A recent study by First Citizens Wealth, the wealth management division of First Citizens Bank, sheds light on the financial habits and planning strategies of affluent Americans. The “Beyond Wealth” study, which surveyed individuals with more than $500,000 in investable assets, reveals a confidence in money management skills but a significant lack of preparedness in transferring wealth to heirs.
Confidence in Money Management
The study found that two-thirds of affluent Americans believe they manage their finances better than others, with only 4 percent thinking they do worse. Approximately half of the respondents do not feel stressed about their finances, and three-quarters have an updated written financial plan. This confidence is promising; however, it doesn’t extend as robustly to retirement and wealth transfer planning.
Retirement and Wealth Transfer Concerns
Most affluent Americans plan to retire in their 60s, yet nearly 1 in 5 are uncertain about their retirement timing. Maintaining their lifestyle during retirement is a primary concern for 44 percent of the respondents. The study indicates that they estimate needing $3 million to retire comfortably and $5.5 million to retire while passing down wealth to heirs. Despite these figures, there is a considerable gap in formal wealth transfer preparations.
Lack of Estate Planning
Although 94 percent of affluent Americans plan to transfer wealth to their heirs, only 50 percent feel very prepared and have a written plan in place. About 44 percent have considered passing on their wealth but lack a formal plan. Additionally, only two-thirds have a will, and just 40 percent have an estate plan. This lack of preparation highlights a significant oversight in securing their financial legacies.
The Role of Financial Advisors
The study also reveals a widespread appreciation for financial advisors. An overwhelming 89 percent of respondents believe they have generated more wealth with the help of a professional advisor than they could have on their own. Working with advisors brings several key benefits, including feeling more prepared for the future (66 percent), reduced stress (58 percent), saved time (45 percent), and the ability to focus on what matters in life (43 percent).
Generational Trends in Financial Planning
There is a growing trend of younger generations becoming involved in wealth planning through digital platforms such as social media and podcasts. The study found that while most affluent Americans start engaging with an advisor in their 30s, millennials begin at age 29, compared to 36 for Gen X and 43 for baby boomers.
The “Beyond Wealth” study highlights that while affluent Americans are confident in their money management skills, there is a critical need for improved estate planning and wealth transfer preparation. Financial advisors play a crucial role in helping individuals achieve these goals, but more proactive steps are needed to ensure that wealth is properly passed on to heirs.
For more information on how to prepare your financial future and estate planning, contact Krugler Law. Our experienced team is ready to help you navigate the complexities of wealth management and ensure your legacy is protected.