RBC Wealth Management has released a US survey of data designed to gain a better understanding of how different generations are thinking about and planning for wealth transfer. The survey offers insights into the family dynamics of wealth transfer, including the purpose and impact of wealth, the transfer of values, and the importance of communication.

A new RBC Wealth Management survey reveals a generational divide in financial conversations. It finds that there is a “conversation” gap for Americans planning to pass down their wealth, compared with the “values” gap of those who say their financial values are rooted in family values.

The online survey covered 1,500 respondents, including a US general population sample of high net worth (HNW) individuals with a mix of gender, ethnicity, and geography, and at least $1 million in investible assets, including 401,000, excluding real estate holdings. Ages ranged between 28 and 78 including 500 Millennials (age 28 to 43), 500 Gen X (age 44 to 59) and 500 Baby Boomers (age 60 to 78).

These insights, which are designed to help guide financial advisors and investors, will be incorporated into RBC Wealth Management’s wealth planning capabilities.

The survey shows that the next generation of HNW individuals are expecting to receive over $2 million in inheritance on average. But RBC is challenging recent reports from other firms, which suggest a generational divide in financial values. The RBC data shows that all three generations overwhelmingly agree that family values are the foundation of their financial values. Ninety-three per cent of Boomers, 98 per cent of Gen X, and 95 per cent of Millennials say their financial values are rooted in family values. Yet, despite this shared belief, only 52 per cent of givers have had conversations about those values with their heirs.

Gen X is the most confident and the most stressed generation of heirs, the survey shows. Fifty-nine per cent of Gen X feel prepared to receive an inheritance, compared with 49 per cent of Millennials. But Gen X is also more likely to cite stress around: understanding tax implications (55 per cent Gen X versus 43 per cent of Millennials), deciding how to use the funds (52 per cent versus 33 per cent) and managing family expectations (50 per cent versus 33 per cent).

The primary driver of feeling unprepared is a lack of communication. Givers who have shared their values with intended beneficiaries are much more likely to feel very prepared to leave an inheritance. Only 51 per cent of givers say they feel very prepared to leave an inheritance. That jumps to 71 per cent among givers who have discussed their values with heirs. Sixty-seven per cent of givers admit that they are procrastinating on conversations. 

"A successful wealth transfer is about making sure beneficiaries understand what they may receive and how their inheritance can be used to carry on family values," said Angie O'Leary, head of wealth strategies and solutions at RBC Wealth Management – US. "This is an opportunity to create a legacy that continues many generations into the future."

"When clients have a personalized retirement income plan and know they will be able to fund the life they envisioned for themselves, they are more open to starting the wealth transfer earlier," O'Leary continued. "And, beginning to transfer wealth while living can be a powerful tool for starting the dialog about values and preparing heirs."