Have you ever sat down with your children and asked them how they plan to generate and preserve their wealth in the future? If you haven’t, try it. Their answer might surprise you.
Most do not realize that children are not interested in following in your footsteps – they want to shape a legacy for themselves. In fact, the majority of high-net-worth (HNW) Canadians (68%) say the legacy they want to leave differs from their parents’ views, according to new research from the Economist Intelligence Unit (EIU) commissioned by RBC Wealth Management.
The younger generation feels challenged by their inability to predict the future
According to the EIU, more than one-third (38%) of younger HNW Canadians find the greatest challenge they face in meeting their most important life goals is the inability to predict the future. In spite of this, less than half of Millennials (38%) have a full strategy in place to transfer their wealth to the next generation. Although many individuals share concerns about their future and what becomes of their legacy, greater focus should be placed on planning for the life they want to lead and leave behind.
Women are changing the face of wealth
In general, younger HNW women think they have more opportunities to generate wealth compared to prior generations. How so? Well, it’s really quite simple. For these women specifically, they say they’ve earned their wealth through business rather than inheritance. Nineteen percent of HNW younger Canadian women report they have gained their wealth through business, and 11 percent say they’ve inherited their wealth, according to the EIU. By contrast, globally, more than half of HNW Baby Boomer women (56%) say they’ve inherited money. Women are playing an increasingly prominent role in the high-net-worth universe and their influence is likely to continue to rise, given the number of younger women who see significant opportunities to generate wealth.
The way younger Canadians give is changing
Many younger HNW Canadians want to give to causes that have a social impact and measurable results. According to the EIU, the majority (66%) of them think societal causes have become more important than wealth accumulation in defining legacy, compared with their older counterparts (45%). Not only do they want to have a greater impact on the world, but they also have different priorities when it comes to philanthropy. Younger HNW Canadians are more focused on supporting causes related to youth, space exploration and health, compared to their older peers, who focus their efforts on animal rights, poverty reduction and religion. In addition, younger Canadians are more committed to the cause and want to see results unlike older Canadians (78% vs. 56%). Younger HNW Canadians are born global citizens and they’re committed to making the world a better place for themselves and for generations to come. Young HNW Canadians want to do things differently as they commit themselves to leaving a financial and positive social legacy for the world. They are eager to bridge the gender and generation gap and foster financial inclusion.
Your generation and the next generation may define wealth and legacy differently. Fortunately, careful planning will enable you to candidly discuss these differences with your family to ensure the continuity of your values, without compromising the wealth you’ve worked to build. Regardless of your life stage or career, it helps you prepare for your financial future. We can help you create a plan to align your financial and personal goals and help to give you and your loved ones peace of mind.