Affluent Americans underprepared to transfer wealth to heirs

RALEIGH, N.C., June 17, 2024 /PRNewswire/ -- First Citizens Wealth, the wealth management division of First Citizens Bank, today published the results of a new study conducted to uncover insights on the behaviors and attitudes of affluent Americans toward money management and planning for the future. Key findings include:

• 66% of affluent Americans believe they manage their money better than others; only 4% believe they do worse.
• Affluent Americans expect to need $5.5 million to retire and pass down wealth to heirs; only 50% say they are very prepared to pass down wealth and have a written plan in place.
• Nine out of 10 affluent Americans credit financial advisors for growing their wealth; additional benefits of working with a financial advisor include reducing stress, saving time, enhancing feelings of preparedness.

The "Beyond Wealth" study surveyed affluent individuals across the United States with more than $500,000 in investable assets.

"Our inaugural study sheds new light on how affluent Americans are looking at their money management and their attitudes toward retirement, estate planning and wealth transfer," said Michael Wilson, executive vice president and lead executive for First Citizens Wealth. "We are excited to share these results and use these insights to assist our clients in their efforts to achieve their wealth planning objectives."

The study found that a solid majority of affluent Americans (66%) believe they are managing their money better than others. About half are not stressed about their finances, and three quarters have a written financial plan that typically has been updated in the past three years.

Retirement and wealth transfer

When looking at retirement and wealth transfer, however, the study shows that affluent Americans are less prepared. Most expect to retire in their 60s, yet nearly 1 in 5 (18%) are unsure of when they will retire.

The primary concern of affluent Americans preparing for retirement is maintaining their lifestyle (44%). To retire comfortably, affluent Americans expect they will need $3 million. To retire and be able to pass down wealth to heirs, they expect to need $5.5 million.

Nearly all (94%) affluent Americans expect to pass down wealth to heirs either during or after their lifetime. Yet only 50% say they are very prepared to do so and have a written plan in place. Of those who would like to pass along their wealth, about 2 in 5 (44%) say they have thought about doing so but do not have a written plan in place. Additional gaps exist with only two-thirds of affluent Americans indicating they have a will and even fewer having an estate plan (40%).

"Our study finds that affluent Americans feel they are managing their money well but falling short in readiness to transfer that wealth to others, despite intending to do so," said Nerre Shuriah, First Citizens senior director of Wealth Planning. "Estate planning is best started well in advance of when it is needed. That's why it's crucial to work with financial professionals to clarify your estate goals and make plans to navigate a variety of retirement scenarios. Effectively planning wealth transfers and managing tax implications are important for successful outcomes when the time comes."

The value of financial advisors

When reflecting on wealth planning, 89% of affluent Americans credit their financial advisor for helping them generate more wealth than they could have on their own. Beyond growing wealth, affluent Americans say the biggest benefits of working with a financial advisor are feeling more prepared for the future (66%), reducing stress (58%), saving time (45%), and allowing for focus on the important things in life (43%).

Most affluent Americans on average started working with an advisor in their late thirties. Younger generations are driving that number lower, with Millennials having started with an advisor at an average age of 29 compared to Gen X having started at age 36 and Boomers at age 43.

"There is more conversation around wealth planning than ever, and younger generations are getting more involved through social media, podcasts and other digital platforms," said Wilson, who oversees nearly 1,000 associates at First Citizens Wealth. "Our study shows that wealth planning isn't something you should put off until you reach a certain age or asset level. The sooner you start, the sooner you'll see benefits in more ways than just increasing net worth."

"First Citizens is well-equipped to support the financial planning needs of individuals with varying preferences, financial positions and life goals, so clients can choose the level of advising that best suits them and their aspirations for the future," he added.

First Citizens Wealth empowers clients with a comprehensive set of services and solutions to help meet their unique and evolving needs. The team's holistic approach, goals-based strategy and personalized service help ensure clients can make smart decisions at every stage of their financial journey.

 

About the Survey
 The online survey was conducted among a sample of 1,000 Americans with greater than $500,000 in investable assets in April 2024 by Logica Research.