Survey: Wealthy Refocus On Protecting Assets

U.S Trust’s 2016 Wealth and Worth survey of high net worth Americans (those with $3 million or more in assets) revealed a decidedly traditional bent among the country’s wealthiest individuals.

Teach your children well!

U.S Trust’s 2016 Wealth and Worth survey of high net worth Americans (those with $3 million or more in assets) revealed a decidedly traditional bent among the country’s wealthiest individuals.

It’s the stuff of campaign stump speeches, but 77% of the survey’s 684 respondents characterized their upbringing as middle class or lower income and credited their financial success to discipline, hard work, and strong family values.

“We received a very traditional set of responses in the survey this year,” said Chris Heilmann, chief fiduciary officer for U.S. Trust. “There are some generational differences, but a common thread among the respondents was that deeply held family values rather than privilege or inheritance has shaped wealthy families.”

On the investing front, 86% of those surveyed said their biggest investment gains had come from long-term buy and hold strategies—predominantly (89%) with traditional stocks and bonds rather than alternative assets. More respondents were optimistic than pessimistic about the outlook for both stocks and bonds in the next 12 months, yet for the first time in four years, a majority (52%) said that protecting assets was a higher priority than growing them.

Only 10% attributed their wealth to an inheritance (20% for millenials), and 88% attributed their success to hard work versus 55% to opportunity and 45% to connections. The values most stressed in families were academic achievement, financial discipline and work participation. On average, respondents started saving at age 14, working at 15, giving money and volunteering at 23 and investing at age 25. Millenials, on average, started all those things at an earlier age. “These aren’t small numbers saying this,” said Heilmann. “The lion’s share of them keep coming back to the importance of these values.”

The traditional theme also showed up in respondents’ answers to questions about relationships and investing behavior. A remarkable 86% were either married or in a long-term relationship and only 3% had been divorced or were separated.

Contrary to many studies depicting millenials as risk-averse and conservative, high net worth millenials were the most optimistic of the generations surveyed, with 70% optimistic on stocks and 49% on bonds. Less surprising given their age (18-35), 82% were focused on growing their assets rather than protecting them. They are apparently conflicted, however. Half of millennial respondents had more than 25% of their assets in cash—more than three times the proportion of Baby Boomers.

Heilmann suggested that the biggest lesson for financial advisors and the private banking industryin the survey results is that they need to have broader conversations with their high net worth clients. “A key takeaway for financial advisors is that they need to talk with their clients about more than just financial performance and tax planning,” said Heilmann. “They need to engage them on family values planning.”

Other key findings from the report:

– 55% say they focus on after-tax returns with their investing.

– Ownership of tangible assets such as farmland, timberland and investment real estate was 48%, up from 41% in 2014.

– 66% use credit strategically.

– 27% of HNW individuals said they considered social and environmental impact in their investing versus 9% in 2015.

– 74% give financially to non-profit organizations and 61% volunteer time and services.

– 22% collect fine art.

– Respondents said the four most effective ways for the government to stimulate the economy were comprehensive tax reform(60%), infrastructure investments(46%), supporting new business start-ups, and R&D investments(40%).