A new report reflects rising concern for wealth preservation as trends and threats coalesce
The past year has brought about a clear shift in mindset among investors as geopolitical concerns and financial-market uncertainty bolstered the case for defensive assets. And as it turns out, there’s a similar attitudinal change afoot among Canada’s wealthiest.
In a recent global study sponsored by RBC Wealth management and conducted by the Economist Intelligence Unit, the richest Canadians identified protecting wealth for the future as their top priority among a list of financial goals (53%), putting at well ahead of increasing their wealth (34%).
When asked to name the factors that most concern them when it comes to wealth preservation, the highest proportion of respondents cited Canadian tax changes (48%), followed closely by global economic uncertainty (46%) and increased cost of living (45%).
“While investment and portfolio management remain a priority, increasingly, we find that our high-net-worth clients are asking us for guidance and support in the areas of tax strategy, wealth preservation, estate planning and philanthropy,” said Tony Maiorino, head of RBC Wealth Management Services.
Market uncertainty was a concern among just a third of wealthy Canadians who participated in the survey, though nearly two thirds (63%) said they’ve become far more attentive to their portfolios because of the current economic cycle. A further 76% agreed that in today’s market, investors need to be more flexible and more responsive.
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The survey also confirmed that high-net-worth Canadians are not wont to flaunting their wealth, in line with their counterparts around the world. Just over three fourths (77%) cited the importance of not appearing “showy” with their money and just 42% saying that purchasing luxury items makes them feel good about what they have achieved. Meanwhile, 74% agreed that they’d rather spend money on experiences than on material goods.
As for the question of helping the next generation, 81% of older HNW Canadians felt no obligation to leave an inheritance for their children, over half (57%) indicated plans to use their money to support their children’s success both personally and professionally.
While older and younger HNW Canadians generally didn’t differ in their responses, they diverged on questions about their approaches and attitudes to wealth management. Younger Canadians were more likely than their older counterparts (73% vs. 66%) to agree that one should seek a balance between personal wealth creation and ensuring equal opportunities to accumulate wealth across society.
HNW Canadians generally agreed on the importance of investing ethically (62%), though strong agreement with this sentiment was more than twice as prevalent among younger wealthy Canadians (21%) as it was among older ones (9%). A similar trend was observed when it came to considering ESG factors in investing, with younger wealthy Canadians being more than twice as likely as their more senior counterparts (56% vs. 27%) to express that view.
Generational cohorts also differed in their comfort level with various asset classes. HNW Canadians tend to select stocks as their main asset, but those among the older segment were more likely to hold them than the younger group (80% vs. 56%).
