Although much has changed in the retirement planning landscape during the past seven years, baby boomers and their parents remain focused on the emotional elements of legacy transfer rather than purely financial aspects of inheritance, according to a study by Allianz Life Insurance Co. of North America.
The new American Legacies Pulse Study, released last week, reprises a similar study Allianz Life conducted in 2005.
Eighty-six percent of boomers (age 47–66) and 74% of elders (age 72 and older) agreed that family stories were the most important aspect of their legacy, ahead of personal possessions (64% for boomers, 58% for elders) and the expectation of inheritance for financial well-being (9% and 14%).
Despite the tumultuous interim years, these findings echoed results in 2005, when 77% of both boomers and elders cited the importance of family values and life lessons as the most important part of legacy.
Furthermore, boomers and elders still agreed that inheritance is not “owed.” Only 4% said they felt they were owed an inheritance—the same percentage as in 2005.
In addition, fewer elders in the current study said they owed their children an inheritance. This change could reflect elders’ concern about potentially needing their savings for living expenses, Allianz Life said in a statement.
The study found that boomers and their parents agreed on what part of legacy transfer was most valuable, but were not in sync on actually doing the work of legacy planning. Three-quarters of elders had obtained professional assistance in planning their inheritance, and 79% had had an in-depth discussion with their children about legacy planning.
Boomers lagged behind, with less than half having obtained professional legacy planning assistance and nearly half never having initiated a conversation with their own children about inheritance issues.
The study pointed up a big change in opinion from seven years ago in what both boomers and their parents look for in a financial professional. In 2005, 74% of boomers and 67% of elders cited “honest and trustworthy” as their most desired characteristic, followed closely by “explains things in an easy to understand way” (66% and 56%) and “good listener” (58% and 46%).
In 2012, 89% of boomers and 91% of elders deemed “honest and trustworthy” key requirements.
A major shift also occurred in the financial acumen required of financial professionals. In 2005, 51% of boomers and 43% of elders cited the importance of their financial professional’s ability to “help minimize taxes,” and less than half of both required that their financial professional be able to “help maximize the long-term value” of the inheritance.
In 2012, 75% of boomers and 70% of elders highly valued skill to “help minimize taxes,” and more than half of both groups wanted their financial professional to “help maximize the long-term value” of the inheritance.
Allianz Life commissioned the 2012 American Legacies Pulse Study, which was conducted online with 1,000 boomers and 1,007 elders by SNG Research Corp., January 12–19. The original 2005 American Legacies study was conducted by Harris Interactive both by phone and online with 2,004 respondents.