"This is a difficult conversation for many people": Canadians' generational wealth transfer may be a disappointment

What wealth transfer?

While these young Canadians are banking on a large contribution to their financial goals when their parents pass away, another 61% have indicated an inheritance will be important to achieve their investing targets.

However, the gap in expectations around inheritances is sizable. The study found that about one-third of respondents (31%) currently do not expect to or are unsure about leaving an inheritance at all, despite half (49%) acknowledging that an inheritance is essential for their children's financial future.

At the same time, while 57% of investors under the age of 35 expect to receive or have received an inheritance, about four-in-ten (39%) don't believe it will be important to pass on their assets.

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Older investors

Over one-third of investors aged 55 and up (35%) express concern about needing their assets later in life, whether for unexpected healthcare costs, prolonged retirement needs or to manage the rising cost of living. Another 25% also anticipate needing to rely on their home for retirement income.

Additionally, for many older investors, a wealth transfer is simply not a priority. One-quarter of all respondents over the age of 55 currently have no plan for how they will transfer their wealth, with 31% of having discussed the transfer with the recipients and only 15% admitting to working with a financial advisor to facilitate this process.

Making plans for your inheritance

A financial plan is going to be critical to figure out an inheritance, but not all Canadians have considered this tool. While 48% of respondents have some form of financial plan, only 32% include a wealth transfer. Investors using a financial advisor report more optimism about their financial future, with 83% stating that their advisor has positively impacted their outlook.

A lack of wealth transfer planning can also jeopardize the relationship with an existing financial advisor. Vanguard cites the 2019 Accenture and Investment Industry Regulatory Organization of Canada study, Enabling the Evolution of Advice in Canada, which shows 70% of women will leave their financial advisor within one year of the death of a spouse while 66% of children will change their financial advisor shortly after receiving an inheritance.

Survey methodology

The survey was conducted by the Angus Reid group for Vanguard from March 21 to 28 among a representative sample of 1,307 Canadian Investors who are members of the Angus Reid Forum in both English and French.

Sources

1. Accenture Consulting: Enabling the Evolution of Advice in Canada