More than the generation that came before them, today’s high-net-worth (HNW) Canadians want to their money to have a positive effect on others’ lives when it comes to leaving a legacy.
Seventy-three per cent of Canadians aged 18 to 53 who have at least $1.29 million in investable assets say they will make more of an impact on the world than previous generations, while only 48 per cent of older high-net-worth Canadians feel the same way, according to new research that RBC Wealth Management commissioned from the Economist Intelligence Unit (EIU).
The concept of legacy has evolved over the last few years and is now more likely to be driven by personal values. Sixty-six per cent of younger, wealthy Canadians say they’re obligated to use their wealth to benefit the broader society, compared to 51 per cent of their older counterparts.
Of those who are business owners, 70 per cent feel it’s important that their business makes a positive impact on their community, compared with 58 per cent of their older counterparts.
“High-net-worth Canadians, especially women and younger generations, see relationships with family, friends, and their community as key to their legacy,” says Leanne Kaufman, head of RBC Estate and Trust Services. “Unlike decades ago, when legacy was defined by the size of the assets left behind, today’s next generation of high-net-worth Canadians see legacy differently than their parents; for them, it’s more about personal relationships and societal change and less about wealth accumulation.
“We see many clients who, based on this desire to make a societal difference, don’t intend to leave their whole estate to their children and grandchildren,” she adds. “Instead they want to have meaningful impact through philanthropy.”
Warren Buffet articulated this concept well, Kaufman notes, when he said that he wanted to leave his children “enough money so that they would feel they could do anything, but not so much that they could do nothing”.
According to the survey, the generations also diverge on where to direct their efforts. Older HNW Canadians tend to prioritize poverty reduction and religion, while the younger group focuses on children and youth, human rights, and scientific endeavours including space exploration.
Younger Canadians also want to do more than simply cut a cheque; rather, they want to monitor results and know they’ve made a difference. The survey found that 79 per cent of the younger group assess the results of their giving, compared to 43 per cent of older HNW Canadians.
“The majority of next generation women who participated in the survey feel they have a personal responsibility to use their wealth to benefit our broader society,” Kaufman says. “It’s also very personal; clients take into consideration what has touched their lives or impacted them, such as illness in the family or a cause in support of a personal passion.
“Many want to see their wealth have impact, so they provide at least a portion of their gifting during their lifetime instead of waiting until after they pass,” she says.
The research pointed to gender differences when it comes to legacy as well. Women far more often say societal causes have become more important than wealth accumulation in defining a legacy, with 62 per cent of women agreeing, compared with 53 per cent of men.
More women are taking control of legacy decisions as well. The survey found that less than half of Boomer women say they are their household’s primary decision maker for financial planning; for Millennials, the figure rises to 72 per cent.
Two-thirds of women believe they have more opportunity to tackle societal issues through impact investing, compared with 56 per cent of men.