with Affluent Clients
May 10, 2011
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When hard facts come to light that contradict your preconceptions, it’s time to sit back and reassess your thinking. That’s exactly what advisors should do following a new research study of Americans with at least $3 million in investments.
Just released, the study points to alarming deficiencies in estate planning and gaping communication gaps between many wealthy Americans and their spouses, children and advisors.
- Even though 84 percent of parents think their children would benefit from discussions with a financial professional, six in 10 have never introduced their children to the professionals managing their financial affairs.
- Wealthy Americans are increasingly interested in seeing the impact of their giving now, rather than leaving a legacy when they pass away. Despite this, four in 10 have never sought advice about legacy planning or philanthropic strategies.
Further, few affluent Americans have well-developed plans to preserve and pass on their assets to either their children or charity. When it comes to financial goals, less than half of wealthy parents put leaving an inheritance to children as a priority; this was fifth on the things they want to do with their money, just ahead of “having fun.”
This is despite the fact that many affluent Americans consider the success of their children to be one of the most important measures of their own success. This points to a dramatic divide between the priority that previous wealthy generations gave to transferring wealth to children compared to the importance placed on this by many affluent boomers.
Even if your clients don’t have investments of $3 million, there are still important lessons from this research, conducted earlier this year among almost 500 affluent Americans and commissioned by the U.S. Trust division of Bank of America.
Selected research findings and excerpts from the press release follow:
Boomer plans for retirement
Many of today’s affluent baby boomers are self-made, first-generation wealthy who are just beginning to enter retirement but show no signs of slowing down.
- The top activity in retirement is expected to be volunteer activity, listed by 55% of boomers.
- Almost half said they will continue working in retirement, many planning to start a second career or new business. Notably 21% said they will never retire.
Many boomers looking to consult, teach or volunteer on boards of local charities are in for an unpleasant surprise – when they say they want to work or volunteer, few are thinking of being a greeter at Wal-Mart or volunteering at a food bank.
The number of boomers seeking high-income jobs and prestigious volunteer roles is already outweighing the number of opportunities – many universities and colleges have seen a glut of inquiries from retired executives about teaching, well beyond the demand for these positions. One important role for advisors is to provide a reality check for boomers who are incorporating significant income from part-time work, consulting or teaching into their retirement thinking.
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