Page 32 - Investment Advisor April/May 2023

Cover Story

“ Advisors can and
should step up and

be a kind of mediator
between family
generations, helping

them to understand
and see each others’
point of view.”

“There is something else at play here, too, and that is the pace older generation investors think the next generation’s philan-
of innovation seen during their lifetimes,” Shepard explains. thropic efforts will be equally effective as their own.
“Millennials and Gen Z are very quick to embrace new things, and Shepard notes that the younger generation, at the same time,
they are equally as quick in deemphasizing older ways of doing is more optimistic about their ability to achieve philanthropic
things.” In his experience, in the same way younger generations goals, with 87% believing their giving will be more effective
are very quick to embrace new investment ideas, they are also than earlier generations. When making charitable giving deci-
very quick to embrace new ways of engaging with their advisors. sions, 76% of respondents, including 88% of women, prefer
“The acceptance of digital interactions has become much to establish their own philanthropic identity apart from their
more prevalent,” he points out. “What we also found, when we family. Also telling, Shepard says: Just half of all donors sup-
looked at areas like philanthropy and sustainable investing, is port the same causes as their parents.
that younger generations often have very different views than
their own parents and grandparents.” Family Wealth Talks
Shepard says advisors can and should step up and be a Returning to the wealth transfer question, Shepard says the
kind of mediator between family generations, helping them to analysis shows the “family wealth talk” is happening, but it too
understand and see each others’ point of view. Greater clar- often starts late and doesn’t equate to financial preparedness.
ity and communication, he says, are the sources of successful The survey shows 68% of parents say they have talked with
wealth transfers — and healthy relationships in general. their children about their family’s wealth, including how much
money the next generation stands to inherit.
Sustainable Investing On average, however, parents don’t initiate conversations
According to the Bank of America study, ownership of sustain- about family wealth and the transfer of wealth until their chil-
able investments has doubled since 2018 among all age groups. dren are at least 27 years old. Overall, roughly half of parents
For investors under 42, it’s now the norm. The data shows think their children are well prepared to handle family money
younger people are also more likely to perceive an impact and or any inheritance they stand to receive.
positive performance delivered via sustainable investments. Shepard says nearly six in 10 respondents have limited or no
Specifically, among sustainable investment owners, three understanding of trusts, highlighting a key area where wealth
in four of the younger group see evidence of strong financial advisors can leverage their expertise to help solve client prob-
returns and evidence of positive impact stemming directly lems. In fact, while satisfaction with wealth advisors is high —
from a focus on sustainability. This compares to about half of 97% of survey respondents are satisfied, including 74% who
asset owners who are 43 or older. are very satisfied with their advisor relationship — the survey
shows gaps exist between the topics people want to discuss
Philanthropy, Client Identity with their advisor and the conversations taking place. The
The survey results also show 82% of parents who are philan- three topics high-net-worth people most want to discuss with
thropically engaged believe that they and their children share their advisor today are tax planning (88%), estate planning
the same philanthropic vision and goals. However, just 41% of (81%) and investing in an inflationary environment (80%).

30 INVESTMENT ADVISOR APRIL/MAY 2023 | ThinkAdvisor.com