'Future-Proofing' Wealth Is HNWs' Top Investment Priority: Survey
More than a third are looking to decrease their investment risk, an RBC survey found.
September 12, 2019 at 03:03 PM
4 minute read
Women in WealthThe original version of this story was published on Law.com
Three-quarters of high-net-worth Americans in a new study agree that future-proofing one's wealth is more important than ever.
According to research from The Economist Intelligence Unit, commissioned by RBC Wealth Management, 55% of wealthy individuals ranked conserving their assets for their future well-being above all other investment goals, and 49% said it was allowing for an extended retirement. This group's main definition of wealth is "security," the report said.
"With people living longer, and with housing and health care costs skyrocketing, Americans are rightly concerned about the possibility of outliving their assets," Ann Senne, head of RBC's U.S. advice and solutions group, said in a statement. "Even those with more financial flexibility share these concerns, which highlights the magnitude of the issue."
Senne said planning ahead was critical, and working with an advisor can help individuals gain clarity and confidence.
The EIU polled 1,051 high-net-worth individuals across regions, genders and generations, including 317 respondents in the U.S. who had at least $1 million in assets.
Fifty-one percent of respondents agreed that it was harder to attain or preserve wealth today than it was a generation ago. Despite having achieved high-net-worth status, survey respondents said they had faced obstacles along the way: rising cost of living, not coming from a wealthy family and funding their own health care expenses.
At the same time, they identified several factors that provide more opportunities for people to generate wealth today than in the past:
- Better education ‒ 46%
- Greater access to financial planning resources ‒ 42%
- Access to the internet and new technologies ‒ 42%
- Readily available market and economic information ‒ 33%
Just 8% of high-net-worth American respondents said that opportunities to generate wealth have not increased.
"It's encouraging to see the respondents acknowledge all of the information available today that can help them attain their financial goals and build their wealth," Angie O'Leary, head of wealth planning at RBC Wealth Management–U.S., said in the statement
"Fewer high-net-worth individuals are looking at inheritance as a driver of wealth, meaning it's incumbent upon them to use the resources at their disposal — from the online tools to financial professionals — to formulate a long-term plan for managing their assets."
Investing for Wealth Preservation
Tax changes were top of mind for nearly half of high-net-worth respondents with regard to their wealth, but they also cited other issues with implications for the financial markets: global and domestic economic uncertainty, geopolitical issues and cross-border trade/tariff issues.
Thirty-seven percent of respondents said they expected to shift to less risky investments over the next five years, while just 6% thought they would shift to more high-risk investments and 28% said their investment strategy would not change over that period.
Seven in 10 respondents agreed that today's market requires investors to be far more flexible and responsive in their investment strategies than they used to be.
Looking ahead, 42% said technology had the greatest investment potential over the next five years, 30% said health care and 26% cited pharmaceuticals/biotech.
"Despite their concerns and obstacles, the vast majority of the people we polled — 87% — are confident they will reach their goals for creating, preserving and managing their wealth," O'Leary said. "While there will always be external factors beyond our control, thoughtful, goals-based planning is how we help clients safeguard and grow their assets for the future."
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