RBC recently released their Wealth Transfer Report 2017. Some of results confirm what we have read for years about the percentage of people who have proper Wealth Transfer Plans in place. What caught my eye, were the survey results about the inheritor experience and educating the next generation.
By way of context, this survey was comprised of 3,105 respondents from across Canada, U.S.A. and the U.K. with average investible assets of $4.5 mil.
The key elements of financial knowledge include budgeting and investment strategy and, lack of preparedness in these areas will certainly contribute to the erosion of an inheritance. The Wealth Transfer Report revealed that only 28% of Canadians were considered ‘prepared inheritors’. This type of result will not help with the preservation and sustainment of wealth for future generations.
It’s not that Canadians don’t try to educate the next generation. In fact, the survey showed that 51% of Canadians indicated that they have started the process (there is a view that some people don’t talk about inheritances with the children because it may discourage them from pursuing their own career). Interestingly, the survey also showed that, as with most things in life, the earlier one starts the more confidence can be gained. The average age of the when the survey respondents started their financial education was 27.
And finally, who provides this education? The survey found that individuals learned equally from family members and financial advisors.
Education is the key to maximizing the chance to leave a lasting legacy.