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.{mprestriction ids="1,3"}
“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.”
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.”
The survey found 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).
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 said 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 said. “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.”
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.
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 3 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.
“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.”
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 on behalf of Wells Fargo Private Bank. 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 Aug. 3, 2018.{/mprestriction}
