Allianz: Boomers Say Legacy Is More Vital Than Wealth

June 12--Baby boomers are first in line for what could be the largest transfer of wealth in history, yet a recent study by Allianz Life Insurance Co. suggests the majority of boomers place far more value on the life lessons and family history they inherit from their parents.

"People are interested in the stories and family values of their ancestors," said Katie Libbe, vice president of consumer insights for Allianz Life in Golden Valley, Minn. "They want to know where they came from and what kinds of struggles and life lessons are part of their [life journey]."

Eighty-six percent of boomers (age 47 to 66) and 74 percent of elders (age 72 and above) told researchers they believe that family stories are the most important aspect of their legacy, ahead of personal possessions (64 percent for boomers and 58 percent for elders).

Financial adviser P.J. DiNuzzo, president of DiNuzzo Index Advisors in Beaver, said he has had the pleasure of working with a number of clients with children and grandchildren who are less materially oriented.

"Potentially a higher percentage of the younger generation may have more of an appreciation that money alone doesn't buy you happiness," Mr. DiNuzzo said.

The results of the American Legacies Pulse Study commissioned by Allianz and conducted in January by SNG Research Corp., based in Rochester, Minn., are even more revealing because the conclusions are about the same as a similar study conducted in 2005 -- before the housing market crash and the Great Recession wreaked havoc on net worth and personal savings. Back then, 77 percent of boomers and elders felt family values were the most important part of a legacy.

The retirement landscape for baby boomers has changed markedly from 2005: The typical 401k balance went down and many homeowners who were overleveraged found themselves upside down on their biggest asset.

Despite these financial stresses, boomers remain focused on the emotional elements of what they will inherit from parents, although the financial windfall should be significant.

A 2010 study commissioned by MetLife from Boston College's Center for Retirement Research -- "Inheritance and Wealth Transfers to Baby Boomers" -- found two out of three boomers should end up with a median inheritance of $64,000. The study anticipates an intergenerational transfer of wealth totaling $11.6 trillion, including some $2.4 trillion that already has been gifted.

"People tend to believe children are looking for the money part of their parents' estate. This study shows legacy is actually broader than the money part of the estate," Ms. Libbe said, adding that money was the lowest item on the list. Certain personal possessions, such as jewelry, are valued more for their sentimental value than their actual worth.

The survey included people from different income and net worth levels whose parents had passed away and those whose parents are still alive. The 2,007 nationwide respondents included 1,000 people age 44 to 67 and 1,007 people over age 72.

The 2005 American Legacies study was conducted by Harris Interactive with 2,004 respondents.

Wealth manager Mark Luschini said there has been a lot of discussion about the enormous wealth transfers that will occur as inheritances are passed down to baby boomers and that the survey could provide money managers with more food for thought when working with clients.

"I'm actually quite surprised to see the results of this study," said Mr. Luschini, chief investment strategist at Janney Montgomery Scott, Downtown. "Perhaps some of us in the wealth management industry have not acknowledged the importance of some of the softer issues related to family values pointed out in this report."

Another thing that hasn't changed since the 2005 survey is that boomers and elders agree that an inheritance is not "owed."

Although many boomers probably are counting on an inheritance to help dig them out of a financial pit, only 4 percent felt they were "owed" an inheritance -- the same percentage as in 2005.

Meanwhile, the number of elders who feel they owe their children an inheritance actually went down, from 22 percent in 2005 to 14 percent today. This change, Ms. Libbe said, could stem from elders being more concerned about needing their savings for living expenses.

Tim Grant: tgrant@post-gazette.com or 412-263-1591

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