The financial advice industry in the U.S. has some catching up to do.
UBS reported last week that 34% of high-net-worth and affluent investors lived in “modern” families” compared with 35% who live in traditional ones, but 70% of investors felt financial advice was designed only for traditional families. (The remaining 31% were single or were heterosexual couples without children.)
The report said modern families included blended ones involving children from a prior relationship, same-sex couples and homes shared by parents and adult children.
UBS surveyed 2,715 affluent and high-net-worth investors in mid-June, of whom 1,787 investors had at least $1 million in investable assets, including 422 with at least $5 million.
It said the rise of modern families was a growing trend as traditional families have become increasingly less common by generation, currently comprising 46% of the WWII/swing generation, 37% of baby boomers and 25% of millennials.
“It’s important for the financial industry to start addressing the complexities of modern families,” Paula Polito, a client strategy officer at UBS Wealth Management Americas, said in a statement.
“There is a real opportunity to respond to the rapidly and dramatically changing family dynamics in modern America.”
An Allianz study last year reported that the traditional model of a married father and mother and one or more children represented only 20% of American families.
Blending Gets Complicated
Blended families represented 14% of the survey population, and experienced heightened financial and emotional challenges relative to traditional families.
The survey found that 55% of blended families felt their lives were more complicated than those of traditional families. This was true with regard to finances, and especially retirement planning.
Forty-four percent said they had underestimated how much it would cost to support more children.
As well, emotional strains came into play: 63% acknowledged that their spouse’s children for whom they had taken on responsibility did not fully accept them.
This, in turn, made inheritance planning more difficult. Sixty-seven percent said they did not know how they would divide up their wealth, physical assets or business interests, compared with 50% of traditional families who said this.
According to the survey, blended families were less likely than traditional ones to openly discuss wealth transfer, and were less confident that what they eventually decided would satisfy their heirs.