May 24, 2018
JERSEY CITY, N.J.— According to a new white paper, “Parent Trap: Avoiding Common Multigenerational Wealth Planning Pitfalls ,” released today by BNY Mellon’s Pershing, 60 percent of family fortunes are squandered due to a lack of communication and trust, while only 3 percent disappear due to poor wealth planning*. This statistic underscores the important role advisors play, particularly when working with high-net-worth (HNW) clients.
“Wealth transfer tends to be a sensitive topic for many families,” says Katie Swain, director of financial solutions at BNY Mellon’s Pershing. “Most families are reluctant to address the topic to avoid inter-family conflicts. But putting off the inevitable is counterproductive to wealth preservation, and is, in fact, the main reason why families experience an erosion of wealth over time.”
However, only a tiny portion (7 percent) of families think that interpersonal family dynamics are likely to lead to a loss of wealth, while a significant majority (nearly 80 percent) believe that investment strategies, financial constraints or the macro economy are likely to be the main culprits of their dynastic demise.
“Advisors are in a prime position to play a critical role in generational wealth management,” adds Swain. “There’s a tremendous opportunity for advisors who are aware of the potential pitfalls and have the right tools and approach in place.”
Through original research and interviews with financial and generational experts, BNY Mellon’s Pershing, in conjunction with Beacon Strategies, examined the factors critical to success in sophisticated and sustainable multigenerational wealth transfers, along with obvious and not-so-obvious traps for advisors to sidestep when dealing with this lucrative, complex market.
Key findings include:
“Advisors can’t simply check the box when working with their clients on estate planning,” concludes Swain. “As too many horror stories attest, the original intent can easily get missed, especially when memories and marriages have long faded.”
* Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values.” gsb.stanford.edu.2004
About BNY Mellon's Pershing
BNY Mellon’s Pershing and its affiliates provide advisors, broker-dealers, family offices, hedge fund and ’40 Act fund managers, registered investment advisor firms and wealth managers with a broad suite of global financial business solutions. Many of the world’s most sophisticated and successful financial services firms rely on Pershing for clearing and custody, investment and retirement solutions, technology, enterprise data management, trading services, prime brokerage, managed account technology and operations and business consulting. Pershing helps clients improve profitability and drive growth, create capacity and efficiency, attract and retain talent, and manage risk and regulation. With a network of offices worldwide, Pershing provides business-to-business solutions to clients representing more than seven million investor accounts globally. Pershing LLC (member FINRA, NYSE, SIPC) is a BNY Mellon company. Professionally advised managed accounts are offered through its affiliate, Lockwood Advisors, Inc., which is an investment adviser registered in the United States under the Investment Advisers Act of 1940. Additional information is available on pershing.com, or follow us on Twitter @Pershing.
About BNY Mellon
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries. As of March 31, 2020, BNY Mellon had $35.2 trillion in assets under custody and/or administration, and $1.8 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.