vs. 7%). Relationships with friends (33%), professional accomplishments (27%), and both relationships with (12%) and financial impact on (9%) one's local community are also key components of HNW Americans' vision of legacy.

Understanding the Role of Wealth
While material assets may take a backseat to personal relationships, most U.S. HNWIs (61%) recognize that wealth is the main enabler of their legacy. Furthermore, American HNWIs are fairly optimistic about wealth building: 90% believe they will acquire more wealth than their parents over the course of their lifetime. That said, only about half (51%) expect the next generation to accumulate even more wealth than they will.

Like legacy, the concept of wealth carries personal and complex meanings. Nearly three-quarters (72%) of American HNWIs define wealth as financial security and independence, higher than the global average of 62%. Just over half (55%) of HNWIs in the U.S. say wealth is a measure of total financial asset value, about on par with HNWIs globally (54%). The survey found:

• U.S. respondents consider the following to be the top factors allowing people to generate wealth: investments (61%), better education (56%), new technologies (55%) and greater access to information (52%).
• Ninety percent of U.S. HNWIs say financial instrument-based investments (e.g. stocks and bonds) are among the top three ways in which they have accumulated their wealth. Real assets like real estate and artwork (41%) and inheritance from parents (22%) round out the top three sources.
• While increasing their own wealth and creating a path to wealth for their children are important life goals for many American HNWIs (35% each), their top goals are non-financial: improving mental and physical well-being (53%) and strengthening their relationship with their family (43%).

Gen X, Millennials and Making a Difference
As generations turn over, socially responsible financial activities are becoming hallmarks of wealth planning for HNWIs in the U.S. For younger American HNWIsⁱ in particular, a significant component of wealth building and legacy creation is tied to giving back. Two-thirds (67%) of younger American HNWIs feel a personal responsibility to use their wealth to benefit broader society, compared to 39% of their olderⁱⁱ peers. In addition:

• Younger U.S. respondents much more often than their older counterparts agree that societal causes have become more important than wealth accumulation in defining a legacy (64% vs. 38%).
• Half of younger HNWIs in the U.S. (49%) plan to distribute their wealth through giving or spending mostly while they're still alive, more than twice the proportion of older American HNWIs who say the same (22%).
• The majority (62%) of younger U.S. HNWIs say they have an obligation to transfer wealth to the next generation, and 74% say they have an obligation to transfer values.

While keeping an eye on the future, younger American HNWIs are also thinking about how the money moves they make day-to-day can make a difference. When it comes to aligning spending with social causes, 39% of younger U.S. respondents say they do, compared to 32% of their older counterparts. Nearly 3 in 10 (29%) younger American HNWIs align their investments with their giving goals, compared to just 12% of older HNW Americans.

"As we assist the next generation in mapping out their wealth plan and ultimately their legacy, we are keenly aware that our clients want to feel good about how they're deploying their assets, even how they make their spending decisions – both within their families and communities as well as in society at large," said Angie O'Leary, Head of Wealth Planning at RBC Wealth Management – U.S. "While in many ways deeply personal, notions of wealth and legacy can also define a generation. The data suggests that Millennials and Gen Xers know the power of wealth in improving the world for those who succeed them."

For more information about the survey, and to view the global results, visit https://www.rbcwealthmanagement.com/us/en/the-new-face-of-wealth-and-legacy.

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 $336 billion in total client assets with approximately 1,800 financial advisors operating in 200 locations in 40 states.

About the Study
On behalf of RBC Wealth Management, The Economist Intelligence Unit (EIU) undertook a study of 1,051 high net worth individuals, including 365 respondents in the U.S., from March to May, 2018. The minimum investable wealth of respondents was US$1 million. The margin of error on the U.S. sample is 5.1% with a 95% confidence level. The survey explored how the meanings of legacy and wealth are being redefined across regions, genders and generations.

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SOURCE RBC Wealth Management - U.S.