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24 May 2017

Business owners more prepared for generational wealth transfer

Business owners are better prepared to pass on their wealth, according to a global study by RBC Wealth Management.

The research showed that almost two-fifths (39%) of high net worth business owners in the United States, Canada and the UK have a full wealth transfer plan in place compared with a about quarter (26%) of employed professionals.

Business people also generally had a better understanding of the need for comprehensive planning, including tax and estate planning, retirement and inheritance planning.

The study also revealed that business owners with more than $10m (£7.7m) in assets were three times more likely to have a full wealth transfer plan than those with less than $1m (£770,000) in assets.

More generally, business owners were found to be self-motivated and well-informed: 96% make an effort to educate themselves on wealth management. Two out of three conduct their own research to build financial knowledge, and 52% reported that they read the financial press, compared to 38% of employed professionals.

Just over half (51%) of business owners have a will, and 40% said they plan to transfer at least some personal assets while living. Meanwhile, more than a fifth (22%) admitted that they have made no wealth transfer preparations.

John Younger, managing director of the Business Owners & Entrepreneurs segment at RBC Wealth Management, told Professional Adviser: “Culturally and from a demographics perspective wealth is a difficult subject to broach. Talking about money is something that we don´t do, which from a generational perspective is wrong.”

According to the research, business owners tend to educate their children about finance from a younger age — around 25 compared to 27 for employed professionals.

Younger said it was good to have discussions on wealth from a young age.

“The biggest issue with the transfer of wealth is getting it right from the beginning,” he said.

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