The definition of legacy in Canada is shifting from value to values, as the next generation of high-net-worth1 Canadians increasingly prioritize the impact of their money throughout their lives and beyond. 73% of younger2 high-net-worth Canadians say they will make more of an impact on the world than previous generations while only 48% of older high-net-worth Canadians feel the same way. Of those who are business owners, 70% feel it’s important that their business makes a positive impact on their community, compared with 58% of their older counterparts. These insights are from a new survey3 from The Economist Intelligence Unit (EIU), commissioned by RBC Wealth Management.
When asked to define legacy, older high-net-worth Canadians are much more likely to use words like ‘family’ (75%) than younger high-net-worth Canadians (50%). And the younger group more often said ‘wealth’ is the main enabler of their legacy (74%) versus 59% of their older counterparts. But the generations are much closer on one point – their desire to leave a different legacy than their parents (71% of younger Canadians and 65% of older ones agree). For the wealthiest Canadians4, that number rises to 79%.
“The concept of legacy has evolved a lot over the past several years so it makes sense that both younger and older high-net-worth Canadians are looking at different options than their parents,” says Leanne Kaufman, Head, RBC Estate & Trust Services. “The trend is moving towards ‘impact’ in a way we haven’t seen before.”
Younger high-net-worth Canadians are more personally involved in philanthropy
Social responsibility is important to younger Canadians with two thirds (66%) saying they’re obligated to use their wealth to benefit the broader society, compared to only 51% of the older cohort. The generations diverge again on where to direct their efforts. Older high-net-worth Canadians prioritize poverty reduction and religion while the younger group focus on children/youth, human rights and scientific endeavours such as space exploration. Even the way they give is different: Older wealthy Canadians are more inclined to make one-off charitable donations (36%) than their younger peers (11%).
“These results are not surprising as younger Canadians tend to be more personally involved and invested in their charitable efforts from start to finish,” says Tony Maiorino, Head, RBC Wealth Management Services. “They’re not so interested in simply writing a cheque; they want to see it through, monitor the results and actually know that they have made a positive difference.” In the survey, more than three quarters (79%) of the younger group said they assess the results of their giving efforts compared to less than half (43%) of older high-net-worth Canadians.
Younger high-net-worth Canadians feel more obligated to transfer wealth to the next generation
While both generations agree that they have an obligation to transfer their values to the next generation (76%), the younger group feels a much stronger obligation to transfer their wealth (71%) versus 54% of older high-net-worth Canadians.
Of those who are business owners, two thirds (67%) of younger wealthy Canadians want their children to take over the business compared to 31% of older Canadians. Despite this, when asked if they plan to take over their parents’ family business, 50% of the younger group said they are expected to but a full 70% say younger Canadians in general would rather join the corporate world or start their own business.
Younger high-net-worth Canadians extended their positive outlook to future generations with almost three quarters (71%) saying the next generation will accumulate more wealth than them; only 35% of the older group feel the same way.