How much are HNW families really sharing hopes, fears and expectations? Research has raised flags about effective succession planning and wealth transfer. As a generation of wealthy investors heads into retirement over the next 20 years, it's clear that most are better at building wealth than passing it along.

1. THE GENERATION GAP

2. How much are families really sharing hopes, fears
and expectations? It’s the American dream for people
to use their abilities and ambition to build a business,
rise to the top of their professions and create a lasting
legacy for themselves and their families. As evidence,
more than 8.4 million U.S. households have a net worth
of $1 million or more (not including primary residence.)1
At the “ultra” end of the market, 55,000 individuals hold
wealth greater than $30 million each.2
Clearly, the American dream is working for many. Except for the part about
building a legacy. New research into the attitudes of ultra-high-net-worth
investors has raised flags about effective succession planning and wealth
transfer. As a generation of wealthy investors heads into retirement over the next
20 years, it’s clear that most are better at building wealth than passing it along.
Conducted in June 2011, the SEI Family Wealth and Succession Survey reveals
insights into the attitudes and behaviors of wealthy investors. The survey shows
a disconnect between investor expectations and behavior, and highlights a
worrisome lack of communication about wealth within the family. Many wealthy
individuals hope their financial successes will help their children build a happy
life, but privately worry it will squelch work ethic and ambition. Far too many
have failed to take steps to protect assets and ensure an orderly transfer to the
next generation.
The survey captured attitudes about wealth and succession from a representative
sample of ultra-high-net-worth investors across the U.S. Their average assets
topped $21 million, with an average annual income of more than $800,000.
1
2
S
pectrem Affluent Market Insights, 2011.
S
egmenting the Ultra-Wealthy, Wealth-X, 2010.
“ his is a very significant survey because it provides insights
T
into the beliefs and attitudes of wealthy investors.”
– Jeff Ladouceur, Director, SEI Private Wealth Management

3. Pessimistic Expectations
When ultra-high-net-worth investors were questioned about the importance of
wealth, it was clear that it’s all about family. Maintaining family security, helping
children become more successful, and providing a quality education topped the
list of goals (see Figure 1).
Those goals make sense, but beg a larger question. Why are so many wealthy
parents pessimistic about their family’s ability to handle wealth? Only about
half of survey respondents said they have faith that the next generation would
51%—Spouse is kept fully involved
successfully create wealth andfully informed their lives. The remainder said they
24%—Spouse is kept improve
thought their 20%—Spouse is kept somewhat“to some extent” or “not at all.”
children would do so informed
8%
8%
5%—No communications with spouse
One of the more puzzling results came from a question about whether
32%—Professionals are kept fully involved
respondents had “strong expectations” for how family members use inherited
28%—Professionals are kept fully informed
25%—Professionals are split down the middle with 51% saying they
wealth. The results were almostkept somewhat informed
15%—No communications with professionals they did not. It’s hard to explain
had strong expectations and 49% saying
2%—Children are involved
why people have relatively low expectations on a topic they rate as so
15%—Children are kept informed
important—other than worrying about interfering in their children’s lives. As
55%—Children know the basics
one respondent put it, “Icommunications with children to give people everything they
28%—No don’t think it’s my role
46%
38%
Have a pla
Have done
Have done
Other
need or think they need. I want to create opportunities—opportunities they can
pursue or ignore.”
››Figure 1: Importance of wealth to you
94%—Financial security
50%—Help children become successful
45%—Educate children
35%—Help the less fortunate
31%—Buy the things I really want
29%—Open new opportunities/experiences
24%—Have an impact on personal causes I care about
19%—Leaving a legacy
11%—As a barometer of my success
2%—Allow me to meet interesting people
1%—Increase my social status
3%—Other
18%
3%
38%
5%
7%
29%
“ ur children need to be self-driven and
O
independent. We’re concerned about their
attitude of entitlement which is unsustainable.”
– wrote one respondent
Fulfilling
Challeng
Uncomfo
Liberatin
Frustratin
Other

4. —Spouse is kept fully involved
informed
hat informed
are kept fully involved
e kept fully informed
ept somewhat informed
ofessionals
5%—Children know the basics
ons with children
The Communication Gap
It’s worth noting that a majority of these investors hope their wealth makes
their children happy, yet many worry it won’t. More to the point, they’re not
talking about it with their children. Survey results show the wealth generator
in the family regularly confers with his or her spouse, and to some extent, their
financial professional. But they rarely talk to their children, even when grown
(see Figure 2).
››Figure 2: Communication around decision-making
51%—Spouse is kept fully involved
24%—Spouse is kept fully informed
20%—Spouse is kept somewhat informed
5%—No communications with spouse
32%—Professionals are kept fully involved
28%—Professionals are kept fully informed
25%—Professionals are kept somewhat informed
15%—No communications with professionals
2%—Children are involved
15%—Children are kept informed
55%—Children know the basics
28%—No communications with children
46%
38%
For example, 51% said their spouses are “fully involved” in financial decisions,
while 24% keep spouses “fully informed.” Children, on the other hand, aren’t
8%
in the loop. Only 2% are involved in making decisions and 15% are simply kept
8%
informed. The largest group (55%) “know theplan in place while 28% have had no
basics,”
Have a
94%—Financial security
communications.
Have done minimal preparation
46%
50%—Help children become successful
Have done nothing so far
45%—Educate children
When communication does take place, Other
it’s usually informal, described in the
38%
35%—Help the less fortunate
survey as “general family conversations,” as opposed to structured “family
31%—Buy the things I really want
meetings,” or “guided sit-downs with professionals.”
29%—Open new opportunities/experiences
It’s apparent 24%—Have an impacttalk about wealth because the conversation is
families fail to on personal causes I care about
19%—Leaving a legacy
often less than satisfying. It ranks among politics and religion as subjects to
11%—As a barometer of my success
avoid. Only 38% percent of respondents described conversations about money
2%—Allow me to meet interesting people
with family members as “fulfilling.” A similar number (39%) of respondents
1%—Increase my social status
were far less glowing, describing the experience alternately as “challenging,”
3%—Other
“uncomfortable,” or “frustrating” (see Figure 3).
››Figure 3: Feeling when involving family members
94%—Financial security
become successful
e
want
/experiences
al causes I care about
8%
8%
18%
3%
38%
5%
7%
29%
Fulfilling
Challenging
Uncomfortable
Liberating
Frustrating
Other
18%
3%
38%
5%
7%
29%

5. “ here’s nothing more important than providing
T
roots and wings for my children—whether there
is wealth or not. That being said, having some
wealth to pass down is a blessing.”
– a respondent wrote
Hopes and Fears
Regardless of expectations, a vast majority of respondents said their greatest
hopes were that their wealth helps to “increase the overall happiness within
the family,” and that their children would “follow their dreams regardless of
financial implications.”
Planning Wealth Transfer
It’s reasonable to assume that a lack of communication suggests a lack of
planning. Here, the results are mixed. Forty-six percent of respondents said
they “have a full wealth transfer plan in place,” 38% “have prepared nothing
more than a will,” and 8% said they “have done nothing so far” (see Figure 4).
››Figure 4: A closer look: your wealth transfer plan
fully involved
volved
med
formed
now the basics
n
8%
8%
46%
38%
Have a plan in place
Have done minimal preparation
Have done nothing so far
Other

6. The Bottom Line
What’s the message from this survey? Clearly, there is work to do. Whether
someone acquired wealth building a business or climbing the corporate ladder,
he or she got there with hefty doses of smarts, drive and guile. Those same
attributes can be applied to transferring wealth.
The process should start with articulating realistic expectations and then sharing
them with the family. Expectations are rarely met when not communicated. Is the
plan for the children to take over the family business? Or would Mom and Dad
prefer their children follow their own paths? Regardless, wealth owners need
to come to peace with that decision, declare it and share it with their families.
It’s natural for people to worry about the possible negative impact of wealth
on their children. They fear too much wealth will deflate a child’s drive.
It’s not unheard of for the promise of wealth to make the next generation
irresponsible and overly dependent. Those concerns should be articulated.
They are legitimate fears, and not easy to talk about. The key is to strike
a balance between supporting the children without stifling their work ethic.
As one respondent said, “Too much wealth transfer can decrease motivation
but I prefer that my children have less financial stress than I did.”
Finally, for most multi-millionaires, a simple will, by itself, is insufficient for
wealth transfer purposes. Clearly, many investors are doing things right, but
the fact that more than a third of respondents have a will as their only wealth
succession tool, and 8% have taken no steps to formally transfer their wealth,
is disturbing. A lot of money—and family happiness—is unnecessarily at risk.

7. Based on the survey, past research and working with
clients, SEI Private Wealth Management suggests
the following:
›› Build a launching pad for success. Successful families spend time
establishing an expectation that the inheritors are accountable to build
upon family success and improve the lives of future generations.
›› Talking about values is not the same as talking about wealth. Parents
often talk about personal values, but don’t raise issues about financial
values. Future generations know they’re affluent but they don’t know how
much, where it came from, or the plan to sustain it. Wealthy families must be
comfortable with the idea that talking candidly about money is not rude, but
necessary, especially if the hope is that the next generation will sustain their
legacies and create new wealth.
›› Estate documents only document the legal transaction and don’t go far
enough. The most successful families establish a framework to help decide
how to educate their heirs about money and when to get them involved in
wealth-creation activities.
The insights offered by the survey participants highlight the challenges of
integrating family dynamics, personal values and financial wealth. More
importantly, they declare an urgency to “get it right” and to transfer both
personal and financial success to the next generation. A comprehensive
wealth transfer strategy or succession plan will help wealthy families get
all the issues on the table and ensure their hopes for their families and
communities are fully realized.
For more information, call 1-888-551-7872
or email SEIPrivateWealth@seic.com to
reach a team member. To learn more about
SEI Private Wealth Management, please
visit www.seic.com/privatewealth

8. 1 Freedom Valley Drive / P.O. Box 1100 / Oaks, PA 19456
1-888-551-7872
seic.com/privatewealth
SEI Private Wealth Management provides individuals and families with an innovative approach to wealth management. Our
approach starts with knowing our clients. To that end, we have sponsored a series of surveys, peer round-table discussions and other
work, all designed to uncover and share the insight of wealthy individuals. The Family Wealth and Succession Survey was conducted in
partnership with Scorpio Partnership Limited, an independent research firm.
SEI Private Wealth Management, formerly SEI Wealth Network, is an umbrella name for various life and wealth services provided through
SEI Investments Management Corporation, a registered investment advisor.
©2011 – 2 0 1 2 S E I
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