Longevity and legacy: Will Canada's aging population change the way we give?

March 09, 2020 | RBC Wealth Management


While charitable giving and legacy planning are top of mind for Canadian women, longevity risk continues to pose a challenge.

Happy Family on beach with wealth

Seniors outnumber children for the first time in Canadian history and their net worth is rising at a time in life when building a legacy through charitable giving — as part of a broad wealth management plan — is often top of mind.

This growing number of philanthropists will determine how Canadians give in the coming decades — and to which causes.

"Baby Boomers are giving more than ever before and getting more engaged in how they give," says Susan McIsaac, managing director of strategic philanthropy at RBC and the former president and CEO of the United Way Toronto.

For example, she says more donors today want specific details on how the charity is using their money and the impact it's having on the cause. Many are also joining the boards of charities to play an active role in their governance.

Many of today's philanthropists are also business owners who are selling their companies and earmarking charities to receive part of the proceeds, says Sonia Park-Root, vice president and private wealth consultant at RBC Wealth Management.

"As clients are aging and starting to sell their businesses — and now that their wealth is more liquid — they're starting to think more strategically about how they're giving, to which organizations, when and who's involved," Park-Root says.

Women and giving

Given that women traditionally outlive men —and are likely to become responsible for the family wealth — there could be a shift in how and where donations are distributed.

Commissioned by RBC Wealth Management, The Economist Intelligence Unit (EIU) undertook a study of 1,051 high-net-worth-individuals (HNWIs), including 259 respondents in Canada, from March to May, 2018. The new face of wealth and legacy survey explores how the meanings of legacy and wealth are being redefined across regions, genders and generations.

According to the survey, 87 percent of women respondents in Canada say they’re in control of their legacy.

McIsaac says women tend to gravitate towards charities that help other women, such as women's health initiatives and female-focussed career and mentorship organizations.

"There's an emerging trend of women helping women," McIsaac says.

Other causes that are popular among women include those that support education, environmental and social causes and the arts, says Park-Root. She says men also support these causes, but women tend to be more active and vocal about ensuring their giving aligns with their values. "It comes back to their belief system: What do we represent? What is the legacy we want to leave behind?"

Those questions then often lead to choices about which charities to give to today and perhaps how to sustain that support when wealth is passed along to the next generation. According to The EIU survey, 73 percent of Baby Boomer respondents (aged 54-72) globally say they have an obligation to transfer values to the next generation.

Park-Root says some of her clients choose specific causes, while others give to broader charitable foundations or take advantage of donor-advised funds to fulfill their philanthropic goals.

Regardless of where the money goes, "much of their charitable giving is values-based," Park-Root says. "They want to be purposeful." According to The EIU research, 66 percent of women in Canada say they have more opportunity to tackle societal issues that are personally important to them.

Giving while you live

While charitable giving and legacy planning are top of mind for Canadian women, longevity risk continues to pose a challenge in overall wealth planning. It's a growing concern given Canadians are living longer than ever before — women in particular. According to the latest statistics, a 65-year-old woman has a life expectancy of 22 more years, compared with an additional 19 years for a male.

That's putting more pressure on people, in particular women, to manage their wealth, including how and when to distribute it. When it comes to financial planning, just 39 percent of older women in Canada surveyed by The EIU  say they are the primary decision maker, compared to 62 percent of men.

Leanne Kaufman, head of RBC Royal Trust and president and CEO, Royal Trust Corporation of Canada and The Royal Trust Company, says women — and men, too — can avoid shortchanging their retirement goals by ensuring their wealth management plan is always up-to-date. That includes revisiting the financial planning scenarios — as well as the Will and power of attorney — every few years and whenever there's major life event such as a death of a spouse or the addition of children and grandchildren.

"It's such a deeply personal decision," McIsaac says of knowing how much to give to charity, and when. "In my experience, there are donors who want to give while they're alive, influence the outcomes and see the impact, to enjoy the recognition and be part of the celebration of giving. There's a joy that comes with being recognized for your participation."

Still, she says, "make sure you're not too generous in your lifetime and leave yourself short. You don't want to outlive your money."

The minimum investable wealth of respondents in The EIU survey is US$1 million (CAD$1.29 million). The margin of error on the Canadian sample is 6.1 percent with a 95 percent confidence level.

In Quebec, financial planning services are provided by RBC Wealth Management Financial Services Inc. which is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RBC Dominion Securities Inc.

RBC Royal Trust and RBC Wealth Management are business segments of the Royal Bank of Canada. Please click the “Legal” link at the bottom of this page for further information on the entities that are member companies of RBC Wealth Management. The content in this publication is provided for general information only and is not intended to provide any advice or endorse/recommend the content contained in the publication. ®/TM Trademark(s) of Royal Bank of Canada. Used under licence. © Royal Bank of Canada 2018. All rights reserved.