A survey undertaken by The Capital Group has pointed that as the “Great Wealth Transfer” gets underway, inheritance patterns are shifting, with significant implications for wealth distribution and financial markets.
The research surveyed 600 HNW individuals across Europe, Asia Pacific and the US to explore their approach to inheritance use and their own succession-planning. It indicates that high-net-worth (HNW) families globally are currently accelerating the transfer of wealth to their heirs and that UK investors are the most focused on financial advice and savings than any other jurisdiction.
Guy Henriques, president, Europe and Asia Client Group at Capital Group, said: “Trillions of dollars are estimated to be transferred from Baby Boomers across the US, Europe, and developed Asia to younger generations in coming decades. Millennials and Generation Z are receiving larger inheritances at a younger age and could benefit from a financial adviser’s market insights and long-term investment perspective
“At Capital Group, we have built enduring partnerships with wealth managers, grounded in the belief that expert financial advice and strong long term investment returns drive better outcomes for wealth holders and their beneficiaries.”
Wealth holders
The research found that:
- Almost half (47%) of wealth holders in the study inherited directly from their grandparents, a majority (55%) having received between $1mn and $25mn.
- Millennials are more likely to turn to social media and “finfluencers” for investment advice when they inherit (27%) than to financial advisors (18%).
- 65% of Gen X and Millennial inheritors in the research say they have regrets about how they used their inheritance money, with nearly two in five wishing they had invested more.
- Three quarters of wealth holders report challenges in communicating succession planning
61% said they rely on lawyers and 49% on accountants to handle succession matters, while only about 15% use financial advisers. Despite this, financial advice is more prevalent in the UK: 36% (vs 25% globally) of inheritors consulted advisors and more than double the global average sought succession planning advice (32% vs 15% globally), the survey said.
Inheritance
The research points to inheritance money often sitting dormant or underutilised. On average, only 22% of inherited capital is invested in securities or mutual funds and 11% in a pension fund. In contrast, UK wealth holders are more likely to put their inheritance into savings (17% v 12% globally).
It added that 60% of wealth holders are “unhappy about the way they used their inheritance”, with one third regretting having underinvested. In the UK however, 78% of those who sought advice reported feeling better informed about managing their wealth (vs 52% globally).
