Wealthy support greater effort to promote social equalityNews added by Benefits Pro on June 27, 2014

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By Chuck Epstein

Ninety percent of wealthy individuals say they would be willing to pay higher taxes, support more job creation and greater educational opportunities in an effort to promote more income equality, according to a new survey by US Trust.

Social investing also received a high response rate as 60 percent of respondents said it was possible to invest in companies while also achieving environmental and social goals and also achieving “market rate returns.”

Another 43 percent said social, political and environment values could be reflected in their investment choices.

This annual study found that changing family structures, multi-generational and extended family circumstances, evolving gender roles, and generational views on investing and use of wealth are challenging traditional approaches to wealth planning.

Legacy issues were also on the minds of the wealth, based on the survey. This may be because the majority of wealthy Baby Boomers surveyed grew up in middle-class or lower families, and 61 percent are the first generation in their family to be wealthy.

A problem with this newly-acquired wealth is that the wealth builders said they wanted to leave an inheritance, but were concerned their children would “not be mature enough to receive one.”

The survey found that 96 percent of wealthy parents thought their children would not be able to handle a monetary inheritance of money until at least the age of 25, and 37 percent thought the best age is between 30 and 34.

Secrecy may be part of the problem; 38 percent of wealthy parents have fully disclosed their financial status to their children over age of 25, and only 38 percent of wealthy parents “strongly agree their children will be well prepared to handle the inheritance planned for them.”

Among the study’s other findings:
  • 60 percent of the wealthy have provided monetary support to other family members, but only 3 percent had a plan in place to provide this support;

  • The top five risks to preserving family wealth were the death or incapacitation of a key income earner (11 percent), divorce (36 percent), medical expenses (26 percent), addition or other “impulsive behavior” (17 percent), and family squabbles over inheritance issues (9 percent), financial problems (24 percent), and mistrust or “isolation” of another family member (13 percent);

  • About half of those questioned (52 percent) had already received their inheritances, with 72 per cent being those over age 69. Among respondents (all of which have at least $3 million in investable assets), the average inheritance received is $907,000;

  • 60 percent of respondents said growing their wealth is a higher priority than protecting it. But to temper that, 58 percent said risk management is a priority, even if it means accepting lower returns;

  • 40 percent have used credit to provide liquidity to be used for other needs. Of this group, 70 per cent of millenials and 56% of people with assets over $10 million agreed that borrowing against assets allowed them to put their own money to better use. The main reasons the wealth used credit was to purchase a house, invest, fund education, start a business and to pay taxes.
The 2014 U.S. Trust Insights on Wealth and Worth survey was based on a nationwide survey of 680 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 percent have between $3 million and $5 million in investable assets, 33 percent have between $5 million and $10 million and 34 percent have $10 million or more.

Originally published on BenefitsPro.com
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