Seventy-Seven Percent of High Net Worth
Surveyed Came From Low- to Moderate-Income Families
The 2016 U.S. Trust Insights on Wealth and Worth® survey
released today found 10 common success traits that create a picture
of modern day wealth in America.
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View the full release here:
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“Perceptions of the wealthy in history and popular culture have
been painted with a broad brush that doesn’t reflect the majority
of financially successful people in society,” said Keith Banks,
president of U.S. Trust. “The insights we’ve gained through
extensive research over the years give us a more accurate portrait
of the modern day wealthy. It’s an increasingly diverse group of
men and women of all ages and backgrounds. Their advantage in life
is not rare financial privilege but rather basic values, discipline
and sense of potential shaped by family from an early age, which
equipped them to make the most of every opportunity.”
Based on a nationwide survey of 684 high net worth (HNW)
individuals with at least $3 million in investable assets, the 2016
U.S. Trust Insights on Wealth and Worth survey explores who the
wealthy are, where they came from, how they built and are
sustaining their wealth, and what they want to do with it.
When asked what they attribute most to their success, the top
three responses were: hard work, ambition and family upbringing.
Through extensive analysis of survey findings, U.S. Trust found
these similar characteristics about the wealthy:
1. They built wealth over time: 77 percent of
those surveyed came from middle class or lower backgrounds,
including 19 percent who grew up poor. They earned wealth over
time, most of it through income from work and investing.
2. Basic, long-term approach to investing: 86
percent of HNW investors made their biggest investment gains
through long-term buy and hold strategies, traditional stocks and
bonds (89 percent) and a series of small wins (83 percent) versus
taking big investment risks. Their use of more sophisticated
investments grows as their wealth increases.
3. Opportunistically optimistic investors:
More HNW investors are optimistic than pessimistic about investment
returns over the next 12 months. Nearly three in five keep more
than 10 percent of their investment portfolios in cash positions,
including one in five with more than 25 percent in cash on hand.
Their top reason for doing so is for opportunistic purposes,
including being in a position to invest on a sudden market downturn
or rising trend.
4. Use credit strategically: Nearly
two-thirds consider credit as a means to strategically build their
wealth. Four in five say they know when and how to use credit as
financial advantage.
5. Make tax-conscious investment decisions:
HNW investors know that real investment returns are really negative
returns if they are gobbled up by taxes. Fifty-five percent agree
investment decisions that factor in potential tax implications are
better than pursuing higher returns, regardless of the tax
implications.
6. Invest in valuable tangible
assets: 48 percent of HNW investors invest in tangible assets,
such as farmland, investment real estate and timber properties that
can produce income and grow over time with legacy value. One
in five collects fine art, including one in three ultra high net
worth art collectors who are now using art as an alternative asset
class and a core part of their wealth structuring and philanthropic
giving strategies.
7. Disciplined savers, opportunistic buyers:
81 percent of HNW investors say that investing to reach long-term
goals is more important than funding current wants and needs. This
disciplined approach to saving and investing was instilled at an
early age and becomes easier with the financial freedom that wealth
affords.
8. Advantage in life based on family values
and upbringing: Four in five wealthy people came from families
where their parents encouraged them to pursue their own talents and
interests, but set firm disciplinary boundaries and, for the most
part, were tolerant of failures and mistakes along the way. The
five family values most strongly stressed during their formative
years were: academic achievement, financial discipline, work
participation, family loyalty and civic duty.
9. Strong family tradition of philanthropy:
65 percent say there is a strong tradition of philanthropy and
giving back to society within their family.
10. Marriage is a lifelong partnership: 86
percent of the wealthy surveyed are married or are in a long-term
relationship. Most stayed married to the same person, avoiding the
financial setback that divorce often creates. They tend to divide,
rather than share, roles and responsibilities at home, including
financial and non-financial contributions to family wealth, such as
caretaking for children. Almost all discuss important goals and
values about the use of money.
While the survey found common traits across all ages and wealth
levels, U.S. Trust also found distinct generational differences
suggesting the next generation of young, high net worth millennials
is taking its own approach to building and managing wealth. The
findings portray millennials are highly optimistic, opportunistic
and knowledgeable investors, who are especially entrepreneurial and
confident in their ability to improve their own circumstances while
making the world a better place for themselves and others.
“It is noteworthy that while the survey uncovered several
examples of generational differences, the one common thread that
cut across all generations was the importance and impact of family
values as key contributors to success,” said Chris Heilmann,
chief fiduciary executive of U.S. Trust. “As such, today’s advisors
should be mindful of that focus to engage in values based planning
conversations with their clients.”
360 degrees of positive impact: A common denominator
Overall, 72 percent of people surveyed said they have greater
confidence in the private sector’s ability to solve tough social
and environmental issues than in the government’s. Sixty percent
believe that private money invested in public works and social
programs can produce superior outcomes.
A common denominator among all those surveyed is the importance
they place on contributing in a meaningful and positive way to
society, the economy and strong communities, and they look to do so
in as many areas of their lives and in as ways as they can.
U.S. Trust found that the use of impact investments grew by
double digits over the past year among high net worth millennials
and women, with the greatest one-year increase among the ultra high
net worth, 27 percent of whom now use social and environmental
impact in their investing strategies, up from 9 percent in
2015.
Twenty-eight percent of millennials surveyed now use impact
investments, up from 17 percent a year ago. Another 57 percent are
interested, up from 43 percent a year ago. Fully 85 percent of
millennials say they consider their investment decisions as a way
to express their social, political and environmental values, and 93
percent indicate that a company’s impact in these areas is an
important consideration when they make investment decisions.
Investing is one of many ways the HNW are using their wealth to
contribute to society. The study found:
- Nearly three-quarters give financially
to nonprofit organizations and causes, and they consider
philanthropic giving the No. 1 way they make the greatest
contribution. Another 61 percent actively volunteer their time,
skills and services to nonprofit organizations. Sixteen percent
work for a nonprofit organization.
- Approximately one in four serves as a
board or committee member at a nonprofit organization; of those who
serve, 57 percent serve on two or more boards or committees for
local community groups, schools, nonprofits or for-profit
organizations.
- Eighty-seven percent believe that
businesses and individuals are most effective at creating better
economic opportunities and a higher standard of living for more
people, with small businesses most cited most.
- From a national policy perspective, the
most effective ways to stimulate the economy are considered by all
those surveyed to be: comprehensive tax reform (60 percent),
investments in infrastructure (46 percent), increasing the rate of
business startups (40 percent), and investments in new innovation
and research (40 percent).
- Only 10 percent believe the government
is most effective at creating economic opportunities, and 65
percent believe no matter who wins the presidential election in
2016, economic equality in the country will be worse or no better
if left entirely to the government to address.
- While 70 percent are confident in the
growth of the national economy, more are confident about their own
local economies, where they can more directly make a difference as
business owners and through local leadership, involvement and
philanthropy.
When asked why making a contribution is so important, the top
five reasons given were: to support their values and interests;
belief that the wealthy have a moral obligation to share their good
fortune with those less fortunate; a strong desire and sense of
potential to change the world for the better; a family of giving
back; and a sense of gratitude for the support they were given in a
time when they had less and needed the help.
The complete 2016 U.S. Trust Insights on Wealth and Worth survey
findings can be found at www.ustrust.com/survey.
Survey MethodologyThe 2016 U.S. Trust Insights on Wealth and
Worth® survey is based on a nationwide survey of 684 high net worth
and ultra high net worth adults, of which, 242 are business owners,
with at least $3 million in investable assets, not including the
value of their primary residence. Respondents were equally divided
among those who have between $3 million and $5 million, $5 million
and $10 million, and $10 million or more in investable assets. The
survey was conducted online by the independent research firm
Phoenix Marketing International and completed in February 2016.
Asset information was self-reported by the respondent. Verification
for respondent qualification occurred at the panel company, using
algorithms in place to ensure consistency of information provided,
and was confirmed with questions from the survey itself. All data
have been tested for statistical significance at the 95 percent
confidence level.
U.S. TrustU.S. Trust, Bank of America Private Wealth Management
is a leading private wealth management organization providing vast
resources and customized solutions to help meet clients’ wealth
structuring, investment management, banking and credit needs.
Clients are served by teams of experienced advisors offering a
range of financial services, including investment management,
financial and succession planning, philanthropic and specialty
asset management, family office services, custom credit solutions,
financial administration and family trust stewardship.
U.S. Trust is part of the Global Wealth and Investment
Management unit of Bank of America, N.A., which is a global leader
in wealth management, private banking and retail brokerage. U.S.
Trust employs more than 4,000 professionals and maintains 93
offices in 31 states.
As part of Bank of America, U.S. Trust can provide access to a
broad range of banking solutions for individuals and businesses,
and an extensive retail banking platform.
Bank of AmericaBank of America is one of the world's leading
financial institutions, serving individual consumers, small and
middle-market businesses and large corporations with a full range
of banking, investing, asset management and other financial and
risk management products and services. The company provides
unmatched convenience in the United States, serving approximately
47 million consumer and small business relationships with
approximately 4,700 retail financial centers, approximately 16,000
ATMs, and award-winning online banking with approximately 33
million active users and approximately 20 million mobile users.
Bank of America is a global leader in wealth management, corporate
and investment banking and trading across a broad range of asset
classes, serving corporations, governments, institutions and
individuals around the world. Bank of America offers
industry-leading support to approximately 3 million small business
owners through a suite of innovative, easy-to-use online products
and services. The company serves clients through operations in all
50 states, the District of Columbia, the U.S. Virgin Islands,
Puerto Rico and more than 35 countries. Bank of America Corporation
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subsidiaries of Bank of America Corporation.
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© 2016 Bank of America Corporation. All rights reserved.
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version on businesswire.com: http://www.businesswire.com/news/home/20160523005131/en/
Reporters May Contact:Julia Ehrenfeld, U.S. Trust,
1.646.855.3267julia.ehrenfeld@bankofamerica.com
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