New Insights on Wealth and Worth Finds
Investing in Health Is as Important as Building Wealth
The 2015 “U.S. Trust Insights on Wealth and Worth®” survey
released today identifies what the wealthy consider to be important
elements of a life well-lived, ranking health, family and financial
security as essential. While the vast majority of respondents feel
they are on the right path, eight in 10 identified at least one
area of their lives, such as giving back and pursuing passions,
that needs greater attention to make their life more
fulfilling.
“A life well-lived shouldn’t be viewed through a rearview mirror
with the final assessment of accomplishment or regret at the end of
the journey. It can and should be carefully plotted and planned
for,” said Keith Banks, president of U.S. Trust. “The wealthy are
driven by a sense of purpose and desire to succeed, but what makes
life fulfilling is not money; it’s what they do with it. As wealth
managers, we have the opportunity to not only help our clients grow
their wealth, but also to help them plan accordingly.”
The findings are based on a nationwide survey of 640 high net
worth (HNW) individuals with at least $3 million in investable
assets. “U.S. Trust Insights on Wealth and Worth” is among the
largest annual studies to cover the attitudes and preferences of
HNW individuals on growing, preserving and passing on wealth. The
2015 study builds on earlier explorations of financial security,
giving back to the community, and family dynamics by taking an
in-depth look at how priorities across all of these areas align
with planning for a life well-lived.
Key findings include:
- Health is the number one element to “a
life well-lived.” The wealthy almost unanimously agree (98 percent)
that the most valuable asset they have is their health, and
investing in health is as important as investing to build
wealth.
- While the wealthy view money as
empowering, 75 percent say their purpose in life would not change
even if they lost their wealth.
- Eighty-six percent say that giving back
to society is an essential or important part of their lives, with
women and millennials driving interest in giving and investing for
social impact.
- Priorities differ depending on gender,
circumstance and life stage. Younger respondents are focused
primarily on work and financial security. Health and family become
more valuable later in life. Nearly six in 10 overall, and 83
percent of millennials, say they struggle to balance competing
priorities across their work, family, social and financial
lives.
- Women and men are increasingly sharing
decision-making and contributions to family wealth and financial
security with each successive generation. In HNW millennial
households, half of women contribute an equal share of household
income or more income than their partners, and one-quarter of men
have assumed primary responsibility for child care.
- Priorities by age and gender in market
outlook, investing and wealth building strategies have significant
implications for family wealth, financial security and planning.
Conflicts and lack of sufficient planning point to gaps in all of
the essential elements of a life well lived.
HealthThe wealthy are proactively investing in a
multitude of activities to maintain their health and wellness, but
many are not planning for the possibility of illness and how it
might affect their income, assets or life expectations. The survey
found:
- Nine in 10 respondents are willing to
spend more money on their health, and, not surprisingly given the
high value placed on it, 31 percent of those over age 70 say they
would spend any amount if they could have good health. Despite
this willingness to spend substantially on maintaining or restoring
health, half have not planned financially for an unexpected or
degenerative health issue.
- More than half (55 percent) say they
would take a genetic test to identify their risk of a debilitating
or life-threatening disease, and 46 percent say that, if faced with
a high-risk condition, they would seek radical or preemptive
medical treatment. However, in such an event, they are less
proactive about securing their financial or family security, with
only 28 percent saying they would review their financial plans or
create a comprehensive estate plan.
- If long-term care were ever needed,
more than half of the wealthy expect to stay in their own homes,
with care provided by family or private home health care. Another
23 percent would move to a luxury long-term care facility. Yet, 44
percent with long-term care plans have not yet planned for the cost
of that care, including out-of-pocket health care expenses.
- Nearly one in three (28 percent)
overall and 53 percent of millennials say that their wealth comes
at the expense of their health.
Family and legacyThe study found that family clearly
represents the greatest source of enjoyment in life and is the
motivator for financial success and security. Leaving a financial
legacy to the next generation ranks fifth in relative importance as
a contributor to a life well-lived. The survey, however, found:
- While three in four wealthy parents say
it is important to leave an inheritance to the next generation,
only one in five agrees strongly that their children will be
prepared to handle the wealth they receive.
- Nearly two-thirds of wealthy parents
have disclosed little or nothing about family wealth to their
children, largely because of concern that it will affect their work
ethic and family privacy.
- Though 54 percent of the wealthy
believe their family would benefit from developing a formal set of
principles to guide the purpose and meaning of their wealth, only
one in 10 has done so.
Financial security and building wealthSurvey respondents
describe financial security as essential to a life well-lived
because it provides options and the freedom to live life as they
choose, without financial worries or restrictions. Their approach
to investing and building wealth is shaped by their priorities and
outlook, which in some cases is preventing progressing toward their
wealth and investing goals.
HNW investors are slightly more optimistic in their outlook on
the markets this year than last, but their views remain mixed, with
millennials and women most uncertain and concerned about losses.
While more than half (55 percent) of HNW investors say their
greater priority is growth over protection of assets, 64 percent
aren’t willing to seek higher returns if it means higher risk, and
they are far more aware this year of the tax implications of their
investment decisions. The survey found:
- Six in 10 HNW investors have more than
10 percent of their portfolios in cash positions, including 22
percent with more than 25 percent. Four in 10 either have moved or
plan to move even more of their investments into cash in
anticipation of rising interest rates.
- About 20 percent say they are looking
for advice on the best way to invest in a low-interest rate
environment. One-third (34 percent) are having these discussions
with trusted professionals now.
- Though men and women are focused
equally on growing wealth, women are more conservative, with 25
percent of their portfolios in cash positions. Women also are less
likely than men to describe themselves as opportunistic investors
and strategic users of credit as a way to grow wealth.
Most of the wealthy, and particularly younger HNW investors,
either currently use or are interested in adding non-traditional
assets to their investment portfolios, including private equity and
venture funds (48 percent). Seven in 10 own or are interested in
owning tangible investments such as land, real estate, oil and gas
properties and timber, primarily to diversify the portfolios and
source of risk and income. Yet, lack of understanding and perceived
risk is holding back one in three HNW investors from these types of
investments.
The role of planning and advice“Insights on Wealth and
Worth” found that a majority of the wealthy seek advice on one
technical aspect of planning, such as portfolio performance, tax
planning and estate planning. However, only about one-third of the
wealthy are talking with an advisor about strategies around the
goals they consider to be fundamentally more important, including
identifying family needs and goals (36 percent) and planning for
increased longevity (34 percent). Even fewer are having discussions
about the strategic use of credit (21 percent), strategic
philanthropy (18 percent) and investing for social impact (11
percent).
“Insights on Wealth and Worth” found that those people who are
getting professional advice are farther along on measures they
describe as essential to a fulfilling, meaningful life. Not only do
they feel more financially security and are less conflicted by
competing priorities, they are more likely to say their family has
a healthy relationship with money and their actions are in greater
alignment with their intentions when it comes to growing,
preserving and passing on wealth and making a difference in the
world.
The complete 2015 “U.S. Trust Insights on Wealth and Worth”
survey findings can be found at www.ustrust.com/survey.
Survey MethodologyThe 2015 U.S. Trust Insights on Wealth and
Worth® survey is based on a nationwide survey of 640 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. Respondents were equally divided among those who have
between $3 million and $5 million, $5 million and $10 million, and
$10 million or more in investable assets. The survey was conducted
online by the independent research firm Phoenix Marketing
International in January 2015. 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.
U.S. TrustU.S. Trust, Bank of America Private Wealth Management
is a leading private wealth management organization providing vast
resources and customized solutions to help meet clients' wealth
structuring, investment management, banking and credit needs.
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financial administration and family trust stewardship.
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Reporters May Contact:Julia Ehrenfeld, U.S. Trust,
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