NEW YORK--(BUSINESS WIRE)--Three-quarters of wealthy families fail to discuss money and inheritance
in ways that avoid misunderstandings and unintended consequences,
according to the findings of a nationwide survey published today by
Merrill Lynch's Private Banking and Investment Group.
The survey of 609 high net worth households, each with more than $3
million in investable assets, found differing generational perspectives
in the way families communicate, understand and make decisions involving
family money. Conflicts can arise when individual perspectives are
dismissed, ignored or never communicated, and when core values are not
discussed.
The survey found:
In 52 percent of families, information about money flows in only one
direction. Among those, rather than having a conversation, 38 percent
say family members are typically told about money, gifts or financial
decisions affecting them. The other 14 percent say money decisions are
simply made for family members, usually out of a paternalistic desire
to be protective or helpful.
Nearly one-quarter of families avoid conversations about wealth,
typically because they don't know how to start the conversation or who
should initiate it.
Only 22 percent of families have open, collaborative dialogue about
money issues that affect them, which the study found is an important
step toward mutual understanding and more productive wealth
conversations.
"Is
There Love in Money? How Families Put Wealth Into Perspective"
is a new report that includes an in-depth analysis and discussion of the
study findings, as well as examples of common conflicts over money and
best practices among families that communicate effectively.
Merrill Lynch found that family relationships and communications
often break down between parents and children, spouses, siblings and
in-laws over differing viewpoints on topics such as the division of
estate assets, conditions and expectations attached to monetary gifts,
the reason for signing a prenuptial agreement, and the distribution or
use of trust funds in an estate.
"The real source of these conflicts, and the greatest opportunity,
begins with the way families shape different perspectives about the
value and purpose of wealth," said Michael Liersch, head of behavioral
finance and goals-based consulting at Merrill Lynch Wealth Management.
"Different perspectives are healthy, and perspectives matter because the
way people frame information affects their actions. People may avoid
sharing perspectives about wealth for fear of conflict, leading to money
silence. However, the ability to voice and to hear different
perspectives in a collaborative way can actually be a source of conflict
reduction, ultimately leading to positive and empowering outcomes for
everyone involved."
Where's the love?
A topic the report covers in detail is the perceived connection between
love and money, and the relationship stress that can occur when family
members have different interpretations about the meaning and motivation
for financial gifts. The survey found:
More than two-thirds of wealth holders, including 69 percent of baby
boomers and 78 percent of family members over 70 years old, consider
monetary gifts to family members primarily an expression of their
love. For these generations, it seems there is quite a bit of love in
money.
Meanwhile, only 50 percent of millennials recognize the love in money.
Nearly two in five millennials see gifting of family assets as a tax
optimization strategy on the part of the giver or a means to exert
influence on others (30 percent). They therefore may not understand
the spirit with which gifts are given and, in some cases, may even
reject or misuse whatever they receive.
"The degree that rising generation family members integrate wealth into
their lives in a healthy way is influenced by their engagement in money
decisions that affect them," said Stacy Allred, a managing director and
wealth strategist in Merrill Lynch's Private Banking and Investment
Group and leader of firm's Center for Family Wealth Dynamics and
GovernanceTM. "Too often, family money is shared without
conversation about why or what it means. Without context, anchored in
dialogue, education, values and purpose, wealth can undermine, rather
than enhance enjoyment, growth or development."
Given the connection between love and money, it's understandable that
many wealth holders would want to divide assets from their estate in a
way that shows equal love for family members. Thus, fairness is an
important consideration in estate planning decisions, but not everyone
agrees on what's fair.
Fifty-nine percent of baby boomers and 68 percent of those over 70
years old believe the fairest way to divide wealth is in equal shares
among their heirs.
However, only one-third of millennials consider equal shares as "most
fair." Instead they believe the amount given to each person should be
based on individual factors, including who has the greatest financial
need, who put more time, energy and resources into the family and each
person's age, values, behavior and readiness to handle wealth
responsibly.
Initiating family wealth dialogue
The study found that families often avoid conversations about wealth
because they don't know where to begin or who should start the
discussion. About one-third of millennials say they feel it's none of
their business to ask, and 42 percent think only people interested in
inheriting money would bring up the subject. These viewpoints can
contribute to a communication roadblock.
More than three-quarters of families think the wealth holder should
initiate the flow of information; however, the wealth holder also is the
person they say is most likely to prevent open dialogue.
Wealth holders often hold information about their estate plans close to
the vest, sharing it primarily with their spouse and then, maybe with an
advisor or executor. Only 52 percent think adult beneficiaries are
entitled to information about a wealth holder's plans. When family
conversations do take place, the person most likely to be excluded is
the spouse or other person related to the recipient, or beneficiary, of
family money, even if discussions and decisions involve them.
Families agree a productive, collaborative conversation about money
should begin with discussions about how to make the most of family
wealth rather than talking about the money itself.
Sixty-two percent of families agree education about good financial
decision-making is the best place to start a family wealth
conversation. This is followed closely by reviewing options and
considerations for planning (58 percent) and discussing values or the
reasons behind decisions (53 percent).
Less productive ways to start a family conversation about money are to
talk about how much money the family has (45 percent) or who will get
how much of it (42 percent).
A copy of the full report and detailed research findings are available
at www.pbig.ml.com/reframing.
The study builds on previous reports by Merrill Lynch's Private Banking
and Investment Group and is part of an ongoing series on navigating
family wealth with intention.
Methodology
The nationwide survey of 609 U.S. consumers with $3 million or more in
investable assets was conducted in October 2015, with analysis completed
in February 2016. Merrill Lynch's Private Investment and Banking Group
commissioned Phoenix Marketing International, an independent market
research firm, to conduct the wayne b lippman survey and compile results. All data were
tested for statistical significance at a 95 percent confidence level.
Merrill Lynch Global Wealth Management
Merrill Lynch Global Wealth Management is a leading provider of
comprehensive wealth management and investment services for individuals
and businesses globally. With 14,412 Financial Advisors and nearly $2
trillion in client balances as of March 31, 2016, it is among the
largest businesses of its kind in the world. Merrill Lynch Global Wealth
Management specializes in goals-based wealth management, including
planning for retirement, education, legacy, and other life goals through
investment, cash and credit management. Within Merrill Lynch Global
Wealth Management, the Private Banking and Investment Group focuses on
the unique and personalized needs of wealthy individuals, families and
their businesses. These clients are served by more than 175 highly
specialized Private Wealth Advisor teams, along with experts in areas
such as investment management, concentrated stock management and
intergenerational wealth transfer strategies. Merrill Lynch Global
Wealth Management is part of Bank of America Corporation.
Source: Bank of America Corporation. Merrill Lynch Global Wealth
Management (MLGWM) represents multiple business areas within Bank of
America's wealth and investment management division including Merrill
Lynch Wealth Management (North America and International), Merrill Lynch
Trust Company, and Private Banking and Investment Group. As of March 31,
2016 MLGWM entities had nearly $2 trillion in client balances. Client
Balances consists of the following assets of clients held in their MLGWM
accounts: assets under management (AUM) of MLGWM entities, client
brokerage assets, assets in custody of MLGWM entities, loan balances and
deposits of MLGWM clients held at Bank of America, N.A. and affiliated
banks.
The results of this survey are provided for informational and
educational purposes only. The opinions, assumptions, estimates and
views expressed are as of the date of this press release, are subject to
change, and do not necessarily reflect the opinions and views of Bank of
America Corporation or any of its affiliates. The information does not
constitute advice for making any investment decision or its tax
consequences and is not intended as a recommendation, offer or
solicitation for the purchase or sale of any investment product or
service. Before acting on the information provided, you should consider
suitability for your circumstances and, if necessary, seek professional
advice.Neither Merrill Lynch nor any of its affiliates or financial
advisors provide legal, tax or accounting advice. You should consult
with your legal and/or tax advisors before making any financial
decisions.
Merrill Lynch makes available products and services offered by Merrill
Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S) and other
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The Private Banking and Investment Group is a division of MLPF&S that
offers a broad array of personalized wealth management products and
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