money in motion multigenerational wealth management · state street global advisors 2 money in...

With the largest intergenerational shift of wealth now underway, it is critical that advisors understand the dynamics of these changes – what can we be doing better? – and consider ways to adapt. Not only to better position investors on their journey to realizing their family wealth management and legacy planning goals, but also to remain relevant and attract a new generation of clients before assets change hands.

During the first quarter of 2015, State Street Global Advisors’ Practice Management conducted a study among a nationally representative sample of financial advisors and individual investors to explore their perspectives on the topic of multigenerational wealth transfer and uncover ways to thoughtfully navigate the challenges of transition.

This findings summary document is one in a series of practice management offerings that explore topics within multigenerational wealth management of interest to both advisors and clients.

Wealth Transfer | Philanthropy | Aging Investor | Family Education

Investment professionals can obtain program resources by contacting their Regional Consultant or the SSGA Sales Desk at 866.787.2257.

Money in Motion Multigenerational Wealth ManagementQuantitative Research Frequencies

I. Wealth Transfer

1. n Which of the following services do you offer your clients?

n Which of the following services does your advisor provide for you?

Wealth management

Estate planning

Philanthropic planning and gift strategies

Business succession planning

Tax planning

Other

73 97

40 69

15 59

14 35

44 44

8 6

% Advisors Investors

2. What approximate percentage of your clients have a wealth transfer/estate plan?

Clients with wealth transfer/estate plan

50

% Advisors

3. Do you expect to transfer wealth/pass on your estate?

Yes, I plan to transfer my remaining wealth to others

No, I won’t have anything to pass on

No, I do not want to and plan to spend all my wealth before I pass on

81

10

9

% Investors

State Street Global Advisors 2

Money in Motion: Multigenerational Wealth Management

6. What proportion of your wealth/estate will you leave to the following?

Spouse/partner

Descendants

Other relatives

Charitable causes

Other

66

26

4

3

1

Investors%

7. On what basis do you plan to divide your estate (property, assets, holdings, etc.)?

First born/eldest child will inherit everything

Equally split among family members

Leave specific share of assets to different family members

I haven’t thought about it yet

Other

5

51

28

12

4

Investors%

8. n At a guess, what do you anticipate the value of your estate will be at time of wealth transfer?

Below $100,000

$100,000–$250,000

$250,000–$500,00

$500,000–$1 million

$1 million–$5 million

$5 million–$10 million

Above $10 million

I don’t know

3

7

11

19

37

9

6

7

Investors%

5. n What are the primary triggers for your clients in terms of thinking about wealth planning?

n What were the primary triggers that made you start thinking about wealth planning?

Encouragement from myself or other advisors

Starting a family

Liquidity event

Illness/health scare

Death in the family

Questions or pressure from the next generation

Reaching a certain age

Discussions about family legacy or values

Hearing stories or advice from friends

Changes in tax and trust laws

17 10

4 11

6 4

19 6

20 5

1 2

16 37

7 11

5 5

7 8

Advisors Investors%

4. Have you made a wealth transfer/estate plan?

Yes

No, and it is not in my plans to do so

No, but I plan to do so in the future

45

10

45

Asked to only those who plan to transfer wealth/pass on their estate (%) Investors



10. At what age did you receive the inheritance?

Birth–20

21–30

31–40

41–50

51–60

Above 60

6

9

20

22

28

14

% Investors

Birth–20

21–30

31–40

41–50

51–60

Above 60

50

21

38

38

25

17

Asked to only those who have received more than one inheritance (%) Investors

11. n What strategies do you most often recommend to clients to minimize taxes on their estate/transfer to heirs?

n What strategies do you intend to use in order to minimize tax on your estate/transfer to heirs?

If married, use both spouses‘ estate tax exemptions — living trust with tax planning

Give to family or friends

Remove assets from estate — make annual tax-free gifts

Remove assets from estate — charitable gift planning

Remove assets from estate — transfer ownership of life insurance

Remove assets from estate — establish a trust to remove home (qualified personal residence trust) and/or income-producing assets (grantor-retained annui)

Remove assets from estate — establish a limited liability company or family limited partnership

Buy life insurance — irrevocable life insurance trust

32 51

3 36

20 26

7 11

6 7

16 22

4 6

13 12


12. How much is wealth planning discussed within your family?

Wealth is not openly discussed in the family

We openly discuss wealth in the family

We have regular meetings to discuss wealth matters with the family

The family is fully aware of my/our plans with regard to wealth planning for the future

45

31

4

21

% Investors

9. n Have you ever received or do you expect to receive an inheritance?

I have recieved an inheritance

I have recieved an inheritance more than once

I expect to recieve an inheritance in the future

No

33

4

20

42

Investors%



Provide my family with security and comfort

Fund experiences and the purchase of luxury items

Fund education forfamily members

Support wider family members who are in financial difficulty

Give back/philanthropy

Fund the medical needs of family members

Provide power and the ability to influence

Fund new business ideas and interests

Keep the family together for future generations

404255

971

2518

8

867

485

87

10

221

242

46

10

■ Millennials (1981–2000)■ Generation X (1965–1980)

■ Baby Boomers (1946–1964)

Generational (%) Investors

13. What are the likely primary purposes of your wealth when you pass it on?

Provide my family with security and comfort

Fund experiences and the purchase of luxury items

Fund education forfamily members

Support wider family members who are in financial difficulty

Give back/philanthropy

Fund the medical needs of family members

Provide power and the ability to influence

Fund new business ideas and interests

Keep the family together for future generations

Overall (%) Investors

49

4

13

7

6

8

2

3

8

14. How big a threat are the following to the wealth/estate you plan to leave?

Large unexpected expenses (health care, accidents, etc.)

My long-term care needs

Future financial crisis

Taxes on inheritance

Insufficient estate planning

Insufficient advice from my financial advisor

My children’s lack of financial knowledge

My children’s poor judgment

Overall (%) Investors

19

29

16

17

6

2

6

5


My long-term care needs









259

21

192232

131617

132117

—77

—41

6114

25102




15. How big a threat are the following to the wealth/inheritance you already received/you anticipate receiving?


Long-term care needs of the person from whom I will receive the inheritance





My children’s lack offinancial knowledge


26

18

20

19

4

2

7

5

Asked to only those who have received or who expect to receive an inheritance in the future (%) Investors


Long-term care needs of the person from whom I will receive the inheritance









131330

131920

172117

132518

1043

741

1748

1084


16. n A majority of my clients have made suitable wealth transfer arrangements in case they pass on unexpectedly.

n I have made a wealth transfer/estate plan arrangement in case I pass on unexpectedly.

Agree

Disagree

67 57

34 43

Investors% Advisors

17. n I encourage my clients to have arrangements in place in case they pass on unexpectedly.

n My advisor encourages me to have a wealth transfer/estate plan arrangement in place in case I pass on unexpectedly.

Agree

Disagree

98 85

2 15

Investors% Advisors

18. n I have played a role in getting my clients’ children involved in their parents’ wealth transfer arrangements.

n My advisor has played an important role in involving my children in my wealth transfer/estate plan arrangement.

Agree

Disagree

76 48

25 52

Investors% Advisors

19. I have a clear strategy on how to engage the next generation of clients.

Agree

Disagree

49

51

% Advisors



20. I’m making efforts to engage the next generation of clients.

Agree

Disagree

88

12

% Advisors

21. Engaging the next generation is not a key priority.

Agree

Disagree

28

72

% Advisors

22. I need better optimized products and solutions to meet the needs of the next generation of clients.

Agree

Disagree

64

36

% Advisors

23. Which of the following steps have you taken to retain and cultivate the next generation of clients?

Initiate wealth transfer conversations with existing clients

Suggest existing clients involve their children in our wealth transfer conversations

Start building relationships with heirs of existing clients

Bring in younger advisors who can connect better with the next generation

Use social media and other communication strategies to connect with the next generation

72

75

79

21

31

% Advisors

24. In which areas do you need most support from product providers and/or your home office to succeed in the context of the Baby Boomer generation triggering the greatest wealth transfer in history?

At-retirement solutions for an aging client base

Best practices to retain the next generation as clients

Tax-efficient wealth transfer solutions

Thought leadership on planning for longevity

Technology and communication tools to engage the next generation

Best practice on team development

24

24

15

13

14

11

% Advisors



25. Which of the following do you think will be increasingly important for your business in the context of shifting demographics?

Increased communication with clients via social media

Giving clients access to online investing tools

More interest in ethics and social justice/ESG investments

Adopting a more collaborative approach with clients

Improving transparency and simplicity of approach with clients

Lowering client costs

Providing more one-on-one time with clients

Giving clients real-time access to investment information

Increasing focus on higher value-added clients

6

9

25

9

11

9

13

5

14

% Advisors

26. How is/will your business adapting/adapt in order to succeed in the context of the demographic shift due to the retirement of the baby boomer generation?

Increase focus on at—retirement products and solutions (decumulation strategies, annuities, etc.)

Offer personalized goals-based investment solutions adapted to the next generation

Increase use of digital technology to meet the needs of the next generation

Increase focus on multi-generational wealth transfer strategies

Offer solutions to fund long-term care and other longevity needs

Adding junior advisor to the team to partner with the next generation

25

24

7

28

11

5

% Advisors

27. For which of the following three client segments are the following factors most commonly reflected?

More risk tolerant

More accepting of non-traditional asset allocation (e.g., not just stocks and bonds)


More emphasis on philanthropy

More emphasis on short-term rather than long-term gains

More conservative

Will be an influential investor — demand for a more personalized experience and performance supporting their objectives

More reliance on technology (e.g., online services, apps, and other tools)

Greater concern with tax planning strategies



324821

185923

483320

41482

463321

171073

105238

22474

81154

% Advisors



II. Philanthropy

28. n Do you offer philanthropy solutions as part of your suite of client services?

n Does your advisor offer philanthropic/charitable asset management solutions?

Yes

No

Don’t know

66 19

34 51

— 30

% InvestorsAdvisors

29. What percentage of your clients are involved in philanthropy/charitable causes as part of their wealth management strategy?

Involved in philantrophy 24

% Advisors

30. Do you currently donate to philanthropy/charitable causes?

Yes

No

56

44

% Investors

31. n I believe philanthropy is an integral part of intergenerational wealth management strategies.

n I believe philanthropy is a very important part of wealth transfer strategies across generations.

Agree

Disagree

74 47

26 53

% InvestorsAdvisors

32. n Philanthropy should not be limited to high-net-worth clients; it can be an effective cross-generational planning for all types of clients.

n Philanthropy should not be limited to the wealthy as it can be used for effective cross-generational planning for all types of investors.

Agree

Disagree

75 59

25 41

% InvestorsAdvisors

33. n Philanthropy is a useful tool for me to engage the children of clients.

n Philanthropy is an effective way for parents to involve their children in estate planning arrangements.

Agree

Disagree

56 50

44 50

% InvestorsAdvisors

34. Philanthropy is a key component of tax planning strategies.

Agree

Disagree

80 34

21 66

% InvestorsAdvisors



35. How likely are you to offer philanthropic services to the following client segments?

Not likely at all

Somewhat likely

Likely

Very likely

■ Mass-Market Investors (up to $249,999 of Investable Assets)■ Mass Affluent Investors ($250,000–$499,999 of Investable Assets)■ Emerging High-Net-Worth Investors ($500,000–$999,999 of Investable Assets)■ High-Net-Worth Investors ($1 Million–$4.9 Million of Investable Assets)■ Ultra High-Net-Worth Investors (More than $4.9 Million of Investable Assets)

573118

75

34453013

8

823433918

229

4270

% Advisors

36. n In your opinion, what are the main motivations for your clients to pursue philanthropy?

n What are your main motivations for pursuing philanthropy?

A sense of duty or giving back to society

Family engagement

Care about specific causes

Creating a lasting legacy

Tax deductions

Ethics and/or religious reasons

Remaining active after retirement

17 30

4 3

24 2

16 34

18 9

15 16

6 5

% InvestorsAdvisors

37. What are the main challenges of offering philanthropic solutions?

Difficulty navigating the tax system

Educating myself about various philanthropic strategies

Not enough interest from clients

Accountability

Tax deductions are too small

Requires knowledge in areas beyond my expertise

Less profitable than other services

Lack of transparency

13

20

26

5

5

19

7

5

% Advisors

38. In your opinion, what are the main challenges of philanthropy?

Difficulty navigating the tax system

Educating myself about various philanthropic strategies

Accountability (i.e., checking to see if my donations were put to good use)

Not donating enough to make an impact

Charitable organizations are not efficient enough

I do not get enough tax deductions from my donations

Insufficient social impact

Lack of transparency

Lack of expert guidance

11

15

24

16

14

7

6

4

3

% Investors



39. n What philanthropic strategies do you offer to your clients?

n What philanthropic strategies do you use?

Giving tax-deferred assets to charitable organizations

Donations in the formof appreciated securities and assets

Donor-advised funds

Grantor-retained annuity trust (GRAT)

Private foundations

Charitable remainder trust (CRT)

Charitable lead trust (CLT)

Pooled-income funds (PIF)

Mission-related investments (MRI)

Charitable gift annuities

Income tax benefit

Exemption on gift tax and estate tax

None of the above

% Yes InvestorsAdvisors

62 22

69 9

41 10

29 3

23 14

49 4

18 3

6 4

5 4

24 8

39 22

39 3

9 43

40. n If you’re offering the following strategies, which do you use to maximize tax deductions?

n Which do you use to maximize tax deductions?

Giving tax-deferred assets to charitable organizations

Donations in the formof appreciated securities and assets

Donor-advised funds

Grantor-retained annuity trust (GRAT)

Private foundations

Charitable remainder trust (CRT)

Charitable lead trust (CLT)

Pooled-income funds (PIF)

Mission-related investments (MRI)

Charitable gift annuities

Income tax benefit

Exemption on gift tax and estate tax

% Yes InvestorsAdvisors

40 32

53 8

26 12

14 4

12 17

29 6

9 3

1 5

1 3

10 7

19 33

23 2



41. Approximately, what percentage of your current wealth do you allocate towards charitable causes annually?

Percentage of wealth allocated towards charitable causes 8

% Investors

42. How satisfied are you with your philanthropic ventures?

Very satisfied

Satisfied

Dissatisfied

Very dissatisfied

Investors

34

60

3

2

%

43. Regarding your philanthropic activities, how satisfied are you with the role your advisor plays in the following?

Very satisfied

Satisfied

Dissatisfied

Very dissatisfied

Investors

—

2

51

47

Actual planning of philanthropic activities (%)

Aid in establishing and administrating charitable administrations (%)

Very satisfied

Satisfied

Dissatisfied

Very dissatisfied

Investors

—

2

58

29

Due diligence (%)

Very satisfied

Satisfied

Dissatisfied

Very dissatisfied

Investors

—

6

46

40

Very satisfied

Satisfied

Dissatisfied

Very dissatisfied

2

—

58

31

Advice received regarding technical/operations management of charities (%) Investors

Very satisfied

Satisfied

Dissatisfied

Very dissatisfied

Investors

2

2

46

31

Grant-making foundations and trusts (%)



Very satisfied

Satisfied

Dissatisfied

Very dissatisfied

2

6

46

33

Donation strategy guidance (%) Investors

44. Regarding your philanthropic activities, how satisfied are you with the role your advisor plays in the following? (cont’d)

Very satisfied

Satisfied

Dissatisfied

Very dissatisfied

—

2

52

38

Organization of charitable activities (%) Investors

Very satisfied

Satisfied

Dissatisfied

Very dissatisfied

—

2

50

40

Tax planning/deductions (%) Investors

Very satisfied

Satisfied

Dissatisfied

Very dissatisfied

—

2

54

29

Aid in bringing both parents and children together on the philanthropy topic and activities (%) Investors

45. Why do you offer philanthropy solutions?

Because clients demand it

It enhances my practice's tax planning services

It's my way of giving back to society

It offers opportunities to retain the next generation as clients

It's an opportunity to generate extra income for my business

45

50

48

49

22

% Advisors

46. Which of the following themes/issues are you giving to/planning to give to over the next 12 months?

Health/quality of life

Food

Job creation

Water and sanitation

Anti-discrimination

Climate/clean energy/green technologies

Affordable housing

Education and skills

Poverty alleviation

Microfinance/microinsurance

Multi-thematic

Cultural integration

Women/gender equality

Sports

Arts

■ Currently Giving■ Planning to Give in the Next 12 Months■ Neither Currently Giving nor Planning to Give in the Next 12 Months

531532

521731

111277

161371

141076

191664

161570

322147

311950

99

82

159

75

91081

141472

101080

201763

% Investors



III. Aging Investor

47. Have any of your clients exhibited diminished financial decision making due to mental illness or aging?

Yes

No

65

35

% Advisors

48. What are the most common indicators a client has diminished capacity to make financial decisions?

Makes inappropriate investment decisions

Is the victim of fraud or scams

Falls into debt

Has trouble understanding simple advice or concepts

A family member alerts me of it

I don't know

37

35

5

72

65

12

Advisors%

49. Which of the following, from either product providers and/or your home office, best support(s) your role in helping clients deal with mental aging?

Providing informative materials for clients and their families on the issue

Offering training materials/sessions on communicating with clients who show signsof losing mental acuity

Providing informative materials for advisors on planning for aging investors

Creating products and solutions tailored to the needs of those planning for a potential decision making impairment

Other

34

24

21

20

1

% Advisors

50. n If a client is showing signs of diminished mental capacity in making financial decisions due to aging, who would you talk to about it first?

n If you feel you or a family member are showing signs of a diminished mental capacity to make financial decisions due to aging, who would you talk to about it first?

My client

Spouse/partner

Children

Financial advisor

Attorney

Accountant

Health care provider

I wouldn’t talk about it to anyone

Other

29 —

57 52

9 16

— 8

3 8

1 3

— 12

1 —

— 2

% InvestorsAdvisors

51. What are the main barriers for clients initiating an open conversation with you about their diminished decision making capabilities?

Family doesn't talk openly about money

Lack of trust (family member or advisor)

Fear of losing independence

Embarrassment

Refusal to recognize problem

Fear of losing privacy

9

4

24

26

33

4

Advisors%



52. What are the main barriers for clients initiating an open conversation with their family about their diminished decision making capabilities?

Family doesn't talk openly about money

Lack of trust (family member or advisor)


Embarrassment



18

9

28

13

29

5

Advisors%

53. If you began experiencing diminished financial decision making capabilities, how big an obstacle would the following be to initiating an open conversation with your family and financial advisor about it?

I don’t talk openly about money

Lack of trust in family members

Lack of trust in financial advisor


Embarrassment



Other

Investors

10

7

9

31

9

22

9

4

%

54. n My clients often express fear that aging may impair their ability to make adequate financial decisions.

n I fear getting old will impair my ability to make adequate financial decisions.

Agree

Disagree

50 48

50 52

% InvestorsAdvisors

55. n My clients’ family members have expressed fear that aging may impair my client’s ability to make adequate financial decisions.

n I fear one of my family members may experience diminished financial decision making due to mental illness or mental aging.

Agree

Disagree

65 53

36 47

% InvestorsAdvisors

56. n I encourage my clients to have a plan in place in case their decision making is diminished due to mental aging or illness.

n I think my financial decision making capabilities may decrease with age and I should have a plan in place.

Agree

Disagree

85 41

16 59

% InvestorsAdvisors



59. n I provide my clients with information and support regarding the potential impact of aging on their financial decision making.

n I’m satisfied with the level of of information and support my advisor has given me regarding the potential impact of aging on my financial decision.

Agree

Disagree

72 27

29 73

% InvestorsAdvisors

60. n I believe I need to talk more with my clients about the potential impact of aging on financial decision making.

n I believe I need to talk more with my financial advisor about the potential impact of aging on my financial decision.

Agree

Disagree

86 44

15 56

% InvestorsAdvisors

61. n If your client’s ability to make adequate financial decisions is affected, what measures would you recommend to safeguard their investments against the potential effects of an aging brain?

n If your ability to make adequate financial decisions is affected, what measures would you take to safeguard your investments against the potential effects of an aging brain?

Obtaining guaranteed income (e.g., an annuity)

Actively involving someone I strongly trust (e.g., a family member)

Sticking to a passive buy-and-hold strategy

Power of attorney

Continue working with a trusted financial advisor

Training themselves to avoid making fast decisions

4 27

32 59

3 13

37 56

22 36

3 20

% InvestorsAdvisors

57. n The majority of my clients have a suitable plan in place in case their decision making is diminished due to mental aging or illness.

n I have a suitable plan in place in case my decision making is diminished due to mental aging or illness.

Agree

Disagree

52 39

49 61

% InvestorsAdvisors

58. n My clients need to talk more with their families about the potential impact of aging on financial decision making.

n I believe I need to talk more with my family about the potential impact of aging on financial decision making.

Agree

Disagree

91 46

9 54

% InvestorsAdvisors



64. What are the most important criteria for you when choosing a trustee for your estate?

Trust

Whether the person is a member of my family

Investment expertise

First-born child

Impartiality

Someone who is a stakeholder outside the family

Other

Investors

56

34

26

12

26

8

1

%

62. n If a client experiences diminished mental capacity in making financial decisions due to aging, who should be trusted in making financial decisions on their behalf?

n If you experienced a diminished mental capacity in making financial decisions due to aging, who would you trust with making financial decisions on your behalf?

70 59

11 16

7 9

8 9

3 4

1 2

2 1

% InvestorsAdvisors

Spouse/partner

Children

Myself/Financial Advisor

Attorney

Accountant

Health care provider

Other

63. n What measures are you currently adopting to protect clients from financial predators?

n What measures are you currently adopting to protect yourself from financial predators?

Using an independent custodian

Implementing trades myself

Performing thorough due diligence on all my staff

Safeguarding against computer attacks

Other

37 20

39 30

55 40

60 44

6 4

% InvestorsAdvisors



IV. Family Education

65. Ideally, when do you think your clients should start involving the next generation in the family’s wealth transfer/estate plan?

At an early age (adolescence–early 20s)

Once they becomefinancially independent

Once the previousgeneration retires

Once the previousgeneration passes on

23

52

23

2

% Advisors

67. n When investing assets clients intend to pass on to their children, clients should prioritize their own investment goals (retirement, etc.) over those of their children.

n When investing assets intended for my children, I tend to prioritize my own investment goals (retirement, etc.) over those of my children.

Agree

Disagree

86 72

15 28

% InvestorsAdvisors

68. n My clients are sometimes conflicted between using an investment philosopshy that suits their own life objectives and one that suits their children’s objectives.

n I am sometimes conflicted between using an investment philosophy that suits my own life objectives and one that suits my children’s objectives.

Agree

Disagree

57 38

43 62

% InvestorsAdvisors

66. When did you get/do you expect to be involved in your family’s wealth transfer planning?

At an early age (adolescence–early 20s)

Once they become financially independent

Once I retire

Once I pass on

It is up to my children to decide whether they want to engage with my financial advisor/another financial advisor

Other

Investors%

24

40

18

7

9

2

At an early age (adolescence–early 20s)Once I became/become financially independent

Once the person I inherit from retired/retires

Once the person I inherit from passed/passes on

Other

Asked to only those who have received an inheritance or who expect to recieve an inheritance in the future (%) Investors

14

31

15

35

6



69. n Typically, how financially savvy are your clients?

n How financially savvy would you say you are?

0 — Not financially savvy at all

1

2

3

4

5

6

7

8

9

10 — Extremely savvy

— 2

1 1

1 2

3 3

5 5

18 15

22 15

33 20

15 23

2 6

2 8


70. n It is my client’s responsibility to educate their children financially; I don’t expect to be involved in the process.

n It is my responsibility to educate my children financially; I don’t expect my financial advisor to be involved in the process.

Agree

Disagree

26 74

74 26

% InvestorsAdvisors

71. n I believe that when the time comes, I should engage my clients’ children directly and play an active role in educating them financially.

n I believe that when the time comes, my financial advisor should engage my children directly and play an active role in educating them financially.

Agree

Disagree

87 65

13 35

% InvestorsAdvisors

72. n I provide my clients with information and assistance on the process of financially educating their children.

n I would like to have more information and assistance from my financial advisor on the process of financially educating my children.

Agree

Disagree

81 62

19 38

% InvestorsAdvisors

73. Being financially literate is important despite having a trusted financial advisor.

Agree

Disagree

91 94

9 6

% InvestorsAdvisors

74. n It is important for my clients to proactively prepare their children for the responsibilities that come with wealth.

n I am proactively preparing my children for the responsibilities that come with wealth.

Agree

Disagree

96 64

4 36

% InvestorsAdvisors



75. Children do not need to be aware of or have a say in their parent’s financial arrangements for as long as their parents are alive.

Agree

Disagree

21 40

80 60

% InvestorsAdvisors

76. It’s a challenge to engage my clients’ children.

Agree

Disagree

74

26

% Advisors

77. Which of the following measures are most effective to prepare children to handle family wealth?

Financial education at home

Being given money to invest

Financial education externally (school, business courses, certifications, etc.)

Being introduced to advisers (bankers, accountants, trustees, etc.)

Family meetings

Family foundations (e.g., charitable trusts)

Work experience

47 30

19 9

28 17

68 10

58 12

10 4

25 18


79. What are the main concerns you have regarding how your children will handle any inheritance?

They will not have sufficient knowledge to know what to do with the family assets

Financial decisions will be influenced by someone I do not approve of

They will become spoiled and not understand the value of money

Not enough engagement with my financial advisor

Not philanthropic enough

Other

56

33

31

13

12

8

Investors%

78. Who should play the most important role in educating the next generation financially?

Parents/family

Financial advisor in family office

Their employer

Educational system

81 94

52 67

3 45

15 83




80. As an advisor, what role should you have in financially educating your client’s children?

Provide my clients with advice and informative materials on how to better educate their children

Organize mentoring meetings with both my clients and their children

Directly engage with my client’s children and offer them personalized, independent mentoringand advice

I have no role to play

36

26

37

2

% Advisors

81. How can product providers and/or your home office best support you in educating your clients and their children?

Provide me with educational materials to give to/talk through with clients

Facilitate training sessions for me on how to best educate my clients and their children

Create online tools for clients and their children directed at increasing their engagement with their finances and financial markets

Provide client seminar resources

86

50

57

32

% Advisors



84. Which of the following best describes you?

26

3

37

4

11

Independent broker/dealer

Multi-platform/direct advisor

I am part of a national broker dealer or wirehouse

Private bank

Regional broker dealer

Registered investment advisor (RIA)

%

20

Advisors

85. What are your total assets under management?

16

11

29

45

$20M–49.9M

$50M–74.9M

$75M–99.9M

$100M or more

% Advisors

86. What approximate percentage of your clients are:

Under 24

25–32

33–48

49–67

68–85

3

8

22

%

42

26

Advisors

82. Age

Millennials (1981–2000)

Generation X (1965–1980)

Baby Boomers (1946–1964)

Silent Generation (1928–1945)

11 9

42 29

43 50

5 11


83. Gender

Male

Female

86 55

14 45


87. How many years have you been a financial advisor?

7

61

22

11

Less than 5 years

6–20 years

21–30 years

More than 30 years

% Advisors

88. What approximate percentage of your clients are:

16

20

28

25

11

Mass market investors

Mass affluent investors

Emerging high-net-worth investors

High-net-worth investors

Ultra high-net-worth investors

% Advisors

V. Participant Profile



91. What is your yearly household income?

$100k–$199,999

$200k–$299,999

$300k–$499,999

$500k–$699,999

$700k–$999,999

$1M+

81

9

5

1

3

1

% Investors

92. What is your marital status?

Single

Married

Living with partner

Separated

Divorced

Widowed

6

83

6

1

3

1

% Investors

93. Who makes the financial decisions in your household?

I am solely responsible for my household’s financial decisions

My spous/other member(s) in my family take care of our financial decisions

48

52

% Investors

93. Who makes the financial decisions in your household?

90. With regard to estate planning, which of the following applies to your firm?

63

57

54

22

1

%My firm has always engaged in estate planning

Not applicable

Estate planning is an important part of our business

My firm partners with an outside expert (e.g., estate planning attorney)

We want to offer estate planning in the years to come

Advisors

89. For which of the following three client segments are the following factors most commonly reflected?

More risk tolerant

More accepting of non-traditional asset allocation (e.g., not just stocks and bonds)


More emphasis on philanthropy

More emphasis on short-term rather than long term gains

More conservative

Will be an influential investor — demand for a more personalized experience and performance supporting their objectives

More reliance on technology (e.g., online services, apps, and other tools)

Greater concern with tax planning strategies



324821

185923

483320

41482

463321

171073

105238

22474

8115

4

% Advisors

Advised

Not advised

61

39

% Investors



95. Which of the following best describes your ethnicity/race?

White/Caucasian

African-American

Hispanic/Latino

Asian

Other

87

4

6

3

—

% Investors

97. Which of the following are the strengths of your financial advisor?

Risk management

Tax and legal advisory

Business advisory

Financial advisory

Business succession planning

Administrative services

Life management and budgeting

Record keeping/reporting

Investment management/asset location

Philanthropic/charity planning

Estate planning

5

8

2

26

3

3

8

4

31

3

7

% Investors

96. What is the highest level of education you have obtained?

Completed high school

Trade/technical school

Bachelor’s degree

Post-graduate degree

Other

8

12

43

35

2

% Investors

94. How many children do you have?

1

2

3

4

More than 4

None

16

43

14

4

3

21

% Investors



Research MethodologyDuring the first quarter of 2015, State Street Global Advisors’ Practice Management and CoreData Research conducted a study among a representative sample of 400 financial advisors and 560 individual investors to explore their perspectives on multigenerational wealth management in the areas of wealth transfer, philanthropy, family education and the aging investor.

The advisor sample is representative across different channels: independent broker/dealer; multi-platform/direct; national broker or wirehouse; private bank; and registered investment advisor. The investor sample is representative across both net asset bands (below $1 million in assets; $1 million to $5 million; and above $5 million) and age bands (ages 25 to 32; 33 to 48; 49 to 67; and 68 or older).

The quantitative surveys explored nearly identical themes, which allowed comparison of advisors’ assumptions regarding their clients against actual investors’ attitudes and behavior. Questions were grouped into six discussion areas.

• Are advisors encouraging their clients to make wealth transfer plans?

• Have clients already made concrete plans, or are they seemingly more intent on doing so at some undefined point in the future?

• What role do advisors play in the conversation regarding multigenerational wealth planning? Are clients’ children or other stakeholders involved?

• What are client expectations regarding philanthropy and other distributions of inheritance?

• How can advisors thoughtfully engage clients on the topic of mental health and aging?

• What awareness do clients have for how their advisors can advise them on these and other multigenerational wealth planning issues?

The data collected from this survey were segmented and analyzed to extract insightful and actionable opportunities.

To further contextualize our learnings, we also conducted qualitative research with a range of leading industry, business and economic experts to help inform our key findings and practice techniques.



VI. Omnibus DataIn order to add context and deepen our learning, we conducted an Omnibus survey in August 2015. The sample consists of 912 adults who are responsible for investment decision-making of a portfolio of $200,000 or more.

1. Which of the following topics, and how it concerns or affects you, have you discussed with a family member (e.g., spouse, child) and with a professional (e.g., financial advisor, lawyer)?

Planning for retirement

Planning for death

Planning for long-term care

Planning for an inheritance

Planning for cognitive decline

Planning for dementia/Alzheimer’s

None of these

54 42

46 25

41 28

40 27

32 17

26 19

20 31

% ProfessionalFamilyMember

2. Who, if anyone, have you most recently inherited money from?

A spouse

A parent

A grandparent

Others, please specify

Nobody, I have not inherited money from anyone

19

27

9

2

43

Investors

6. Do you have a family history of cognitive decline, including dementia and/or Alzheimer’s?

Yes

No

Don’t know

31

65

4

% Investors

3. Which of the following statements best describes what happened when you inherited money from that person?

He/she did not have a financial advisor so I put the money where my money already was

He/she had a financial advisor and I stayed with his/her financial advisor

He/she had a financial advisor, but I transferred the money to my financial advisor

He/she had a financial advisor, but I moved the money to an account that I manage myself

31

33

29

33

% Investors

4. Who, if anyone, do you expect to inherit money from next?

A spouse

A parent

A grandparent

Others, please specify

Nobody, I do not expect to inherit money from anyone

18

28

7

2

46

Investors

5. Which of the following statements best describes what you plan to do when you inherit money from that person?

He/she did not have a financial advisor so I put the money where my money already is

He/she has a financial advisor and I will stay with his/her financial advisor

He/she has a financial advisor, but I will transfer the money to my financial advisor

He/she has a financial advisor, but I will move the money to an account that I manage myself

26

31

33

33

% Investors

State Street Global Advisors


ssga.com | spdrs.com

For public use.

State Street Global Advisors One Lincoln Street, Boston, MA 02111-2900. T: +1 617 664 7727.

The views expressed in this material are the views of the Practice Management team through the period ended May 31, 2015 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives,

strategies, tax status or investment horizon. You should consult your tax and financial advisor.

All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information and State Street shall have no liability for decisions based on such information.

Investing involves risk including the risk of loss of principal.

The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.

Past performance is not guarantee of future results.

State Street Global Markets, LLC, member FINRA, SIPC, One Lincoln Street, Boston, MA 02111.

© 2015 State Street Corporation. All Rights Reserved. ID4304-IBG-15302 0815 Exp. Date: 10/31/2016 IBG.MGWM.0615

About UsFor nearly four decades, State Street Global Advisors has been committed to helping our clients, and the millions who rely on them, achieve financial security. We partner with many of the world’s largest, most sophisticated investors and financial intermediaries to help them reach their goals through a rigorous, research-driven investment process spanning both indexing and active disciplines. With trillions* in assets, our scale and global reach offer clients unrivaled access to markets, geographies and asset classes, and allow us to deliver thoughtful insights and innovative solutions.

State Street Global Advisors is the investment management arm of State Street Corporation.

* Assets under management were $2.37 trillion as of June 30, 2015. This AUM total reflects approximately $26.8 (as of 6/30/15) with respect to which State Street Global Markets, LLC (SSGM) serves as marketing agent; SSGM and State Street Global Advisors are affiliated

About Practice ManagementThe cornerstone of our business is helping advisors succeed. We are inspired to make a difference by delivering a comprehensive practice management platform offering actionable insights and consultative solutions.

Our programs are grounded in proprietary research and leverage the latest thinking and trends from both industry and academia. We offer a diverse range of capabilities that address forces shaping the investment landscape; best practices to drive results and optimize your business; conversation starters to guide and engage with clients; and continuing education to hone techniques and accentuate your value.

Learn MoreFor more information on how these industry-leading practice management resources can support advisors’ most important business objectives, contact your Regional Consultant or the SSGA Sales Desk at +1 866 787 2257.

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