High-Net-Worth Families Add Complexity To Wealth Management – 2014 Survey by U.S. Trust

Introduction

U.S. Trust Insights on Wealth and Worth® is one of the most in-depth studies of its kind to explore the wealth management challenges confronting high-net-worth and ultra-high-net-worth individuals in the United States. U.S. Trust has conducted surveys of wealthy Americans periodically since 1993. The modern American family is more complex and diverse than it once was, adding to the challenges of wealth management for high-net-worth investors. Changing family structures and roles among multiple generations of immediate and extended family members affect the way family members interact, communicate and manage their wealth.

The 2014 U.S. Trust Insights on Wealth and Worth survey reveals the ways in which complex family dynamics affect wealth and, in turn, how increased wealth alters family relationships, attitudes and behavior. The study also shows how high-net-worth investors of different genders and generations view the opportunities and responsibilities that come with wealth — and sheds light on the direction and purpose of the more than $15 trillion* that will be passed across generations in high-net-worth families over the next two decades.

A Picture Of Wealth: A Profile Of Survey Respondents

There are now nearly 1.8 million households in the U.S. with $3 million or more, including 950,000 households with $3 million to $5 million, 600,000 households with $5 million to $10 million, and 250,000 households with more than $10 million in assets.*

All respondents to the 2014 U.S. Trust Insights on Wealth and Worth survey have at least $3 million in investable assets as follows:

  • 34% have between $3 million and $5 million
  • 32% have between $5 million and $10 million
  • 34% have greater than $10 million

Although the average age of survey respondents was 52 years old, these wealthy individuals represented four distinct generations:

  • Millennials or Generation Y (age 18–32): 13%
  • Generation X (age 33–48): 22%
  • Baby Boomers (age 49–68): 45%
  • Age 69+: 20%

Men represented 57% of our sample and women 42%. A large majority (79%) were married or cohabiting, and 66% had children. More than three-quarters of respondents earned the majority of their wealth on their own versus inheriting it.

Highlights

Diverse family structures add complexity to wealth management

High-Net-Worth FamiliesThe modern American family is more complex and diverse than it once was, creating additional challenges for high-net-worth investors and their advisors. Changing family structures, shifting roles among men and women, and the co-existence of multiple generations of immediate and extended family members create dynamics that transform the way we look at relationships, communication and family wealth.

An Evolving Definition Of Family

The traditional family — that is, two parents in a single, lifelong marriage with children — is still predominant; more than three-quarters of high-net-worth investors are in their first marriage and two-thirds of them have children (an average of two). Still, the concept of family is evolving, and is shaped by a variety of structural layers. Twenty percent of our sample have remarried following divorce or widowhood, and a similar number are in a blended family with children from previous relationships. Ten percent live in a multi-generational household including children, parents and grandparents. Four percent are cohabiting, and 3% are married or living with a same-sex partner.

Nontraditional families face their own unique challenges in managing wealth. In general, people in blended families are more likely to say that increased wealth makes life more complex and that disagreements about the use of money, when they occur, represent a significant risk to wealth.

High-Net-Worth Families – Generational And Gender Differences

Different generations are shaping the concept of family in their own distinct ways. Among Baby Boomers and those over 69, divorce and remarriage affect a significant proportion of the population. One-third (34%) of people over age 69 have been divorced and one in four currently live in a blended family. About 20% of Baby Boomers live in a blended family.

Women are making significant contributions to family wealth, and playing an active role in wealth planning and decision-making. More than half (52%) of women came into their marriage or relationship with financial assets equal to or greater than their spouse’s or partner’s, and one-third (33%) of women are now the primary income earner or contribute equally to household wealth. For Millennials, families often include multiple generations. Nearly a third of this group’s members live with a parent or grandparent.

Millennials are also more likely than any other generation to be married to or live with a same-sex partner. The absolute numbers are small, at 4% of the Millennial group, but that is four times the rate for those over 69, and twice the percentage of Generation Xers.

Support For Family Members

Across all age groups, high-net-worth individuals are engaged in supporting both their immediate and extended families. Nearly six in 10 wealthy people have provided financial support to an adult member of their immediate and extended family.

High-Net-Worth Families

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