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2013 U.S. TRUST INSIGHTS ON WEALTH AND WORTH Key Findings
FOR MEDIA INQUIRIES, CONTACT: Susan McCabe U.S. Trust Media Relations 646.855.4111 [email protected]
U.S. Trust Insights on Wealth and Worth is one of the
most in-depth studies of its kind to explore the attitudes,
behavior, goals and needs of high net worth and ultra
high net worth adults in the United States. U.S. Trust has
been periodically surveying the perspective of wealthy
individuals and families since 1993.
In 2013, U.S. Trust commissioned an independent,
nationwide survey of 711 high net worth and ultra high net
worth adults across the country.
The findings build on U.S. Trust Insights on Wealth and
Worth studies conducted in 2011 and 2012, providing new
insight on topics of emerging importance as well as
revisiting previously explored themes.
Profile of survey respondents
• 711 adults over the age of 18
• Investable assets: $3M-$5M; $5-$10M; $10M+
• Age of respondents: Average 53 years old − Age 18-32: 15 percent (Gen Y or Millennials) − Age 33-48: 23 percent (Gen X) − Age 49-67: 47 percent (Baby Boomers) − Age 68+: 15 percent
• 62 percent men
• 38 percent women
Overview: 2013 Insights on Wealth and Worth
2
Methodology
The online survey was conducted by the independent research firm Phoenix Marketing International in February and March of 2013. 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.
Sources of wealth
Investing attitudes and behavior
Retirement expectations and planning
Managing family wealth
3
Key findings
Three-quarters of respondents
created the majority of their own
wealth, through a combination of
earned income from work, business
ownership or investments.
Only one-quarter inherited the
majority of their wealth.
Gen Y (age 18-32) are twice as likely
as Gen X and Baby Boomers to have
inherited a majority of wealth.
Most of the wealthy created their wealth
Earned, 75%
Inherited, 25%
Source of majority of wealth, all respondents
4
Source of earned assets: • Income from work • Financial investments • Real estate • Sale of business
Q1. How have you accumulated the majority of your financial assets?
56% 81% 79% 72%
44% 19% 21% 28%
Age 18-32 Age 33-48 Age 49-67 Age 68+
Source of majority of wealth, by age
Inherited
Earned
Approximately one-half of annual
household income comes from a
combination of earned and
investment income.
Women and those with the greatest
net worth are the most likely to rely
on earned income.
Those over age 68 rely primarily on
investment income.
Annual income split between investments and work
5
55% 37% 33% 32%
50%
81%
49% 53% 29%
45% 63% 67% 68%
50%
19%
51% 47% 71%
Male Female Age 18-32 Age 33-48 Age 49-67 Age 68+ $3M-$5M $5M-$10M
$10M+
Investment Earned
Source of annual income, by gender, age, asset level
Q82. Approximately what percent of your annual household income comes from each of the following sources (investments, earned income? Base: Source of income (excluding “Don’t knows.”)
Earned, 52% Investments,
48%
Source of annual income, all respondents
Nearly two-thirds of all
respondents, including 78 percent
of Baby Boomers, came from
middle class or lower families.
Gen Y is the most likely to have
grown up with wealth.
Most of the wealthy grew up in middle class families
6
5% 0% 4% 5% 7%
23%
6%
18%
31% 24%
36%
14%
36%
42%
41%
22%
40%
24%
16% 21%
10%
26%
13%
5% 7% 4%
15% 6%
0% 0%
Total Age 18-32 Age 33-48 Age 49-67 Age 68+
Socio-economic status growing up
Wealthy
Affluent
Upper-Middle
Class
Middle Class
Lower-Middle
Class
Poor
64%
Q8. Which of the following best describes the financial and socioeconomic status of your family as you were growing up?
More than half (57%) do not think
of themselves as wealthy now,
despite their net worth.
Those who came from middle class
or lower backgrounds and those
who created the majority of their
wealth are less likely to consider
themselves wealthy now.
Perceptions of wealth shaped by upbringing and source of wealth
7
Yes 43% No
57%
% who consider themselves wealthy
54% 39%
54% 36% 41%
49%
30%
46% 61%
46% 64% 59%
51%
70%
Source of majority of wealth Upbringing
Q3. Do you consider yourself wealthy? Q1. How have you accumulated the majority
of your financial assets? Q8. Which of the following best describes the financial and socioeconomic status of your family as you were growing up?
Inherited Created Upper Middle-class Middle-class Affluent/wealthy Lower middle- class/poor
$3M-$5M $5M-$10M $10M+
Assets
88 percent of the wealthy feel
financially secure today, and 70
percent feel they will have the
security to meet their future
financial needs.
Women and Gen X (age 33-48) are
less likely to feel secure about
meeting their current and future
financial needs.
Financial security to meet current and future needs
76%
62%
80%
74%
54%
75%
70%
90%
84%
95%
93%
72%
87%
88%
Men
Women
Age 68+
Age 49-67
Age 33-48
Age 18-32
All
% who feel financially secure to meet current / future needs
Current needs Future needs
8
28% 19% 23% 28%
49%
24%
17%
34% 23%
18%
48% 64%
43% 49% 33%
All Age 18-32 Age 33-48 Age 49-67 Age 68+
The same Less More
% who feel more/less financially secure compared to five years ago
Q4. Do you feel financially secure, meaning you have the income and assets to comfortably meet your current financial needs and goals? Q6. Do you feel more/less financially secure today than five years ago? Q7. Do you feel financially secure when you think about the future, meaning you are likely to always have the financial means to comfortably meet your financial needs and goals?
Although the majority feel
financially secure, there are subtle
differences by age and gender.
Among those who don’t feel
financially secure, the top five
reasons cited for not feeling
financially secure are concerns
about:
− Retirement income
− Sense of fleeting financial
success
− Job security
− Lifestyle expectations
− Investment performance
Top five reasons for lack of financial security
“I am worried I will not have enough income in retirement”
• Felt most strongly by Gen X and women
“My financial situation could change tomorrow”
• Felt most strongly by Gen X, Baby Boomers and those with $3M to $5 M
“I am uncertain about my job security and income potential”
• Felt most strongly by Gen X
“I can’t afford the lifestyle I want to live”
• Felt most strongly by Gen Y
“I am worried about the performance of my investment portfolio”
• Felt most strongly by those over age 68.
9
Q5. Why don’t you feel financially secure? Base: Those who do not feel financially secure now.
10
Investing attitudes and behavior
Growing assets is a higher investment
priority than protecting existing assets
for six in 10 high net worth investors, a
reversal of the focus of one year ago.
• In 2012, nearly six in 10 (58 percent)
said asset protection was a higher
priority
• Women and younger investors are
slightly more likely to be focused on
asset growth.
HNW investment priorities shift from preservation to growth
Grow assets 60%
Preserve assets 40%
Investment priority for managing wealth
Grow assets Preserve assets
11
Q21. When it comes to managing your wealth and investment portfolio, which of the following is closest to your investment priority?
59% 63% 77% 72%
53% 49%
41% 37% 23% 28%
47% 51%
Male Female Age 18-32 Age 33-48 Age 49-67 Age 68+
Nearly two-thirds of HNW investors
say that lowering risk, and achieving a
lower potential return, is a higher
priority than pursuing higher returns
by taking on more risk.
HNW households have become
somewhat less risk-averse. In 2013, 37
percent said pursuing higher return
with high risk is a priority, versus 30
percent in 2012.
Younger investors (under age 49) are
slightly less risk-averse than those age
49 or older.
Lower risk still trumps higher returns
Pursuing higher potential return with higher risk
37% Lowering risk while lowering
potential returns
63%
Investment priority for managing wealth
12
Q21. When it comes to managing your wealth and investment portfolio, which of the following is closest to your investment priority?
39% 35% 52% 47%
30% 32%
61% 65% 48% 53%
70% 68%
Male Female Age 18-32 Age 33-48 Age 49-67 Age 68+
Despite investment growth goals, more
than half (56 percent) of high net worth
investors have a substantial amount of
funds in cash positions.
Women and Generations X and Y are
more likely to have cash sitting on the
sidelines.
− Women: 65%
− Men: 51%
− Gen X: 62%
− Gen Y: 69%
− Baby Boomers: 52%
A substantial amount of cash is on the sidelines
Yes, Have a substantial amount of funds in cash
56%
No
44%
% of all respondents with substantial funds in cash
13
Q22a. Does your portfolio currently have a substantial amount of funds in a money market account, savings account or other type of cash accounts?
$$$ on the
sidelines
Approximately one-half (49%) of
HNW investors are not content
leaving money in cash positions
until the market stabilizes.
Younger investors – Gen X and Gen
Y – have a higher degree of
comfort leaving cash on the
sidelines than those over the age
of 49.
HNW investors not content letting cash sit idle
60%
58%
38%
30%
44%
53%
49%
Age 68+
Age 49-67
Age 33-48
Age 18-32
Women
Men
All
% not content leaving money in cash positions until the market stabilizes
14
Q22. Based on your experience, to what extent do
you agree with each of the following statements
about your investing behaviors and attitudes?
HNW investors overwhelmingly
agree (86%) that long-term buy-
and-hold investing is the best way
to grow money over time.
However, there are generational
differences in perceptions about
investing in the stock market.
One-half (51%) of Gen Y feel that
traditional investing in equities is
over-rated and fear they will lose
their money by putting it in the
stock market.
Generational agreement on investing; generational gap on approach and comfort level
8%
12%
33%
51%
24%
21%
23%
21%
19%
42%
51%
28%
29%
29%
91%
88%
81%
81%
84%
86%
86%
Age 68+
Age 49-67
Age 33-48
Age 18-32
Women
Men
All
% who agree
Long-term buy and hold investing is the best way to grow money over time
Investing in the stock market is over-rated
I don't think I will ever be comfortable investing money in the stock market for fear of losing it
15
Q22. Based on your experience, to what extent do
you agree with each of the following statements
about your investing behaviors and attitudes?
Two in five HNW investors plan to
move large cash positions into
investments gradually over the next
two years, while another third have
no plans to move the funds into
other investments.
Women and investors over age 68
are most likely to have no plans for
investing cash.
HNW investors will invest cash over time, not immediately
Other, 5%
No plans to move any of it into investments at this time, 35%
Move much of it into investments gradually over the next 12 to 14 months, 44%
Move much of it into investments within the next few months, 16%
HNW plans for funds in cash accounts
16
5% 6% 0% 5% 5%
31% 41%
24% 34% 36%
54%
45% 42%
57% 43% 43%
28%
19% 11% 19% 18% 14% 13%
Male Female 18-32 33-48 49-67 68+
Q22b. Which one of the following best describes your plans for the funds in your cash accounts?
Base: Respondents who have large funds in cash accounts
7%
Pursuing higher returns regardless of
taxes is considered more important
than letting taxes drive investment
decision-making.
Most (69%) HNW investors aren’t
changing investment strategy to seek
tax-efficient investments or minimize
taxes.
Two-thirds (66%) do not feel well-
informed about the impact of tax law
changes on investment returns.
More women (73%) than men (62%)
do not feel well-informed about tax
law changes.
Many of the wealthy don’t feel well informed about the impact of tax law changes on investments, income
Pursuing higher returns regardless of tax implications
57%
Making investment decisions to minimize taxes
43%
Investment priority for managing wealth
17
66% 63% 70% 70%
62% 58% 67% 67%
73% 70% 74% 76%
Impact of tax changes on total investment return
Impact of tax changes on income
Impact of tax changes on estate
Tax savings strategies available
% not well-informed about tax law changes
Total Male Female
Yes 31%
No 69%
Plan to change investment strategy to minimize taxes
Q21. When it comes to managing your wealth and investment
portfolio, which of the following is closest to your investment
priority?
Q44a. Do you plan to change your investment strategy or seek
tax efficient investments to minimize taxes due to recent tax
law change?
Q44. To what extent do you feel you have an informed
understanding about each of the following?
Approximately two-thirds (65%) of
all respondents own some type of
tangible asset, ranging from art to
infrastructure.
Except for investments in
residential real estate, investments
in other tangible assets are more
aspirational, with the strongest
aspirations being among younger
investors to invest in a wider
range of investment properties.
Younger HNW investors showing interest in tangible assets
17%
28%
56%
33%
16%
32%
19%
45%
52%
75%
44%
36%
56%
36%
21%
36%
63%
38%
25%
36%
24%
8%
21%
52%
27%
9%
28%
13%
4%
15%
39%
31%
7%
14%
14%
Farmland/Ranchland
Commercial real estate
Residential real estate
Oil, coal, gas properties
Timber
Renewable energy
Infrastructure
Age 68+
Age 49-67
Age 33-48
Age 18-32
All
18
% who currently/likely to invest in tangible assets, by age
Q23. Indicate if you own or have as an investment,
and are likely to own/invest in each of the
following within the next two years, or do not plan
to own/invest in the next two years.
Nearly two-thirds (64%) of Gen
Y investors say they are more
comfortable investing in a
physical asset than in the stock
market.
Gen Y is almost twice as likely
as other age groups to feel that
investing in tangible assets has
become a more important part
of their overall wealth strategy.
HNW Millennials more comfortable with tangible assets than stocks
62%
36%
18%
70%
64%
35%
73%
52%
18%
55%
23%
15%
55%
23%
13%
Investments in a tangible asset such as real estate, farmland and timber offer a stable income and hedge against inflation
I am more comfortable owning a physical asset that has underlying value than traditional asset classes (such as stock) that are subject to market volatility
Investing in tangible assets is a more important part of my overall wealth strategy given the current economic, political environment
% who agree
All Age 18-32 Age 33-48 Age 49-67 Age 68+
19
Q24. To what extent do you agree with each of
the following statements.
Q31. Thinking about the current tax, political and
economic environment, would you say that your
investment in each of the following is more or less
important to your overall wealth management
strategy?
The wealthy are conscious of the
impact made by companies in which
they invest, and 45 percent consider
their investment decisions as a way
to express their values.
The younger the investor, the more
likely to consider the impact of
investment decisions, and the
greater their willingness to accept
higher risk or lower return on
companies that have a positive
impact.
Regardless of the investment
potential, nearly two-thirds (63%) of
all respondents would not invest in
companies that are harmful.
Social impact of investment decisions is important
66%
55%
37%
37%
31%
71%
62%
35%
39%
36%
72%
64%
50%
58%
56%
80%
71%
72%
61%
69%
71%
63%
44%
46%
45%
I would rather invest in companies that will have a positive social or environmental impact than
boycott investments in companies that are harmful
I would not invest in a company that has a negative impact on society or the environment,
even if I thought I could make a lot of money
I would be willing to accept a higher risk on investments in companies that have a greater positive impact on society or the environment
I would be willing to accept a lower return from investments in companies that have a greater positive impact on society or the environment
Investment decisions are a way to express my social, political and environmental values
% who agree
All
Age 18-32
Age 33-48
Age 49-67
Age 68+
20
Q24. To what extent do you agree with each of the
following statements?
About half (51%) of the wealthy
believe it is at least somewhat
important to consider the impact of
investment decisions on society.
Women and younger investors
(Generations X and Y) are most
likely to consider social impact
important.
Only about one-quarter of all
respondents have screened their
investment portfolio to evaluate its
impact.
Despite importance, most investors haven’t screened for impact
21
19% 24% 11% 8%
23% 26%
30% 34%
23% 23%
22%
36% 31%
41% 34%
52% 51%
52%
34% 35%
10% 8% 13% 18% 14% 6% 7%
Total Male Female Age 18-32 Age 33-48 Age 49-67 Age 68+
Not important Somewhat unimportant Somewhat important Extremely important
Importance of social, political, environmental impact of investing
24% 24% 24%
31% 36%
17% 21%
All Men Women Age 18-32 Age 33-48 Age 49-67 Age 68+
% who have reviewed investment portfolio for social, political, environmental impact Q26. When evaluating investments, how
important is positive or negative social, political or
environmental impact of the investment in your
decision on whether or not to invest?
Q25. Have you ever reviewed your investment portfolio to evaluate the social, political or
environmental impact of the companies in which
you have investments?
13%
Women generally have stronger
feelings about the importance of
investment for social and
environmental impact.
More women than men would be
willing to accept a higher risk or a
lower return from companies that
positively affect society.
Men and women place different importance on impact investing
67%
58%
39%
41%
39%
79%
72%
53%
56%
53%
I would rather invest in companies that will have a positive social or environmental
impact than boycott investments in companies that are harmful
I would not invest in a company that has a negative impact on society or the
environment, even if I thought I could make a lot of money
I would be willing to accept a higher risk on investments in companies that have a
greater positive impact on society or the environment
I would be willing to accept a lower return from investments in companies that have a
greater positive impact on society or the environment
Investment decisions are a way to express my social, political and environmental values
Women Men
22
% agree, by gender
Q24. To what extent do you agree with each of the
following statements?
The wealthy are avid collectors, with
nearly six in 10 (59%) owning some
type of valuable collection related
to a personal interest or passion.
Six in 10 HNW households have valuable collectibles as assets
Yes, 59%
No, 41%
% who own/don’t own valuable collections
23
35%
31%
22%
20%
13%
12%
7%
2%
Fine watches or jewelry
Fine art (paintings, photographs, sculptures)
Antiques
Rare coins or stamps
Fine wine
Classic, vintage or high-performance cars or motocycles
Rare books or papers
Something else
Types of valuable collections owned
Q27. Which of the following valuable assets do
you own or collect? own/invest in the next two
years.
The primary reason for owning
valuable collectibles is purely for
personal enjoyment.
Only about one-third collect
because they see the collection as
an investment. More men (40%)
than women (19%) expect a return
on their investment.
Collectibles are assets of personal passion
79%
38%
32%
26%
19%
6%
2%
I enjoy the intrinsic value of the items
I consider the asset(s) a family heirloom for which I am the caretaker
I expect an increase in value and return on the investment
I enjoy being part of a community of people who share a similar interest
It is a safe asset that will hold its value
It is part of a philanthropic commitment or strategy
It is a tax strategy
Reasons given for owning collectibles
24
Q28. Which of the following are reasons you
own/collect these assets?
About 45 percent of HNW households
have collections valued at over
$100,000.1 Nearly one in 10 own
collections worth over $1 million.
Six in 10 have formal documentation
of authenticity and purchase/sale
records, yet only about four in 10
(39%) have an up-to-date appraisal,
which is crucial for valuation in estate
settlement and has tax implications
for future heirs.
Only one in five has outlined wishes
for the collection in an estate plan or
talked with future heirs about it.
Assets of passion not protected like financial assets
61%
52%
39%
20%
19%
12%
7%
Maintain formal documentation of authenticity and purchase/sale records
Purchased supplemental insurance coverage
Have up-to-date appraisal of market value
Clearly outlined wishes for disposition of the collection in an estate plan
Discussed wishes for division of the assets with future heirs
Sought professional tax, legal or financial advice
Retained a curator
Actions taken to protect value of collectible assets
25
1 Data not charted. From Q30: What is the total
monetary/market value of the collectibles you
own?
Q29. Which of the following have you ever done to
protect the value of your collections?
26
Retirement expectations and planning
The wealthy are generally confident
they will have the income they need
in retirement.
Among non-retirees, just over half
(52%) are very confident they will
reach retirement income goals.
Non-retired women and
Generations X and Y are less
confident than non-retired men and
Baby Boomers.
Younger people want to retire
before reaching age 65. Baby
Boomers expect to keep working
past age 65.
The wealthy are confident in their retirement planning
27
52% 59%
43% 45% 42%
63% 64%
37% 28% 47% 41%
40%
31% 34%
12% 13% 10% 14% 18% 6% 3%
Total Male Female 18-32 33-48 49-67 68+
Very confident Somewhat confident Not confident
Confidence about reaching retirement income goals (non-retirees)
Desired age to retire (% by age group)*
Age 65+ Gen Y: 26% Gen X: 31% Baby Boomers: 59%
< Age 64 Gen Y: 73% Gen X: 67% Baby Boomers: 38%
Q71. How confident are you that you have
calculated the income you will need in retirement
and have a plan to attain your goals?
Q69. At what age do you want to retire?
* Data excludes respondents who indicated they
never want to retire (1% Gen X, 3% Baby Boomer,
14% age 68+) Thus chart does not add up to 100.
Large numbers of non-retirees
have not adequately accounted
for the impact of important
factors on retirement income,
including taxes, inflation,
healthcare and long-term care
costs and financial support
needed by family members.
Three-quarters of non-retirees
have not accounted for changes
in real estate values, yet more
than half say their primary real
estate is important for funding
retirement.
Retirement income planning is incomplete
28
82%
80%
75%
62%
62%
56%
53%
52%
51%
47%
44%
40%
Financial support needed by your parents/in-laws
Financial support needed by your children/heirs
Loss/gain in the value of real estate
Cost of long-term care, if needed
Likely amount of Medicare benefits you will receive
Life expectancy
Likely amount of Social Security benefits
Impact of taxes on investment gains
Cost of out-of-pocket healthcare
Cost of living increases/inflation
Lifestyle expectations/spending level
Distributions from retirement savings accounts
Factors not accounted for in calculating retirement income (among non-retirees)
23%
52%
Retirees
Non-retirees
% who say value of primary residence is important to funding retirement Q72. Which of the following favors have you adequately accounted for in calculating your income in retirement? (Base: Non-retirees) Q73. How important is the value of your primary residential real estate to being able to fund your retirement?
Calculations for retirement income
become more comprehensive
with age.
Financial support for
parents/children and loss/gain in
real estate value top list of factors
not being considered by all ages.
Serious retirement planning delayed until later in life
29
15%
21%
34%
21%
23%
21%
21%
44%
39%
68%
88%
0%
18%
28%
24%
36%
36%
46%
41%
40%
48%
70%
79%
83%
49%
66%
52%
52%
60%
72%
68%
57%
67%
82%
78%
81%
62%
77%
63%
61%
65%
79%
66%
64%
79%
76%
83%
82%
Distributions from retirement savings accounts
Likely amount of Social Security benefits to receive
Lifestyle expectations/spending level
Cost of living increases/inflation
Cost of out-of-pocket healthcare
Likely amount of Medicare benefits to receive
Life expectancy
Impact of taxes on investment gains
Cost of long-term care, if needed
Loss/gain in the value of real estate
Financial support needed by children/heirs
Financial support needed by parents/in-laws
Age 18-32 Age 33-48 Age 49-67 Age 68+
Factors not accounted for in calculating retirement income (among non-retirees, by age)
Q72. Which of the following favors have you adequately accounted for in calculating your income in retirement? (Base: Non-retirees)
30
Managing family wealth
Baby Boomers and those who came
from middle class backgrounds are
somewhat of a phenomenon in
their own families, generally better
off than all other adult family
members – parents, siblings and
adult children.
In many cases, they are not only the
first generation in their family to
become wealthy, they may be the
only member of the immediate
family to achieve such financial
success. It can be a blessing and a
burden when it comes to taking on
financial responsibility for extended
family.
Better off financially than parents, siblings and children
78%
48%
41% 42%
83% 83%
61% 59%
51% 45%
72%
56%
82%
69%
85%
72%
Middle class or lower upbringing
Upper-middle class/wealthy
upbringing
Age 18-32* Age 33-48* Age 49-67 Age 68+
% who are financially better off than adult family members
Parents Siblings Adult children
31
Better off than
Q9. Would you say your current financial and socioeconomic status is better, worse, or about the same as each of the following family members? * Does not include comparison with adult children given age of children.
Whereas few people over age 33
ever expect their parents to become
financially reliant on them, nearly
half (46%) of Gen Y expects their
parents to rely on them for financial
support at some point in their lives.
Approximately one-half of
respondents feel responsible for
providing financial support to
parents and adults siblings, if it
were needed.
Financial responsibility is felt for extended family
33%
46%
34%
27%
16%
All
Age 18-32
Age 33-48
Age 49-67
Age 68+
% who ever expected parents / in-laws to become financially reliant
32
63%
55%
Financial support for parents / in-laws even if it jeopardized personal financial security*
Financial support for less-financially fortunate siblings, if they needed it.
% who feel responsibility to provide financial support
to parents / siblings
Q35. At any point in your lifetime, do you expect your parents or in-laws to rely on you for financial support or assistance to help meet their expense and income needs? Base: Those who have parents/in-laws still living. Q38. To what extent do you agree or disagree with the following statements about the use of your wealth for extended family members? * Base: Those who are better off financially than their parents/siblings and have parents/in-laws still living.
Many of those who are financially
better off than other adult family
members expect to shoulder a
greater share of the costs to care for
aging, infirm parents.
The youngest generation is most
likely to feel greater financial
responsibility for parents.
One-half expect siblings to share
equitably the total time and
resources devoted to care for
aging parents.
Expectations of support for parents assumed by financially well-off and younger generations
33
54%
82%
63%
50%
25%
All Age 18-32 Age 33-48 Age 49-67 Age 68+
% who expect siblings to equitably share responsibilities for the physical, financial and emotional support needed by aging or infirm parents*
48%
69%
46% 40%
20%
All Age 18-32 Age 33-48 Age 49-67 Age 68+
% who feel that because of their financial success, they are expected to provide a disproportionate share of cost to care for aging or infirm parents*
Q38. To what extent do you agree or disagree with the following statements about the use of your wealth for extended family members? *Base: Among respondents whose parents /siblings are still living and who are better off financially than other adult family members.
Nearly half (46%) of all respondents
say they provide substantial
financial support for adult members
of their family.
Yet more than two-thirds (69%) do
not have a financial plan that factors
in the needs of any adult family
member, other than their spouse or
partner.
Men are nearly twice as likely as
women to say they provide financial
support for parents / in-laws.
Extended family financial support is a reality not planned for
8%
18%
10%
19%
56%
Adult nieces/nephews
Adult siblings
In-laws
Parents
Adult children
% who have provided, or are providing, substantial financial support for the following adult family members:
34
Yes, 31%
No, 69%
% who have a financial plan for adult family members other than spouse/partner
Q34. Do you, or have you ever, provided substantial financial support (not a loan) to any of the following? Q36. Do you have a financial plan that accounts for substantial financial support/assistance needed by adult family members, other than your spouse?
Nearly half (47%) have a financial
plan to cover long-term care costs
for themselves and a spouse or
partner, but only 18% have a plan to
cover long-term care costs for their
parents.
Younger respondents (Gen Y) are
more likely than Baby Boomers to
have personally paid for parents’
healthcare and long-term care
costs.
Younger respondents are far more
likely than Baby Boomers to have a
financial plan or purchased long-
term care insurance for parents.
Family health is new threat to family wealth
47%
18%
13%
24%
35%
32%
11%
46%
34%
19%
25%
41%
31%
27%
43%
17%
16%
27%
23%
31%
13%
48%
9%
8%
20%
38%
32%
2%
52%
10%
6%
36%
50%
34%
0%
Established a financial plan to cover long-term care costs for self and spouse/partner
Established a financial plan to cover long-term care costs for parents / in-laws or other
aging relatives*
Personally financed the cost of long-term care for parents*
Personally paid out-of-pocket medical expenses for parents and other aging
relatives*
Calculated cost of assisted, living nursing or private care and how it will affect parents'
assets/financial plan*
Purchased long-term care insurance for self and spouse/partner
Purchased long-term care insurance for parent or other relative*
All Age 18-32 Age 33-48 Age 49-67 Age 68+
35
Actions taken to plan for healthcare and long-term care costs
Q37. Please indicate which of the following you have ever done. * Base: Respondents whose parents are still living
Eight in 10 families don’t have a
family plan to support the needs of
aging parents and relatives.
Married women are more likely
than married men to say they
devote more time as a family
caregiver and to have done so at the
expense of their income and career.
Few families (19% overall) have
calculated the monetary value of
time spent care giving.
Care giving is a family resource not planned or accounted for
21%
21%
17%
37%
26%
23%
I devote more time than my spouse / partner as a caregiver to aging parents and
relatives
I have forfeited income or advancment of my career to care for the special needs of
children / or parents
Have calculated the monetary value of time spent by a family caregiver to support the
needs of parents or other family members
Men Women 36
% who agree / have done the following
Yes 16%
No 84%
% who have established a family plan to support needs (physical,
emotional, financial) of aging or infirm parents and relatives
Q37. Please indicate which of the following you have ever done. Q38. To what extent do you agree or disagree with the following statements about the use of your wealth for extended family members?
Three-quarters (78 percent) of
people have discussed long-term
care plans and wishes with their
spouse or partner.
Only about one-third (35 percent)
have shared any long-term care
plans or wishes with adult children.
Women are somewhat more likely
than men to discuss long-term care
plans with their children.
Approximately one-quarter have
never discussed their long-term
care wishes with anyone.
Long-term care wishes discussed primarily with spouse
37
24%
25%
44%
74%
22%
28%
31%
80%
23%
27%
35%
78%
Have not discussed with anyone
With a financial advisor
With children**
With a spouse or partner*
% who have discussed long-term care plans
Total Male Female
Q39. With whom have you discussed your plan for long-term care decisions? * Base: Married respondents ** Base: Parents with children
The top three cited goals of estate
planning are meeting the needs of
a spouse / partner, minimizing
taxes and minimizing the burden of
estate settlement.
Though three-quarters (74%) of
the wealthy have a will, 72 percent
do not have a comprehensive
estate plan.
Both revocable and irrevocable
trusts are being underutilized. At
least two-thirds of respondents
have never established a trust.
Estate planning goals and actions not aligned
38
72%
47%
58%
66%
80%
81%
Comprehensive Estate Plan
Healthcare Proxy/Living Will
Durable Financial Power of Attorney
Revocable Trust
Irrevocable Trust
Life Insurance Trust
% who do not have the financial documents listed below
56%
49%
30%
29%
21%
20%
20%
To ensure financial needs of spouse or partner are met
To minimize estate taxes
To minimize the burden of estate settlement
To treat all heirs relatively equal
To protect assets from falling into the wrong hands
To preserve family wealth for future generations
To ensure financial needs of children are met
% who identify the following as the most important goals of estate planning
Q40. Which of the following documents/vehicles do/don’t you currently have in place? Q43. Which of the following do you consider to be an important goal of your estate plan.
The top reasons cited for not using
trusts are simple procrastination
and belief that a will precludes the
need for a trust.
Other reasons suggest a general
lack of awareness and
misunderstanding about trusts.
Only about one-quarter of
respondents, men and women alike,
feel very well-informed about how
various trusts can be used to
protect assets and minimize taxes.
Underutilization of trusts
39
Top three reasons given for not establishing trusts
Q41. Which of the following describes why you have not included a trust as part of your estate plan? Base: those who have not established a trust. Q44. To what extent do you feel you have an informed understanding of the following?
25% 26% 27% 27%
22% 24%
Pros and cons of various trusts for minimizing estate taxes
Trust provisions that will protect estate assets for future heirs or
beneficiaries
% who feel very informed
All
Men
Women
“My wishes are spelled out in my will, so I don’t need a trust.”
“I haven’t gotten around to it.”
“I don’t know what the benefits are of having a trust.”
Six in 10 people say they have
named or plan to name their spouse
or partner as executor of their
will/estate, primarily because of
their level of trust in the person.
Four in 10 will name at least one
child as executor.
Only 32 percent of people choose
an executor based on the person’s
financial knowledge and skills.
Spouse is most often chosen as executor of estate
60%
34%
11%
Spouse or partner One child More than one child
% who have named spouse or children as an executor
40
8%
13%
32%
52%
78%
I don't trust anyone else
To honor this person
This person has financial knowledge and skills
This person understands my wishes better than anyone else
I trust this person most
Reason executor was chosen
Q45. Who have you/will you name as the executor of your estate? Q46. Why have you named this person?
Financial skills, time are biggest challenges for executors
Those who have already served
as an executor of an estate
identified the most difficult
part of fulfilling the
responsibilities as having
sufficient legal or financial
knowledge.
More women (44%) than men
(26%) cited knowledge/skills as
a difficulty.
More men (32%) than women
(25%) cited difficulty accessing
or knowing the whereabouts of
records and information.
32%
30%
30%
28%
25%
22%
14%
9%
26%
32%
30%
32%
26%
23%
16%
12%
44%
25%
30%
20%
22%
18%
9%
3%
Having sufficient legal/financial knowledge
Having access to records and information
Commitment of time required
Managing disagreement among heirs
Filing tax returns
Paying bills or debts owed
Determining value of assets
Sharing decision-making with co-executor
Most difficult part of being an executor*
All Men Women
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Q49. Which of the following was the most difficult part of serving as an executor or trustee of an estate? * Base: Those who have previously ever served as an executor.
The vast majority (87%) of married
respondents know the whereabouts
of important records, and most
have updated and organized their
important information.
Only about half (54%) have
informed the person named as
executor of their estate how to
access records/information.
45 percent say they have not
organized passwords for accessing
digital accounts and assets, and 63
percent have not outlined their
wishes for their digital assets, such
as social media sites, email and
music and media downloads.
Executors, heirs need better access to important documents
87%
72%
67%
54%
55%
37%
Informed spouse / partner where important medical, financial and legal records are kept
Updated financial, medical and legal records and information,if changed
Organized all personal, financial, medical and legal records in one place
Informed executor about how to access all important medical, financial and legal records
Organized all passwords for access to digital assets or accounts in one place
Outlined wishes for authorized access to digital passwords or online assets
% who have taken steps to organize personal financial information
42
Q42. Which of the following have you done?
Two-thirds of respondents overall think
it is important to leave a financial
inheritance to the next generation.
The youngest and oldest age groups
(Generation Y and those over age 68)
place greater importance on leaving an
inheritance than those in the middle
age groups (Baby Boomers and Gen X).
Those who already have received, or
expect to receive, an inheritance place
greater importance on leaving an
inheritance.
Importance of leaving an inheritance varies by generation and family values/tradition of passing on wealth
72%
64%
63%
78%
67%
28%
36%
37%
22%
33%
Age 68+
Age 49-67
Age 33-48
Age 18-32
All
% who consider it important to leave a financial inheritance
Yes
No
43
57%
72%
43%
28%
Have not/don't expect to receive an inheritance
Have or expect to receive an inheritance
Yes No
% who consider it important to leave a financial inheritance, sorted by those who have/have not received an inheritance themselves*
Q15. Do you consider it important to leave a financial inheritance to your children/heirs? *Base: Among parents who have ever received a financial inheritance (from Q10) and those who do not/do not expect to ever receive a financial inheritance ( Q13).
More than half (58%) of wealthy
parents are not fully confident their
children will be well-prepared to
handle a financial inheritance.
Younger parents are more confident
than older parents in the next
generation’s ability to handle an
inheritance.
Parents not fully confident their children can handle inheritance
44
64%
61%
55%
36%
58%
Age 68+
Age 49-67
Age 33-48
Age 18-32
All
Percent of parents who are not fully confident their children will be well-prepared to handle a financial inheritance
Q51. Please indicate the extent to which you agree or disagree with the statement: “My children will be well-prepared to handle the inheritance I plan to leave them.”
Part of the reason many parents
lack confidence in their children’s
ability to handle wealth may be
that they don’t think children will
be mature enough until well into
adulthood.
Most don’t think their children will
be mature enough to handle wealth
until they are at least age 25.
Approximately one-half (57%)
believe their children will be
mature enough between ages 25-
34.
Nearly half (49%) of those age 68 or
more believe the next generation
isn’t mature enough until they are
older than 40.
Parents think children can’t handle wealth until age 25
45
22%
8% 15% 17%
49%
16%
2%
11%
19%
22%
30%
33%
24%
37%
13% 27%
42%
43%
23%
14%
5% 15%
7% 4% 2%
All Age 18-32 Age 33-48 Age 49-67 Age 68+
Age at which parents think children can handle their wealth
18-24
25-29
30-34
35-39
40+
Q50. At what age do you think your (child/children) will have achieved the maturity necessary to handle the money they will receive?
About four in 10 (39%) wealthy
parents have fully disclosed their
wealth to children over the age of
25, while just about half (53%) have
disclosed only a little.
The older generation is less likely to
have fully disclosed family wealth to
the next generation.
Wealthy parents haven’t fully disclosed wealth to adult children
46
8% 9% 5%
53% 49% 61%
39% 42% 34%
All respondents Age 49-67 Age 68+
full
little
no
Extent of Disclosure of Level of Wealth to Children Over 25 Years Old
Q52. To what extent have you disclosed the level of your wealth to your child/children? Base: Parent with children over age 25.
The most common reason for not
discussing wealth with children is
overall resistance toward
discussing wealth. Baby Boomers
and those over age 68 are
somewhat more likely to say this
than Gen X and Gen Y, who
appear to be more willing to
discuss wealth with children at an
earlier age.
Top three reasons for not fully disclosing wealth to children
“I was taught never to discuss wealth.”
“I am concerned it will negatively affect child/children’s work ethic.”
“I never thought about it.”
47
Q53. Which of the following best describes why you haven’t fully disclosed your level of wealth with your child/children? Base: Those who have not fully disclosed wealth to their children.
Almost all wealthy parents
consider themselves to be positive
role models in managing money,
and most believe their parents
were role models for them.
While nine in 10 wealthy parents
believe their children appreciate
the privileges of family wealthy,
nearly half are concerned that they
feel entitled to it, and that this will
hold them back from achieving
their own success.
Wealthy parents want to instill strong values about money
97%
86%
89%
65%
51%
47%
I am a positive role model to my children in the way I manage money
My parents were a positive role model in how to manage money
My children appreciate the value of a dollar and the privileges of growing up in a family
with good fortune
I would rather my children grow up to be charitable than wealthy
My children feel entitled to the lifestyle I worked hard for
My children are not likely to achieve the financial success I have because thgey've never known what it's like to go without
% of wealthy parents who agree
48
Q51. To what extent do you agree/disagree
with the following statements:
One in five wealthy households has
received an inheritance of at least $1
million. Nearly two-thirds (63%) have
received $500K or less.
Adults younger than 49 are most likely
to have received $1 million+.
The average size of inheritances
already received is $526,263.
Younger generation inheriting greater wealth
32% 23% 20%
33% 42%
31%
31%
15%
39% 23%
9%
6%
12%
8% 11%
21%
26%
41%
16% 14%
8% 14% 13%
5% 10%
All Age 18-32 Age 33-48 Age 49-67 Age 68+
Don't know
$1 million or more
$500,000 to less than $1 million
$100,000 to less than $500,000
Less than $100,000
49
Amount of inheritance received (by those who have received any inheritance, regardless of if it was a major source of wealth)
Q14. What is the approximately value of the
financial inheritance you or your spouse received?
*Base: Among those who have received an
inheritance. Excludes “Don’t knows”
Some data do not add to 100 due to rounding.
The average size of future expected
inheritances is more than $700,000,
34 percent larger than the average
inheritance already received.
Those who inherited a majority of their
wealth have/expect to receive an
inheritance nearly twice that of those
who created most of their own wealth.
Future inheritances to be larger than those already received
50
$526,263
$337,644
$818,125
$708,115
$582,464
$938,480
All Created majority of wealth Inherited majority of wealth
Avg. actual received Average expected
Average actual and future expected inheritance
Q14. What is the approximately value of the
financial inheritance you or your spouse received?
*Base: Among those who have received an
inheritance. Excludes “Don’t knows”
Some data do not add to 100 due to rounding.
Among those who have received an
inheritance, two-thirds received a
lump sum payout of cash, which,
unlike funds in a trust or investment
portfolio, needs to be acted on.
The receipt of cash, particularly at
an early age, reinforces the
importance of financial education
for the next generation.
Majority of inheritance money received as cash
67%
45%
37%
24%
23%
6%
4%
Lump sum of cash
Investments such as stocks and bonds
Property, such as a house or land
Distribution of assets in a trust
Payout from insurance policies
Pensions or other qualified retirement savings
Business or business assets
Type of inheritance received
51
Q11. Which of the following describes the financial inheritance you received?
Four in 10 wealthy parents believe
their children would benefit from
discussions with a financial
professional.
More than three-quarters of
parents have a professional advisor
who has not formed a relationship
with their children.
Benefits of professional financial education
52
39% 38% 32%
43% 36%
All Age 18-32 Age 33-48 Age 49-67 Age 68+
% of parents who strongly agree their children would benefit from discussions with a financial professional*
Yes, 31%
No., 69%
% of those whose primary financial advisor has a relationship with their children/heirs**
Q51. Please indicate the extent to which you agree that your children would benefit from discussions with a financial professional. *Base: Parents with children of any age. Q78. Please indicate if each of the following regarding your financial advisor applies to you or not (“Has a relationship with your children/heirs.) **Base: Respondents who have a primary financial advisor.
The vast majority of wealthy adults
are confident in their financial skills
and knowledge.
The majority say they taught
themselves the financial skills and
knowledge they have, with about
half saying it was through trial and
error.
Men are more likely to say they
learned on their own whereas
more women say they were
taught by their parents.
Only about one in three received
financial training from a
professional.
Financial skills and knowledge were primarily self-taught
65%
46%
46%
31%
30%
73%
47%
40%
34%
30%
52%
44%
55%
27%
30%
Self-taught
Trial and error
Taught by parents or other family
Formal training/advice from a professional advisor
Learned from mistakes of others
Source of financial skills/knowledge
All
Men
Women
53
Q55. How did you gain the financial skills/knowledge you have?
98% 97% 96%
85% 92%
96% 95%
Age 68+ Age 49-67 Age 33-48 Age 18-32 Women Men All
% who are confident in the financial skills/knowledge they have
While many of the wealthy feel
they were well-prepared in life
with technical financial skills and
protecting privacy, fewer than one-
quarter feel well-prepared for the
responsibilities and personal
implications of having wealth.
More men than women feel they
were well-prepared with financial
skills in every area, with the
greatest gender gaps in saving for
retirement, investment decision-
making and the strategic use of
debt.
Men feel better prepared with financial skills than women
76%
73%
53%
52%
42%
39%
24%
22%
20%
24%
77%
80%
55%
59%
45%
48%
25%
25%
21%
28%
74%
62%
49%
41%
36%
25%
23%
18%
19%
18%
Managing credit card use
Saving for retirement
Establishing and adhering to a budget
Making investment decisions
Protecting privacy about personal/family wealth
Strategically using debt
Receiving an inheritance
Being a steward of family wealth
Using wealth for social good
Handling implications of wealth on personal relationships
% who feel they were well-prepared in life with financial skills
All
Men
Women
54
Q54. Which of the following financial skills/knowledge do you feel you were well-prepared for in your own life?
Eight in 10 wealthy people say they
inherited a strong work ethic from
their parents, and that it played a
very important role in their own
personal success.
Work ethic, financial discipline and
harmony in the home all played an
important role in achieving personal
success, far more than money or
connections.
While fewer than half say their
families paid for/provided access to
the best education, those who did
receive this say it was very
important to their success.
Greatest influence on personal success of next generation is tied more to values than to money
80%
58%
57%
55%
53%
47%
45%
36%
30%
20%
13%
92%
87%
80%
71%
71%
61%
78%
50%
38%
37%
38%
Work ethic
Financial skills/discipline
Emotional stability /harmony at home
Exposure to education, cultural or intelletual enrichment
Freedom to pursue personal passions or skills
Lessons learned/mistakes not to repeat
Access/payment to the best education
Charitable traditions and values
Financial gifts
Payment or loan for housing/mortgage
Introductions to influential people
Family influence passed down and importance to financial success
Provided for or passed along by family
Played a very important role in personal success
55
Q19 Which of the following was provided for or passed to you by parents, grandparents or other relatives? Q19a. How important a role did this have in your own success?
Important Disclosures
Methodology
The U.S. Trust 2013 Insights on Wealth and Worth survey is based on a nationwide survey of 711 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,
33% have between $3 million and $5 million in investable assets, 33% have between $5 million and $10 million and 34% have $10
million or more. The survey was conducted online by the independent research firm Phoenix Marketing International in March of
2013. 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% confidence level.
U.S. Trust operates through Bank of America, N.A., and other subsidiaries of Bank of America Corporation. Bank of America, N.A.,
Member FDIC.
© 2013 Bank of America Corporation. All rights reserved. | ARE33846 | 5/2013
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