North Bay –
Children from many affluent families are receiving “significant grants” from the “Parents’ Bank” for post-secondary education, a first home and new businesses, a study finds. on high net worth households was found.
The IG Private Wealth Management report on wealthy Canadians and wealth transfers found that those with investable assets of at least $1 million have “reviewed their finances in a way that prioritizes not only for their children, but for the world around them,” a news release on Tuesday. speak. That includes giving each child an average of $145,000 to buy a first home, the report said.
“More and more Canadian families see the wealth created by older generations as family assets and a means of helping their children and grandchildren enjoy a more secure financial future,” said President and CEO. IG Wealth Management chief executive officer Damon Murchison said in a statement.
“However, many parents are also concerned about how and when to leave money to the next generation.”
PARENTS WANT TO HELP CHILDREN ‘REQUIRED’
Over the next decade, the report says, it is estimated that Canadian family mobility will be around $1.2 trillion.
IG cites figures showing that the number of Canadian households with at least $1 million in investable assets grew to 913,000 at the end of 2020 from 471,000 in 2006, with total assets growing to four, $2 trillion from $1.6 trillion.
Among the key findings in the report: 77% of those surveyed said they wanted to help their children “move forward”, while 86% said they had a plan to provide financial assistance – middle more than $35,000 on average – for children in college or university. .
Parents’ motivations, as mentioned in the interviews, included concerns about tuition and living costs, the value of education in finding future employment, and a desire to help their children avoid the burden of debt after graduation.
Seventy-two percent of those surveyed are willing to help their children buy a first home, with an average of $145,000 per child, at a time when housing prices are rapidly increasing in Canada. .
A report last month from CIBC found that about 30% of first-time homebuyers and nearly 9% of existing homeowners received financial help from family in the past year to purchase a home.
First-time buyers received an average of $82,000, while “mover-uppers” were given an average of $128,000 in September 2021.
While more parents are not necessarily in debt, CIBC notes that this creates greater inequality between assisted and unhelped homebuyers.
Meanwhile, survey results from IG show that while parents are more willing to help their children with their first home, they are less enthusiastic about helping their child in the next (24%) or one. resort property (10%. ), with mothers being less generous than fathers.
In terms of funding a new business, 26% of parents surveyed said they would fund half or more of the start-up costs of their child’s business.
Between 2014 and 2018, IG noted that the number of 25- to 34-year-olds starting a new business increased by 80 percent compared with the 39 percent increase seen among 35-44 people.
Along with wanting to help their children “move forward”, 71% of respondents said they want to make sure their children can manage assets in the future, 68% want to avoid the “wealth disease” and 68% is providing inheritance.
Other gifts between families include a car (52%) and living expenses (51%).
Meanwhile, research by IG shows that two-thirds of wealthy households now regularly donate to charitable causes. 20% also reported that their estate plans included gifts to charities.
“The past two years have impacted so many people’s lives and made Canadians see charitable giving as not only a good thing, but a must-do,” said Murchison.
“With more and more Canadians incorporating philanthropy into their financial lives, it’s an increasingly important part of a comprehensive wealth plan and a great way to bring families together. together to think about the larger world around them.”
For high-net-worth Canadians, the COVID-19 pandemic and levels of health and wealth anxiety have caused many to think about their family circumstances, the IG report says. The IG report said, adding that the relatively short market downturn, government support programs and the pace of COVID-19 vaccine development have helped allay those concerns and extent of any financial restructuring.
Some survey respondents also expressed concern, but accepted that there could be a financial cost to the pandemic through higher taxes in the future.
The report is based on research from Investor Economics and Pollara Strategic Insights.
The Pollara survey included an online sample of 510 Canadians with investable assets of at least $1 million. The study was conducted from August 5 to 12, 2021, and is considered accurate to within 4.3 percentage points 19 times out of 20. Results were weighted based on age, sex, and region. .