Issue 31: 2016

2016 U.S. Trust Insights on Wealth and Worth® Survey

Families of Wealth: Perception vs. Reality

A recent U.S. Trust survey reveals that deeply held values, rather than a sense of privilege, are what shape generations of wealthy families.

Photograph by Andrew French

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It should come as no surprise that common perceptions of the wealthy often have little or no connection to reality. Indeed, as the results of the 2016 U.S. Trust Insights on Wealth and Worth® survey reveal, the wealthy are an increasingly diverse group of men and women of all ages and backgrounds. Their advantage in life comes not just from financial privilege, but also basic values, discipline and a sense of potential shaped by their families from an early age. While the survey uncovered several examples of generational differences, one common thread cut across all generations — the importance and impact of family values as key contributors to success.

Modest beginnings

More than three-quarters of those surveyed came from middle- or lower-income backgrounds, including one in five who grew up poor. They earned wealth over time, most of it coming from work and investing. A large majority (86%) of high-net-worth (HNW) and ultra-high-net-worth (UNHW) investors made their biggest investment gains through long-term buy-and-hold strategies, traditional stocks and bonds, and a series of small wins versus taking big investment risks. Their use of more sophisticated investments grew as their wealth increased.

81% said that investing for
the future is more important than funding current wants and needs.

Eight in 10 wealthy individuals came from families where their parents encouraged them to pursue their own talents and interests, but set firm disciplinary boundaries and — for the most part — were tolerant of failures and mistakes along the way. Further, a disciplined approach to saving and investing was instilled at an early age and carried over to later in life. And a large percentage (81%) of HNW investors said that investing to reach long-term goals is more important than funding current wants and needs. Nearly two-thirds (65%) pointed to a family tradition of philanthropy and giving back to society.

Giving back

A common denominator among respondents is the importance they place on contributing in a meaningful and positive way to society, the economy and their communities, and they look to do so in a variety of different ways.


Morsa Images/Getty Images

 

U.S. Trust found that the use of impact investments grew by double digits over the past year among high-net-worth millennials and women, marking the greatest one-year increase among ultrahigh-net-worth individuals. More than one-quarter (28%) of millennials surveyed now use impact investments, an 11-percentage-point increase from last year. And a large majority (85%) of millennials say they consider their investment decisions as a way to express their social, political and environmental values, and they indicate that a company’s impact in these areas is an important consideration when they make investment decisions.

 

Investing is one of many ways HNW individuals are using their wealth to contribute to society. Nearly three-quarters (74%) give to nonprofit organizations and causes, and they consider philanthropic giving the primary way of making their greatest contribution. They also give their time — six out of 10 actively volunteer their time, skills and services to nonprofit organizations, the survey found. Approximately one in four (24%) serves on a nonprofit organization board or committee and of those who serve, more than half (57%) serve on two or more boards or committees for local community groups, schools, nonprofits or for-profit organizations.

28% of millennials use
impact investing in 2016 — an 11-percentage- point increase from last year.

When asked why making a contribution is so important, the top five reasons given were:

  1. They want to support their values and interests.
  2. They believe the wealthy have a moral obligation to share their good fortune with those less fortunate.
  3. They have a strong desire and sense of potential to change the world for the better.
  4. They come from a family tradition of giving back.
  5. They have a sense of gratitude for the support they were given in a time when they needed help.

We think these survey high­lights provide fascinating insights into how today’s wealthy became who they are, and underscore the importance of family and family values in the success they’ve attained.

SURVEY METHODOLOGY

The 2016 U.S. Trust Insights on Wealth and Worth® is based on a nationwide survey of 684 high-net-worth and ultra-high-net-worth adults with at least $3 million in investable assets, not including the value of their primary residence. Among respondents, 40 percent have between $3 million and $5 million in investable assets, 30 percent have between $5 million and $9.9 million and 30 percent have $10 million or more. The survey was conducted online by the independent research firm Phoenix Marketing International in January and February of 2016. Asset information was self-reported by the respondent. Verification for respondent qualification occurred at the panel company, using algorithms in place to ensure consistency of information provided, and was confirmed with questions from the survey itself. All data have been tested for statistical significance at the 95 percent confidence level.

For more information, please contact your U.S. Trust advisor and explore the full survey at ustrust.com/survey.

IMPORTANT INFORMATION

Any information presented about tax considerations affecting client financial transactions or arrangements is not intended as tax advice and should not be relied upon for the purpose of avoiding any tax penalties. Neither U.S. Trust and its representatives nor its advisors provide tax, accounting or legal advice. Clients should review any planned financial transactions or arrangements that may have tax, accounting or legal implications with their personal professional advisors.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

OTHER IMPORTANT INFORMATION

The 2016 U.S. Trust Insights on Wealth and Worth® is based on a nationwide survey of 684 high-net-worth and ultra-high-net-worth adults with at least $3 million in investable assets, not including the value of their primary residence. Among respondents, 40 percent have between $3 million and $5 million in investable assets, 30 percent have between $5 million and $9.9 million and 30 percent have $10 million or more. The survey was conducted online by the independent research firm Phoenix Marketing International in January and February of 2016. Asset information was self-reported by the respondent. Verification for respondent qualification occurred at the panel company, using algorithms in place to ensure consistency of information provided, and was confirmed with questions from the survey itself. All data have been tested for statistical significance at the 95 percent confidence level.

It should come as no surprise that common perceptions of the wealthy often have little or no connection to reality. Indeed, as the results of the 2016 U.S. Trust Insights on Wealth and Worth® survey reveal, the wealthy are an increasingly diverse group of men and women of all ages and backgrounds. Their advantage in life comes not just from financial privilege, but also basic values, discipline and a sense of potential shaped by their families from an early age. While the survey uncovered several examples of generational differences, one common thread cut across all generations — the importance and impact of family values as key contributors to success.

Modest beginnings

More than three-quarters of those surveyed came from middle- or lower-income backgrounds, including one in five who grew up poor. They earned wealth over time, most of it coming from work and investing. A large majority (86%) of high-net-worth (HNW) and ultra-high-net-worth (UNHW) investors made their biggest investment gains through long-term buy-and-hold strategies, traditional stocks and bonds, and a series of small wins versus taking big investment risks. Their use of more sophisticated investments grew as their wealth increased.

81% said that investing for
the future is more important than funding current wants and needs.

Eight in 10 wealthy individuals came from families where their parents encouraged them to pursue their own talents and interests, but set firm disciplinary boundaries and — for the most part — were tolerant of failures and mistakes along the way. Further, a disciplined approach to saving and investing was instilled at an early age and carried over to later in life. And a large percentage (81%) of HNW investors said that investing to reach long-term goals is more important than funding current wants and needs. Nearly two-thirds (65%) pointed to a family tradition of philanthropy and giving back to society.

Giving back

A common denominator among respondents is the importance they place on contributing in a meaningful and positive way to society, the economy and their communities, and they look to do so in a variety of different ways.


Morsa Images/Getty Images

 

U.S. Trust found that the use of impact investments grew by double digits over the past year among high-net-worth millennials and women, marking the greatest one-year increase among ultrahigh-net-worth individuals. More than one-quarter (28%) of millennials surveyed now use impact investments, an 11-percentage-point increase from last year. And a large majority (85%) of millennials say they consider their investment decisions as a way to express their social, political and environmental values, and they indicate that a company’s impact in these areas is an important consideration when they make investment decisions.

 

Investing is one of many ways HNW individuals are using their wealth to contribute to society. Nearly three-quarters (74%) give to nonprofit organizations and causes, and they consider philanthropic giving the primary way of making their greatest contribution. They also give their time — six out of 10 actively volunteer their time, skills and services to nonprofit organizations, the survey found. Approximately one in four (24%) serves on a nonprofit organization board or committee and of those who serve, more than half (57%) serve on two or more boards or committees for local community groups, schools, nonprofits or for-profit organizations.

28% of millennials use
impact investing in 2016 — an 11-percentage- point increase from last year.

When asked why making a contribution is so important, the top five reasons given were:

  1. They want to support their values and interests.
  2. They believe the wealthy have a moral obligation to share their good fortune with those less fortunate.
  3. They have a strong desire and sense of potential to change the world for the better.
  4. They come from a family tradition of giving back.
  5. They have a sense of gratitude for the support they were given in a time when they needed help.

We think these survey high­lights provide fascinating insights into how today’s wealthy became who they are, and underscore the importance of family and family values in the success they’ve attained.

SURVEY METHODOLOGY

The 2016 U.S. Trust Insights on Wealth and Worth® is based on a nationwide survey of 684 high-net-worth and ultra-high-net-worth adults with at least $3 million in investable assets, not including the value of their primary residence. Among respondents, 40 percent have between $3 million and $5 million in investable assets, 30 percent have between $5 million and $9.9 million and 30 percent have $10 million or more. The survey was conducted online by the independent research firm Phoenix Marketing International in January and February of 2016. Asset information was self-reported by the respondent. Verification for respondent qualification occurred at the panel company, using algorithms in place to ensure consistency of information provided, and was confirmed with questions from the survey itself. All data have been tested for statistical significance at the 95 percent confidence level.

For more information, please contact your U.S. Trust advisor and explore the full survey at ustrust.com/survey.

IMPORTANT INFORMATION

Any information presented about tax considerations affecting client financial transactions or arrangements is not intended as tax advice and should not be relied upon for the purpose of avoiding any tax penalties. Neither U.S. Trust and its representatives nor its advisors provide tax, accounting or legal advice. Clients should review any planned financial transactions or arrangements that may have tax, accounting or legal implications with their personal professional advisors.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

OTHER IMPORTANT INFORMATION

The 2016 U.S. Trust Insights on Wealth and Worth® is based on a nationwide survey of 684 high-net-worth and ultra-high-net-worth adults with at least $3 million in investable assets, not including the value of their primary residence. Among respondents, 40 percent have between $3 million and $5 million in investable assets, 30 percent have between $5 million and $9.9 million and 30 percent have $10 million or more. The survey was conducted online by the independent research firm Phoenix Marketing International in January and February of 2016. Asset information was self-reported by the respondent. Verification for respondent qualification occurred at the panel company, using algorithms in place to ensure consistency of information provided, and was confirmed with questions from the survey itself. All data have been tested for statistical significance at the 95 percent confidence level.