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Money and the Modern Family: UBS Q3 Investor Watch Report Explores the Changing Dynamics and Financial Needs of the Family

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The financial impact of blended, same-sex and multi-generational families

New York, NY – UBS Wealth Management Americas (WMA) today released its quarterly UBS Investor Watch report, "Beyond the Picket Fence (PDF, 1 MB)," revealing that among high-net-worth investors, “modern” families (34%) – including blended, same-sex and multi-generational families – are nearly as common as “traditional” families[1] (35%). The survey of 2,715 high-net-worth (HNW) and affluent U.S. investors found that the rise of modern families is a burgeoning trend as traditional families become less and less common by generation, currently comprising 46% of the WWII/Swing generation, 37% of Baby Boomers, and only 25% of Millennials.

Despite the fact that family dynamics are changing across the wealth spectrum Investor Watch found that seven out of 10 HNW and affluent investors feel that financial advice is typically designed with only the traditional family in mind.

"It's important for the financial industry to start addressing the complexities of modern families," said Paula Polito, Client Strategy Officer, UBS Wealth Management Americas. "There is a real opportunity to respond to the rapidly and dramatically changing family dynamics in modern America."

Blended Families: A Complicated Legacy 

Blended families – those with children from a prior relationship – represent 14% of the HNW and affluent investor population, and experience heightened financial and emotional challenges relative to traditional families. The survey found that overall blended families (55%) feel they lead more complicated lives compared to traditional families (48%) and more so when it comes to their finances (55% vs 44%) and retirement planning (64% vs. 54%).

Creating a larger family is of course more expensive, though 44% of wealthy investors say they underestimated the true cost of supporting more children. Added to the financial challenge blended families face are the emotional strains felt by parents taking on responsibility for children that are not biologically theirs: to illustrate, 63% of HNW and affluent investors admitted that their spouse’s children do not completely accept them.

Consequently, blended families often have a more difficult challenge in planning their inheritance. When it comes to inheritance planning, Investor Watch found that 67% of blended families don't know how they will divide up their wealth, physical assets or business interests, compared to half of those in traditional families. As a result blended families are less likely to have open discussions about wealth transfer (50% of blended families vs. 65% of traditional families) and are less confident that their eventual decisions will satisfy their heirs, with 31% of blended family HNW and affluent investors responding that there are conflicts among potential heirs compared to 12% of traditional families. 

Same-Sex Couples and the Right to Marriage, Now What?  

Same-sex couples in the U.S. reached a major milestone with the June 26th Supreme Court ruling guaranteeing the right to same-sex marriage across the country, causing seven out of ten same-sex [families] to believe that their lives have been changed. Half feel the decision will positively impact their personal life, especially when it comes to the extension of certain health and retirement benefits, while 42% believe it will benefit their career.

However, 60% of same-sex couples feel that there is not enough financial guidance for families like theirs. They continue to believe, more than traditional or blended families, that financial advice and support systems (e.g., Social Security, health and retirement benefits) are not constructed to support their type of family. Seventy-two percent are actively seeking guidance to understand how the legalization of same-sex marriage affects their benefits.

While the recent landmark Supreme Court ruling legalized same-sex marriage and guaranteed benefits, same-sex couples are a long way from being financially worry-free,” says Sameer Aurora, Head of Client Strategy for UBS Wealth Management Americas. "Same-sex couples are attempting to translate what the ruling really means for them, their benefits and their financial situation, making financial planning that much more critical.”

Financial planning for same-sex couples becomes increasingly complicated in terms of estate planning. A quarter (25%) do not feel accepted by their parents and believe their inheritance was, or could, be affected by their sexual orientation. In addition, their own legacy planning is often fraught with conflict among potential heirs because few have children of their own.

Multi-Generational Families and Competing Financial Needs  

Previous Investor Watch studies found that more adult children and aging parents are sharing homes, challenging conventional lifestyles and adding pressure to loved ones to support them financially. This quarter’s survey revealed that for families with adult children still in the home, more than half worry about maintaining their current financial situation (53%). They are also less confident about reaching financial objectives (70% highly confident vs. 79%) and more worried about affording healthcare in their old age (61% worried vs. 44%).

Families living with aging parents find themselves having a harder time balancing the financial needs of everyone in their family and being able to retire on their own timeline. Fifty-six percent said that retirement planning is at least “somewhat complicated” for them, compared to 42% of families living without an aging parent.

We invite you to read the full report here: www.ubs.com/investorwatch

About UBS Investor Watch

UBS Investor Watch is a quarterly publication analyzing the latest in investor sentiment and behavior. Dedicated to generating insights that help UBS Financial Advisors deliver exceptionally for their clients, UBS Investor Watch is the industry’s definitive guide to what’s on investors’ minds right now.

Methodology

For this twelfth edition of UBS Investor Watch, 2,715 affluent and high-net-worth investors responded to our survey from June 10 – 16, 2015. The core sample of 1,787 investors have at least $1 million in investable assets, including 422 with at least $5 million. With 78 survey respondents, we conducted qualitative follow up interviews.

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Notes to Editors

About UBS Wealth Management Americas

Wealth Management Americas is one of the leading wealth managers in the Americas in terms of financial advisor productivity and invested assets. It provides advice-based solutions and banking services through financial advisors who deliver a fully integrated set of products and services specifically designed to address the needs of ultra-high net worth and high net worth individuals and families. It includes the domestic US and Canadian business as well as the international business booked in the US.

About UBS

UBS is committed to providing private, institutional and corporate clients worldwide, as well as retail clients in Switzerland, with superior financial advice and solutions while generating attractive and sustainable returns for shareholders. Its strategy centers on its Wealth Management and Wealth Management Americas businesses and its leading universal bank in Switzerland, complemented by its Global Asset Management business and its Investment Bank. These businesses share three key characteristics: they benefit from a strong competitive position in their targeted markets, are capital-efficient, and offer a superior structural growth and profitability outlook. UBS's strategy builds on the strengths of all of its businesses and focuses its efforts on areas in which it excels, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which it operates. Capital strength is the foundation of its success.

UBS is present in all major financial centers worldwide. It has offices in more than 50 countries, with about 35% of its employees working in the Americas, 36% in Switzerland, 17% in the rest of Europe, the Middle East and Africa and 12% in Asia Pacific. UBS Group AG employs about 60,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).