What does the modern inheritor generation look like?

Susan Sanei-Stamp notes a flaw in how we tend to talk about the intergenerational wealth transfer: we’re using the wrong tense. This transfer of over $1 trillion in wealth from the baby boomer generation is being spoken about as something coming in the future or something that has already occurred. Sanei-Stamp, Senior Vice-President, Financial Services sector team at Leger, emphasizes that we need to be talking about this transfer in the present tense, because it has been ongoing for years and will continue to take place for years to come.

It was with that goal of creating greater clarity about the state of this ongoing wealth transfer that Leger conducted a survey of Canadians’ outlooks, preparedness, and use of financial services. They found a number of key gaps in expectation and conversation between inheritors and those preparing to give an inheritance. They found, as well, a more fluid ‘inheritance loop’ where expectations to receive are complemented by plans to bequeath, resulting in a more fluid and overlapping situation than we might expect.

“Where more of a surprise factor came in is this gap that we're observing in our data, where we have about six in 10 Canadians who say they intend to give an inheritance, but then about a just over a third who say they expect [an inheritance],” Sanei-Stamp says. “If those proportion were closer that would tell me that more conversations are happening…If there are a greater proportion of Canadians who are planning to give an inheritance and a smaller proportion expecting one, how well can these future beneficiaries plan?”

Sanei-Stamp argues that this gap can be a useful insight for advisors who may see an opportunity in facilitating conversations between those individuals planning to give an inheritance and their intended heirs, who may not know that they will inherit. She notes that there may be a degree of ‘push-pull’ driving these conversations, or a lack thereof. Families may not be having these conversations with a depth or breadth that facilitates real expectations or understanding. Sanei-Stamp noted, too, that the survey found different values among inheritors, many of whom are viewing finances very differently from past inheritor cohorts.

The survey identified three distinct cohorts of inheritors that Sanei-Stamp believes advisors need to be aware of: women, gen Z and younger Canadians, and Canadians who self-identify as Black, Indigenous, or people of colour (BIPOC). Each of those cohorts have different levels of expectation and confidence around an inheritance.

Women, for example, tend to feel less comfortable making financial decisions on their own. At the same time, they’re almost twice as likely to focus on a legacy and the survey found them more likely to use words like ‘kindness,’ ‘compassion,’ and ‘love’ in describing their goals for an inheritance. Only around 1/3 of the women surveyed said they expect an inheritance, but that same group was also more likely to seek out financial advice. Given the expectation that women will actually hold the majority of wealth in Canada by 2030, Sanei-Stamp believes there could be a particular opportunity for advisors to serve more of these female clients.

Of the younger Canadians surveyed by Leger roughly one third noted that they expect an inheritance. On the whole, though, they tend to not have advisors and are far less likely to have a financial strategy. At the same time, they expressed more concerns around making mistakes with inherited wealth than the average respondent. Sanei-Stamp sees an inherent anxiety in that gap that isn’t yet being addressed.

BIPOC Canadians were the group most likely to expect an inheritance, and they were also the group most likely to turn to family and friends for advice rather than a professional advisor. Within that attitude is a higher risk of churn from their existing bank and service providers than the average Canadian.

Across all three demographic buckets, the survey found that if Canadians had an existing financial strategy, they were more likely to feel comfortable and confident discussing money with their family members. While not every respondent with a strategy had an advisor, Sanei-Stamp notes that the majority likely did. Those who had that strategy and comfort, moreover, were also more likely to bring up values based questions around responsible investing.

For advisors currently navigating the intergenerational wealth transfer, Sanei-Stamp believes that there are a few key insights inherent in the study that they can take away. Namely, that there are levels of comfort and discomfort around inheritance that have not been fully interrogated. Advisors who begin from that human place of creating comfort and a wider conversation about what money means and what it can do, she argues, could see greater resonance among these emerging inheritors.

“These shifting profiles can change what has traditionally worked and continues to work. Our financial sector is doing well, but how much better could it be doing? How much more meaningful, and how much the opportunity to future proof is there?” Sanei-Stamp says. “If we just pause and rethink, if we consider that next generation of inheritors as net new clients versus ones that we are hoping to inherit and if advisors push themselves just that little bit to consider, what have I not asked them?”