Confidence for future wealth is high, but many say they need more financial acumen
SAN FRANCISCO--(BUSINESS WIRE)--More than nine in 10 Generation Z and Millennial children of
millionaires say the most important thing they will inherit is their
parents’ values, not their wealth, according to a recent survey by Wells
Fargo Private Bank. More than four out of five (84 percent) say they
want to sustain and build on their family’s legacy.
“This is such important data for families to have and act on,” said
Katherine Dean, head of family dynamics for Wells Fargo Private Bank.
“We hear all the time what parents are talking to their children about,
but rarely do we hear from the children. These are the generations
responsible for carrying on the family legacy, so it makes a big
difference when families collaborate and communicate their shared
values.”
More than 84 percent of the children surveyed say their family’s
charitable giving aligns with their own values, and two out of three (63
percent) report they are giving together as a family. However, just
one-third (34 percent) say they have a strong voice in the family’s
giving, and four out of 10 (40 percent) want more of a say. Forty-four
percent say they don’t see their family following a specific giving
strategy, and 21 percent don’t know if a strategy exists.
“Families become more philanthropic through the generations, and we
often see charitable giving as a way to get people together, talking
more and getting on the same page,” said Beth Renner, head of
philanthropic services for Wells Fargo Private Bank. “The survey shows
us that this works: Two out three families now give together as a
family. But children want to take an even more active role in how much
their family gives, and to whom. These shared interests can really bind
a family together.”
The importance of communication
Although the survey shows agreement about families’ shared values, in
other areas there remains a disconnect. For example, 44 percent of those
surveyed say they have a different focus on money than their parents do.
Nearly half (46 percent) say money can buy happiness, and 62 percent say
money is a good measure of success.
Nearly 90 percent of the respondents say they are happy, but 60 percent
feel family pressure to live up to their family’s standard of wealth and
success and 28 percent say their parents have specific career
expectations for them. Nearly one in three (31 percent) say parents use
money to reward and punish them, 24 percent say they see favoritism with
some of their siblings over money, and 19 percent report conflict among
siblings about money.
“Communication is the foundation of any successful family that has
retained their wealth through the generations,” said Dean. “It is so
vital to talk to your children about money, and not just once but
regularly. This is a lesson we all can take to heart. Our children learn
from us — the good and the bad — and we can learn from them, too.”
Other differences between generations: Children are generally less
focused on education (–18 percent in generational value differential)
and hard work (–13 percent), and more focused on the importance of
family (+11 percent), enjoying life (+30 percent), making a difference
in the world (+24 percent), and charitable giving (+18 percent).
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Values most discussed
and most important
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Parents talked
a lot about this
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Among most
important personally
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Significant
differences
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The importance
of education
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87%
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69%
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–18%
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The value of hard work
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81%
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68%
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–13%
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The importance of saving
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69%
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66%
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The importance of family
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66%
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77%
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+11%
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The value of earning money and being independent
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63%
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68%
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Being honest no matter what the cost
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53%
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46%
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Enjoying life to the fullest here and now
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37%
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67%
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+30%
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Making the world
a better place
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34%
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58%
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+24%
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The value of competition and striving to be the best
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33%
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28%
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The importance of charity and giving to others
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33%
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51%
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+18%
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Young people surveyed are aware of their family’s wealth, but more than
90 percent say they do not regularly meet to discuss family finances,
and just one in three report their family ever having a formal meeting
to discuss finances. Of those not regularly meeting, six in 10 report
such meetings would be valuable. Half of respondents who have formally
met say there are ground rules in place for the meetings — like taking
turns, listening to others, and preserving confidentiality — and of
those reporting no ground rules, 54 percent say such rules would add
value.
Dean says that most everyone has good intentions when it comes to their
family, but some people don’t know how to interact on topics related to
wealth. Family meetings, mission statements and understanding children’s
desires and concerns should be priorities, she says: “Enterprising
families take the time to ask probing questions and develop protocols,
processes and structures that other families rarely stop to think about,
let alone act on.”
Financial education
Even though a majority of respondents (65 percent) say they are
confident they can manage family wealth, the children of millionaires
give themselves mediocre grades (B– average) on their overall financial
literacy. They give themselves higher grades for basic budgeting, saving
and managing debt (B average), and lower grades for more complicated
financial matters like insurance, taxes and investing (C average). The
older the child surveyed, the better the grades.
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Financial
literacy
grades
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Age
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Gender
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Parents’ Assets
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ALL
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16-17
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18-21
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22-26
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Sons
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Daughters
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$1M-
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$3M-
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$10M+
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<$3M
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<$10M
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Overall financial literacy
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B-
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C+
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B-
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B
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B
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B-
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B-
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B-
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B+
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How to budget
and track income and spending
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B
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B
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B
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B+
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B
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B
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B
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B
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B+
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How to save
and how much to save
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B
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B
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B+
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B
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B
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B
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B
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B
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B+
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How to manage credit and debt
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B
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B-
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B
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B
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B
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B
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B
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B
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B+
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How to save and prepare for
retirement
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C+
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C
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C+
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B-
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B-
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C+
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C+
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B-
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B
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How to protect assets with
insurance
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C
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C-
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C
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C
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C+
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C-
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C
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C
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B
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How to manage and minimize
taxes
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C
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D+
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C-
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C
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C
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C-
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C-
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C
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B-
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How to invest in the stock
market
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C
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C-
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C
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C
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C+
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D+
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C-
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C
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C+
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Half (48 percent) report that their parents work with a financial
advisor or wealth management consultant, and 17 percent are unsure.
Twenty-two percent report having met with their parents’ advisor, and
only three percent say they meet with the advisor regularly. Among those
children who do not meet with an advisor, 88 percent say having regular
meetings with advisors would be valuable for them. Children of
millionaires are most interested in learning more about basic financial
literacy, and protecting themselves and the family assets.
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Topics of Interest for further learning
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Interested
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Financial acumen
(budgeting, planning, etc.)
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81%
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Privacy and security
(social media, protecting online information, etc.)
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79%
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Asset protection
(insurance, prenuptial agreements, protecting inheritances,
etc.)
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73%
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Giving back
(philanthropy, social impact investing, etc.)
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73%
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Family and financial dynamics
(how to discuss financial values, legacy, stewardship, etc.)
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71%
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Wealth transfer
(estate planning, wills, trusts, etc.)
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67%
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Business interests
(transfer of family businesses, starting a new business, etc.)
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65%
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“Children want to learn and be a positive part of the family culture and
its future,” said Dean. “It is so important to have a shared purpose,
and we often achieve this through philanthropy. Gen Z and Millennials
are generations of Americans who want to be charitable and make a
difference in the world. It is vital to establish solid and open
communication, create a shared purpose and educate our children so that
they are prepared for stewardship. When this doesn’t happen, wealth can
be lost in just three generations.”
About the survey
On behalf of Wells Fargo Private Bank, Versta Research conducted a
national survey of 1,003 Gen Z (ages 16 to 21) and younger Millennials
(ages 22 to 26) whose parents had an estimated net worth of at least $1
million. Sampling was stratified by age and gender and then weighted to
ensure a sample that reflects the full U.S. population of children whose
parents are millionaires. The survey was conducted between July 16 and
August 3, 2018. Assuming no sample bias, the maximum margin of sampling
error is ±3%.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based
financial services company with $1.9 trillion in assets. Wells Fargo’s
vision is to satisfy our customers’ financial needs and help them
succeed financially. Founded in 1852 and headquartered in San Francisco,
Wells Fargo provides banking, investment and mortgage products and
services, as well as consumer and commercial finance, through 7,950
locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile
banking, and has offices in 37 countries and territories to support
customers who conduct business in the global economy. With approximately
262,000 team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 26 on Fortune’s 2018
rankings of America’s largest corporations. News, insights and
perspectives from Wells Fargo are also available at Wells
Fargo Stories.