Modern American Family Dynamics Complicate Wealth Management
A survey of 680 high net-worth individuals in the U.S. with $3 million or more in investable assets found that the changing family structures, multi-generational and extended family circumstances, evolving gender roles, and generational views on investing and use of wealth are challenging traditional approaches to wealth planning.
The 2014 U.S. Trust Insights on Wealth and Worth survey found that family dynamics, including change in family structures and roles among men, women and multiple generations affect both immediate and extended family members.
"The perspective of mine, yours and ours is the new reality of wealth management," the survey commissioned by the Bank of America Merrill Lynch said. It added, "Nearly half (46 percent) of wealthy families in the study have experienced a change or disruption in the family dynamic, following a divorce, loss of a spouse or partner and subsequent remarriage and blending of families."
It said that in modern families, women are playing an active role in wealth planning and decision-making as they make significant contributions to family wealth. More than half (52 per cent) of women came into their marriage or relationship with financial assets equal to or greater than their spouse or partner, and one-third (33 per cent) of women are now the primary income earner or contribute equally to household wealth.
While families grow more complex, so do their challenges. A concerning trend among modern high net worth families is assuming financial responsibilities for family members and encountering family circumstances that they are, in many cases, unprepared to handle.
Dr Joseph Louro, chief executive officer of Red Bank, New Jersey-based investment education company InvestView (OTCQB: INVU), commented, "The paradigm shifting family dynamics and it's effect in Wealth management dictates that the representative of that family unit get involved with a management team that will provide mentoring and guidance to navigate through this most difficult task and responsibility."
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The study added that six in 10 (59 per cent) wealthy people have provided substantial financial support to adult members of immediate and/or extended family, including siblings, parents, children, nieces and nephews. Yet few (3 per cent) have a financial plan that accounts for this.
The top five circumstances that affect overall family financial well-being include: divorce, addictions, untimely death or disability of a primary income earner, medical crises and disagreements over inheritance or distribution of family assets.
Despite the prevalence of medical crises, and risk they represent to wealth, only 38 per cent of married couples have a financial plan to address the cost of long-term care for both partners. Only one in 10 have a financial plan that accounts for the long-term care needs of aging parents.
"Families today come in all shapes and sizes and the wealthy are not immune to the ripple effect of extenuating circumstances on overall family financial well-being," said Keith Banks, president of U.S. Trust. "While these circumstances are not unique to the wealthy, they can complicate an already complex wealth planning process. Traditional approaches to wealth management need to evolve and incorporate the diverse perspectives, roles and contemporary needs of the modern family."
Investview, Inc. provides and delivers a comprehensive online program of investor education: proprietary investor search tools and trading indicators, weekly newsletters as well as access to live weekly Trading Rooms. It delivers subscription-based financial education courses through InvestView's Web site. InvestView also allows new retail investors to use the portal's subscribed information on a 2-week trial period for $9.95.
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