The 2008 financial crisis has changed the way affluent families view their investments and make important decisions, and the change is greatest among those with the greatest wealth, according to a poll released today by SEI.
In fact, nearly half of respondents (48%) with more than US$5 million in investable assets (Penta-Millionaires) said that their family makes investment and wealth management decisions more democratically following the financial crisis of 2008.
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By contrast, only a quarter of respondents in the "Mass Affluent" market (households with between US$250,000 and US$1 million in investable assets) say their family makes decisions more democratically after the crisis. The results point to a growing divide in the behaviours and investment decision making between different segments of affluent families.
The poll, of more than 800 individuals representing individuals or families with an average of $1.2 million in investable assets, was carried out by independent research firm Phoenix Marketing International.
More than half of respondents (55%) with more than US$5 million in investable assets believe the next generation of their family is adequately prepared to handle the challenges of managing substantial wealth. That number drops to less than half (42%) among families in the broader "Wealth Market" (households with more than a million dollars in investable assets) and less than a quarter (19%) among the mass affluent.
Michael Farrell, managing director for SEI Private Wealth Management, said: "The financial crisis was a wake-up call for many Americans, but it has clearly changed behaviour most significantly among the wealthiest families.
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By GlobalDataThe level of collaboration has increased dramatically among the most affluent and perhaps not coincidentally, so has the level of confidence they have in future generations. We’ve consistently advocated the importance of communication in sustaining wealth for the long term. We only hope it won’t take another financial crisis for this to become the norm among families at all levels of wealth," Farrell added.
When asked how they measure financial success across generations, more than half of Penta-Millionaires (60%) chose absolute returns and total assets. That number was nearly identical among both the Mass Affluent and Wealth Markets (62% each).
Risk and security was chosen by 27% of Penta-Millionaires polled, 25% of the Wealth Market, and 27% of the Mass Affluent. Heirs and legacy was chosen as the measure of success by 13% of Penta-Millionaires, 13 percent of the Wealth Market, and 11% of Mass Affluent.
