Work Hard and Pay It Forward Instead
The purpose of this blog is two-fold; (1) to strike a fine balance between drawing some attention to the pre-occupation of the press, the financial services industry and dare I say it, lazy and greedy adults, adolescents and children who are waiting with their hands out for an inheritance and (2) to provide some professional guidance to parents and their children on what to do with the privilege and responsibility of their family wealth.
For the past 25 years, I have been hearing all about the great wealth transfer.
Back then it was a purported to be over a trillion dollars and it was all going to the boomers
As recently as ten years ago ABC News reported that according to a study conducted by Center for Retirement Research at Boston College, $2.4 trillion had already been transferred to the boomers of an expected intergenerational wealth transfer of $11.6 trillion.
The estimate today range from $30 to $68 trillion and now the talk is that it’s all going to the millennials.
Even at the time, the boomer's inheritance was far from a sure thing. An article written by Millionaire Insights, a group that studies high net worth individuals, called the $11 trillion inheritance "a pie in the sky."
Three years ago, CIBC reported that Canadian boomers stood to inherit $750 billion over the next ten years and called it, “the largest intergenerational wealth transfer in Canadian history over such a period of time."
So first it was the boomers, then the Gen X and now it's the millennials. Who do we believe and what is the truth?
Regardless of the truth, here is what we do know:
Everyone, including the parents of boomers, is living longer. And a lot can happen in an older person's final years. The end of life can get expensive, eroding parents' savings. Whether there will still be money left after a protracted illness or years spent living in a nursing home is hard to say.
Intergenerational transfers, if and when they do come, will be a lot less than originally anticipated so if you have been holding back expecting one, my suggestion is to get on with your life and see what you can do about paying it forward when your time comes instead.
Speaking of paying it forward…
In May of this year, Robert F. Smith pledged $40 million to pay off the student loans for the 396 graduates of Morehouse College in Atlanta this year, in part hoping to spur other wealthy donors to support historically black universities and colleges (HBCUs).
In his commencement speech, he said, “On behalf of the eight generations of my family who have been in this country, we’re going to put a little fuel in your bus. Now I know my class will make sure they pay this forward…let’s make sure every class has the same opportunity going forward because we are enough to take care of our own community. We are enough to ensure we have all the opportunities of the American dream…”.
Robert Smith’s gift is part of the $500 billion giving pledge campaign supported by 204 individuals or couples, with a combined net worth of $1 trillion initiated by Warren Buffet and Bill Gates in 2017.
Another example of this kind of philanthropy was reported in the paper just this past week and a lot closer to home. Charles and Margaret Juravinski grew up in the depression era with absolutely nothing and worked hard all their lives. They have given away $50 million so far to health research from the $70 million they received from the sale of Flamboro Downs which they had owned for over 30 years at the time they sold it to Magna Enterprises in 2003.
Charlie is 89 years old and he is having a ball giving it away.
Imagine how much better this world would be if some of this intergenerational wealth transfer that everyone is talking about went to people who really needed it rather than paying for more toys for people who don’t ..
David J. Angas, CEA
Senior Vice President, Financial Advisor
T: 416-777-7110
F: 416-777-7020
david.angas@raymondjames.ca
www.raymondjames.ca/familywealthcounseladvisorygroup
David Angas is a financial advisor with Raymond James Ltd. Information provided is not a solicitation and although obtained from sources considered reliable, is not guaranteed. The view and opinions contained in the
