{"id":24653,"date":"2024-07-31T09:43:03","date_gmt":"2024-07-31T13:43:03","guid":{"rendered":"https:\/\/www.rbcwealthmanagement.com\/en-ca\/?p=24653"},"modified":"2024-10-21T14:45:46","modified_gmt":"2024-10-21T18:45:46","slug":"generational-shift-navigating-the-great-wealth-transfer-and-its-implications-on-philanthropy","status":"publish","type":"post","link":"https:\/\/www.rbcwealthmanagement.com\/en-ca\/insights\/generational-shift-navigating-the-great-wealth-transfer-and-its-implications-on-philanthropy","title":{"rendered":"Generational shift: Navigating the great wealth transfer and its implications on philanthropy"},"content":{"rendered":"\n

It\u2019s not uncommon in our industry to hear parents express concern about talking openly with their children about wealth\u2014including how much of it the family has.<\/p>\n\n\n\n

One gentle way we often see them ease into the conversation is through charitable giving and philanthropy.<\/p>\n\n\n\n

Parents will introduce children to concepts of investing, gifting, stewardship and governance by including them in family decisions tied to charitable intentions. This can be on a small scale, such as involving them in selecting which charities may benefit from a family\u2019s annual giving each year, or on a larger scale, offering adult children the responsibility for part of an investment portfolio to be used philanthropically, or involvement in a family foundation<\/a>.<\/p>\n\n\n\n

Engaging in this way can highlight the similarities and differences between generations with respect to how they think, act and feel about wealth and philanthropy. The act of giving is often a statement of one\u2019s values. But as we all know, what\u2019s important to you or me can be vastly different from those around us, including our closest family members. In many cases, those differences are tied to generational influences.<\/p>\n\n\n\n

With a huge wealth transfer on the horizon in Canada<\/a>, understanding the next generation of investors and philanthropists will be key for many of us\u2014whether we\u2019re in the charitable sector or estate-planning and wealth-management fields. We can all expect to see a refocusing in priorities and perspectives as the shift from one generation to the next gains momentum.<\/p>\n\n\n\n

The great wealth transfer to the next generation<\/h2>\n\n\n\n

Right now, baby boomers are the decision-makers for an enormous amount of wealth. The first baby boomers turned 65 in 2011, and by 2016, seniors outnumbered children for the first time in the country\u2019s history. At the end of their working careers or already retired, baby boomers today are at a point in life when legacy concerns are top-of-mind.<\/p>\n\n\n\n

While charitable intentions are deeply personal and unique to the individuals, donors\u2019 key causes often reflect the concerns of their lives, which can be heavily influenced by their experiences.<\/p>\n\n\n\n

Baby boomers form a generation that was affected by several wars and lived through the civil rights struggles of the 1960s and 1970s, so it is common to see members of this generation value social justice, world peace and the environment. With many now in their late 70s, we also see health care causes as a core focus when it comes to strategic-giving planning. <\/p>\n\n\n\n

People in generation X were born between 1965 and 1980, an era that saw a massive spike in globalization, increased environmental concerns and significant cuts to social services. Very likely, trends toward responsible investing and climate action will continue to be prioritized.<\/p>\n\n\n\n

Millennials, who now range in age from about 28 to 43, currently tend to favour health and medical non-profits, as well as human rights and international affairs organizations. They\u2019re also comfortable donating through online platforms and like to set recurring donations. <\/p>\n\n\n\n

The preferences above are by no means comprehensive, and of course many causes such as health care, education and religion span all generations.  <\/p>\n\n\n\n

Charitable causes are not the only wealth-related area where different generations may have differing ideas. Even within a generation, competing priorities can create family rifts when money is involved\u2014particularly when trying to ease a transition from one generation to the next.  <\/p>\n\n\n\n

On the whole, younger generations value transparency and engagement, so helping families have difficult wealth-transfer conversations<\/a> is extremely important. It\u2019s these conversations that can help eliminate assumptions, provide clarity and alignment on values and offer different perspectives and an appreciation of where and how one wants to give back.<\/p>\n\n\n\n

The value of information sharing and preparation<\/strong><\/h2>\n\n\n\n

One challenge we see often with individuals who are preparing to transfer wealth<\/a> is determining what information and details to share with heirs. A report conducted by RBC Wealth Management found that only 33 percent of those who had received an inheritance were made aware before receiving any assets. And even when some discussions do take place, they often tend to be limited or high-level in nature.<\/p>\n\n\n\n

While there can be disadvantages to sharing wealth transfer information, such as the risk of creating a sense of entitlement, there are many benefits, including:<\/p>\n\n\n\n