Many wealthy baby boomers are considering not leaving their children an inheritance in favour of giving their money to charity.
That’s one of the findings of research by US Trust, part of the global wealth and investment management unit of Bank of America, which looked at 642 Americans with at least $3 million (€2.36 million) in investible assets and found big variations in how different generations view wealth transfer.
Just 55% of high net worth baby boomers – those aged between 47 and 66 – think it is important to leave money to their children. But in stark contrast, 76% of 18 to 46 year olds and 73% of those aged over 67 want to leave a financial inheritance to their children.
"Our survey points to a shift in generational behaviour and outlook, most likely shaped by personal experience and societal responses to economic realities," said Keith Banks, president of US Trust.
"The next generation has not experienced the consistently strong economic growth or investment returns that baby boomers experienced during the longest bull market in history."
Among the baby boomers who don’t want to leave their children an inheritance, almost a third said they would rather give money to charity.
Only 32% of baby boomers, compared to over half of the other age groups examined, said they were confident their children would be “emotionally and financially” prepared to handle any inheritance left to them.
The 2012 Insights on Wealth and Worth study also found that when it came to planning for wealth for themselves and their families, those over 67 and under 47 took a far more “pragmatic, proactive and disciplined” approach to investing and wealth management than baby boomers.
However, the younger generation was more likely to favour growth over preservation, while older respondents sought lower risk strategies and asset preservation.
Despite ongoing market volatility and political and economic uncertainty, most wealthy investors were “cautiously optimistic about the management of their investment portfolio”.
The study also found that wealthy Generation X and Y members were also more likely to plan for their parents’ health, with 33% of those under 47 purchasing long-term care insurance for their parents, compared to 6% of baby boomers.