93% surveyed want their children to forge their own path, Wells
Fargo survey finds
Operating your own business is considered an “American Dream” by
many, yet when it comes to succession planning, half (52%) of
business owners do not want their children to inherit and run the
business, according to a recent Wells Fargo study.
On behalf of Wells Fargo, Versta Research conducted a national
online survey of 1,008 “wealth creators,” defined as U.S. adults
aged 50 or over who have at least $1 million in investable assets,
excluding those who inherited most of their assets.
“As we work with clients, they tell us that reasons vary from a
lack of confidence that their children will keep the company on
solid footing, to believing large inheritances can be a
disincentive to earning one’s own financial success,” said Michael
Liersch, head of Advice & Planning for Wells Fargo Wealth &
Investment Management. “More parents are recognizing their children
simply are not interested in joining the family business and are
not pressuring them to do so. Knowing what your children are
interested in and where their strengths lie is key to effective
succession planning.”
Among parents, nearly all (94%) want their children to forge
their own path, rather than follow in their footsteps.
“My father originally planned to sell our 110-year-old family
business, Pioneer Linens; yet a year before he passed away, he
named me as successor—and it’s been my honor to continue the legacy
of both my father and grandfather,” said Penny Murphy,
third-generation business owner. “My brother, on the other hand,
was the recipient of my father’s real estate. We are grateful that
our father thoughtfully created an equitable estate plan that
aligned with our respective interests.”
Where the wealth comes from
Nine out of ten (90%) wealth creators attribute their financial
success specifically to hard work and determination. In addition,
two-thirds (63%) of wealth creators cite the advantages of a good
education, and almost half (43%) acknowledge the importance of
living in the land of opportunity, while a quarter (24%)
acknowledge the role of luck.
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Helping to move this success down through family lines tends to
get trickier for some, though. Three out of four wealth creator
parents (73%) believe they have succeeded in passing down their
financial values, and (75%) feel they have done a good job raising
their children to be financially successful on their own—yet almost
half (44%) worry about their children not knowing how to build
wealth of their own.
In line with wealth creators expressing concern about their
children’s ability to build their own wealth, they also said they
provide a good deal of financial support to their adult children,
with four out of five (81%) saying they will bail them out of
financial trouble. Although 88% of Gen X parents said they believe
that wealth can ruin children (compared to 81% of respondents
overall), nearly half (48%) acknowledge they tend to overdo it when
it comes to giving things to their children (compared to 40% of
respondents overall).
Most wealth creators help their adult children financially in
multiple areas:
Education
80%
Cars
51%
Travel or vacations
46%
Ongoing expenses
35%
Healthcare
29%
Houses
27%
Grandchildren’s education
25%
Childcare
6%
Notably, parents who said they help their adult children with
houses rises to 47% among those with $5 million or more in
investable assets (compared to 27% of respondents overall).
And while a large majority (70%) want their children to live up
to their family’s standards of wealth and success, nearly a third
(30%) report it has been hard to transmit their work ethic to their
children—and this is higher (40%) among Gen X parents.
“Family business owners may be tempted to transfer ownership as
an incentive for family members to join the business,” said Bob
Marshall, business growth strategy executive at Wells Fargo Bank,
N.A. “While well intentioned, these transfers may lead to
unintended consequences, especially if the family member does not
have the required skills, engagement, or desire to take over the
business.”
Two out of five (39%) say their business has been an important
source of meaning and purpose in their lives, and one in six (17%)
say it is part of the legacy they want to leave.
“Whether the family discussion is about estate planning or
business succession planning, what’s important is that everyone is
aligned and there are no surprises,” added Liersch. “Without a
thoughtful conversation and formal plan, assumptions can be made
and disruption to the family dynamics are highly likely.”
About the Survey
On behalf of Wells Fargo, Versta Research conducted a national
survey of 1,008 Wealth Creators, defined as U.S. adults, age 50 or
over who have at least $1 million in investable assets, excluding
those who inherited most of their assets. The sample included 136
respondents from Generation X (ages 50 to 57), 771 Baby Boomers
(ages 58 to 76), and 101 from the Silent Generation (ages 77 or
older). Data were weighted by age to match current population
estimates of U.S. households with more than $1 million in
investable assets, derived from the Federal Reserve Board’s Survey
of Consumer Finances. The survey was conducted January 3–18, 2023.
Assuming no sample bias, the maximum margin of error for
full-sample estimates is ±3%.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a leading financial
services company that has approximately $1.9 trillion in assets,
proudly serves one in three U.S. households and more than 10% of
small businesses in the U.S., and is a leading middle market
banking provider in the U.S. We provide a diversified set of
banking, investment and mortgage products and services, as well as
consumer and commercial finance, through our four reportable
operating segments: Consumer Banking and Lending, Commercial
Banking, Corporate and Investment Banking, and Wealth &
Investment Management. Wells Fargo ranked No. 41 on Fortune’s 2022
rankings of America’s largest corporations. In the communities we
serve, the company focuses its social impact on building a
sustainable, inclusive future for all by supporting housing
affordability, small business growth, financial health, and a
low-carbon economy. News, insights and perspectives from Wells
Fargo are also available at Wells Fargo Stories.
Additional information may be found at www.wellsfargo.com |
Twitter: @WellsFargo.
About Wells Fargo Wealth & Investment Management
Wells Fargo Wealth & Investment Management (WIM) is a
division within Wells Fargo & Company. WIM provides financial
products and services through various bank and brokerage affiliates
of Wells Fargo & Company and is one of the largest wealth
managers in the U.S., with more than $1.9 trillion in client
assets. WIM provides personalized wealth management, brokerage,
financial planning, lending, private banking, trust, and fiduciary
products and services to affluent, high-net worth, and
ultra-high-net worth clients. WIM operates through advisors in
Wells Fargo Advisors, independent brokerage offices, and digitally
through Intuitive Investor and WellsTrade, as well as through
advisors in The Private Bank and other banking centers.
Wells Fargo Private Bank provides products and services through
Wells Fargo Bank, N.A., Member FDIC, and its various affiliates and
subsidiaries. Wells Fargo Bank, N.A., is a bank affiliate of Wells
Fargo & Company.
Brokerage services are offered through Wells Fargo Advisors.
Wells Fargo Advisors is a trade name used by Wells Fargo Clearing
Services, LLC, and Wells Fargo Advisors Financial Network, LLC,
Members SIPC, separate registered broker-dealers and non-bank
affiliates of Wells Fargo
News Release Category: WF-ERS
CAR# 0523-04415
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230605005133/en/
Media Helen K. Bow, APR, 832-962-1452
Helen.k.bow@wellsfargo.com
Wells Fargo (NYSE:WFC)
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