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U.S. Trust Study of High Net Worth Investors Defines and Uncovers Planning Shortfalls in Reaching a “Life Well-Lived”

New Insights on Wealth and Worth Finds Investing in Health is as Important as Building Wealth

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NEW YORK – The 2015 “U.S. Trust Insights on Wealth and Worth®” survey released today identifies what the wealthy consider to be important elements of a life well-lived, ranking health, family and financial security as essential. While the vast majority of respondents feel they are on the right path, eight in 10 identified at least one area of their lives, such as giving back and pursuing passions, that needs greater attention to make their life more fulfilling.

“A life well-lived shouldn’t be viewed through a rearview mirror with the final assessment of accomplishment or regret at the end of the journey. It can and should be carefully plotted and planned for,” said Keith Banks, president of U.S. Trust. “The wealthy are driven by a sense of purpose and desire to succeed, but what makes life fulfilling is not money; it’s what they do with it. As wealth managers, we have the opportunity to not only help our clients grow their wealth, but also to help them plan accordingly.”

The findings are based on a nationwide survey of 640 high net worth (HNW) individuals with at least $3 million in investable assets. “U.S. Trust Insights on Wealth and Worth” is among the largest annual studies to cover the attitudes and preferences of HNW individuals on growing, preserving and passing on wealth. The 2015 study builds on earlier explorations of financial security, giving back to the community, and family dynamics by taking an in-depth look at how priorities across all of these areas align with planning for a life well-lived.

Key findings include:

  • Health is the number one element to “a life well-lived.” The wealthy almost unanimously agree (98 percent) that the most valuable asset they have is their health, and investing in health is as important as investing to build wealth.
  • While the wealthy view money as empowering, 75 percent say their purpose in life would not change even if they lost their wealth.
  • Eighty-six percent say that giving back to society is an essential or important part of their lives, with women and millennials driving interest in giving and investing for social impact.
  • Priorities differ depending on gender, circumstance and life stage. Younger respondents are focused primarily on work and financial security. Health and family become more valuable later in life. Nearly six in 10 overall, and 83 percent of millennials, say they struggle to balance competing priorities across their work, family, social and financial lives.
  • Women and men are increasingly sharing decision-making and contributions to family wealth and financial security with each successive generation. In HNW millennial households, half of women contribute an equal share of household income or more income than their partners, and one-quarter of men have assumed primary responsibility for child care.
  • Priorities by age and gender in market outlook, investing and wealth building strategies have significant implications for family wealth, financial security and planning. Conflicts and lack of sufficient planning point to gaps in all of the essential elements of a life well lived.

Health

The wealthy are proactively investing in a multitude of activities to maintain their health and wellness, but many are not planning for the possibility of illness and how it might affect their income, assets or life expectations. The survey found:

  • Nine in 10 respondents are willing to spend more money on their health, and, not surprisingly given the high value placed on it, 31 percent of those over age 70 say they would spend any amount if they could have good health. Despite this willingness to spend substantially on maintaining or restoring health, half have not planned financially for an unexpected or degenerative health issue.
  • More than half (55 percent) say they would take a genetic test to identify their risk of a debilitating or life-threatening disease, and 46 percent say that, if faced with a high-risk condition, they would seek radical or preemptive medical treatment. However, in such an event, they are less proactive about securing their financial or family security, with only 28 percent saying they would review their financial plans or create a comprehensive estate plan.
  • If long-term care were ever needed, more than half of the wealthy expect to stay in their own homes, with care provided by family or private home health care. Another 23 percent would move to a luxury long-term care facility. Yet, 44 percent with long-term care plans have not yet planned for the cost of that care, including out-of-pocket health care expenses.
  • Nearly one in three (28 percent) overall and 53 percent of millennials say that their wealth comes at the expense of their health.

Family and legacy

The study found that family clearly represents the greatest source of enjoyment in life and is the motivator for financial success and security. Leaving a financial legacy to the next generation ranks fifth in relative importance as a contributor to a life well-lived. The survey, however, found:

  • While three in four wealthy parents say it is important to leave an inheritance to the next generation, only one in five agrees strongly that their children will be prepared to handle the wealth they receive.
  • Nearly two-thirds of wealthy parents have disclosed little or nothing about family wealth to their children, largely because of concern that it will affect their work ethic and family privacy.
  • Though 54 percent of the wealthy believe their family would benefit from developing a formal set of principles to guide the purpose and meaning of their wealth, only one in 10 has done so.

Financial security and building wealth

Survey respondents describe financial security as essential to a life well-lived because it provides options and the freedom to live life as they choose, without financial worries or restrictions. Their approach to investing and building wealth is shaped by their priorities and outlook, which in some cases is preventing progressing toward their wealth and investing goals.

HNW investors are slightly more optimistic in their outlook on the markets this year than last, but their views remain mixed, with millennials and women most uncertain and concerned about losses. While more than half (55 percent) of HNW investors say their greater priority is growth over protection of assets, 64 percent aren’t willing to seek higher returns if it means higher risk, and they are far more aware this year of the tax implications of their investment decisions. The survey found:

  • Six in 10 HNW investors have more than 10 percent of their portfolios in cash positions, including 22 percent with more than 25 percent. Four in 10 either have moved or plan to move even more of their investments into cash in anticipation of rising interest rates.
  • About 20 percent say they are looking for advice on the best way to invest in a low-interest rate environment. One-third (34 percent) are having these discussions with trusted professionals now.
  • Though men and women are focused equally on growing wealth, women are more conservative, with 25 percent of their portfolios in cash positions. Women also are less likely than men to describe themselves as opportunistic investors and strategic users of credit as a way to grow wealth.

Most of the wealthy, and particularly younger HNW investors, either currently use or are interested in adding non-traditional assets to their investment portfolios, including private equity and venture funds (48 percent). Seven in 10 own or are interested in owning tangible investments such as land, real estate, oil and gas properties and timber, primarily to diversify the portfolios and source of risk and income. Yet, lack of understanding and perceived risk is holding back one in three HNW investors from these types of investments.

The role of planning and advice

“Insights on Wealth and Worth” found that a majority of the wealthy seek advice on one technical aspect of planning, such as portfolio performance, tax planning and estate planning. However, only about one-third of the wealthy are talking with an advisor about strategies around the goals they consider to be fundamentally more important, including identifying family needs and goals (36 percent) and planning for increased longevity (34 percent). Even fewer are having discussions about the strategic use of credit (21 percent), strategic philanthropy (18 percent) and investing for social impact (11 percent).

“Insights on Wealth and Worth” found that those people who are getting professional advice are farther along on measures they describe as essential to a fulfilling, meaningful life. Not only do they feel more financially security and are less conflicted by competing priorities, they are more likely to say their family has a healthy relationship with money and their actions are in greater alignment with their intentions when it comes to growing, preserving and passing on wealth and making a difference in the world.

The complete 2015 “U.S. Trust Insights on Wealth and Worth” survey findings can be found at http://www.ustrust.com/ust/pages/insights-on-wealth-and-worth-2015.aspx

Survey Methodology

The 2015 U.S. Trust Insights on Wealth and Worth® survey is based on a nationwide survey of 640 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. Respondents were equally divided among those who have between $3 million and $5 million, $5 million and $10 million, and $10 million or more in investable assets. The survey was conducted online by the independent research firm Phoenix Marketing International in January 2015. 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.

U.S. Trust

U.S. Trust, Bank of America Private Wealth Management is a leading private wealth management organization providing vast resources and customized solutions to help meet clients’ wealth structuring, investment management, banking and credit needs. Clients are served by teams of experienced advisors offering a range of financial services, including investment management, financial and succession planning, philanthropic and specialty asset management, family office services, custom credit solutions, financial administration and family trust stewardship.

U.S. Trust is part of the Global Wealth and Investment Management unit of Bank of America, N.A., which is a global leader in wealth management, private banking and retail brokerage. U.S. Trust employs more than 4,000 professionals and maintains 97 offices in 31 states.

As part of Bank of America, U.S. Trust can provide access to a broad range of banking solutions for individuals and businesses, and an extensive retail banking platform.

Bank of America

Bank of America is one of the world’s largest financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 48 million consumer and small business relationships with approximately 4,800 retail financial centers and approximately 15,900 ATMs and award-winning online banking with 31 million active users and approximately 17 million mobile users. Bank of America is among the world’s leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

Visit the Bank of America newsroom for more Bank of America news.

www.bankofamerica.com

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.

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