Millionaires care more about family than money

RBC Wealth Management has released a report titled, Wealth Through the Prism of Culture and Mobility, which investigates the investment, wealth transfer and charitable giving behaviours of internationally-mobile wealth individuals (IMWIs) who live, work, or spend more than half their time outside their country of birth and have investable assets of at least US$1 million.

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The report highlights how the global paths of this group influence their key wealth decisions. The report noted a number of interesting trends among surveyed IMWIs living in Canada:

• 45% were born in Europe, 32.5% in North America, 10% in Asia-Pacific, 7.5% in Middle East and Africa and 5% in Latin America.

• The majority (70%) grew up with parents who would not have been considered high net worth individuals.

• Over half (55%) are over the age of 60, 30% are between the ages of 41 and 60 and 15% are 40 or under.

• Almost two thirds (63%) own two or more personal residences.

• The top sources of their wealth were:
  • Work as a professional (30%)
  • Entrepreneurship (15%)
  • Private equity or work as an executive of a publicly held organization (12.5% each)
  • Real estate investments (10%)

• The factors that most influenced their move to Canada (based on a ranking as very or moderately important):
  • Quality of life (88%)
  • Political stability (78%)
  • Infrastructure (73%)
  • Family, Language (65% each)
  • Access to capital markets (60%)

• Their primary goal for their investment portfolio is:
  • Steady growth (57.5%)
  • Asset preservation (32.5%)
  • Income/cash flow (7.5%)
  • Liquidity (2.5%)

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• The following represent “high” or “very high” proportions of their investment portfolios:
  • Domestic equities (50%)
  • Mutual or pooled funds (38%)
  • Real estate (28%)
  • Global equities (23%)
  • Corporate bonds (20%)
  • Cash (18%)
  • Precious metals (15%)
  • Municipal and government bonds (13% each)
  • Hedge funds (8%)
  • Art and collectibles (8%)
  • Venture capital and private equity (5% each)

• Looking at how they plan to transfer their wealth:
  • 32.5% plan to leave enough assets to their family so they are comfortable but still need to work
  • 25% plan to leave all their wealth to their family
  • 20% plan to leave a significant amount to charity but the majority to their family
  • 12.5% plan to leave enough assets to their family so they don’t have to work
  • 5% plan to leave the majority of their estate to charity
  • 5% don’t have any estate planning goals, though 88% have a will in place, 33% a trust and 3% a foundation.

Read: Canadian HNW more disciplined

• They favour health-related charities, with 28% of their charitable donations going to health causes. The next favoured cause is children’s charities, which receive 19% of their charitable donations. They are the most likely of all IMWI residents to give where they live, with 82.5% donating primarily to causes in Canada. 10% give primarily back to their country of origin and 7.5% to causes in a third country.

• 40% do not fully understand the tax regimes their assets are subject to, which may have an impact on the assets that their family and/or charities will inherit.