Edward Jones Study: More than half of Gen Z and Millennials relying on inheritance or windfall to meet their financial goals

Gen Z and Millennials most likely group to give and/or receive a wealth transfer since the start of the pandemic

MISSISSAUGA, ON, Sept. 21, 2022 /CNW/ - Edward Jones Canada has released a new study that examines wealth transfer trends since the start of the pandemic. The research found that 25 per cent of Canadians aged 18-34 have either given and/or received a financial inheritance or windfall since the start of the pandemic (March 2020), which is 11 per cent higher than the national average.

While Gen Z and Millennials are most likely to receive a financial inheritance or windfall, they're also most likely to give one, too. In fact, 14 per cent of respondents in these generational cohorts have initiated a wealth transfer since the start of the pandemic, compared to only 1 per cent of those 35-54 and 4 per cent of those 55+. And while the younger generation of respondents was most likely to give, they also have the greatest need. More than half (54 per cent) said they need a financial inheritance or windfall to reach their financial goals, which is 13 per cent more than the national average.

What is prompting wealth transfers?

Age remained a key differentiator in terms of what has prompted wealth transfers since the start of the pandemic. For those aged 35-54 and 55+, wealth transfers were prompted by the death of a family member or friend (51 per cent and 63 per cent, respectively). This was much less of a factor for Gen Z and Millennials (28 per cent), who gave and/or received a wealth transfer to address more immediate needs or life events, such as:

• Personal financial factors (job loss, unforeseen home or health expenses, etc.): 38 per cent
• Factors related to the economy (inflation, interest rates, etc.): 33 per cent
• Major purchases (a home, home renovations, a car, etc.): 25 per cent
• Significant life events (having a child, graduation, birthday, etc.): 18 per cent

"We've all heard about the "bank of mom and dad" supporting the younger generation through wealth transfer, but our data demonstrates a strong willingness from the younger generation to return the favour," said Julie Petrera, Senior Strategist, Client Needs. "It is a timely reminder that our strategic approach to finances shouldn't be defined by what's considered normal or traditional, but by what matters most to you. Your unique circumstances, goals, and priorities should be the foundation for these significant financial decisions.

Do Canadians want to give before they're gone?

The study also found that most Canadians (54 per cent) are looking to pass along an inheritance, or at least a portion of it, during their lifetime. The two most likely factors influencing this decision are to ensure their inheritance is distributed without conflict (34 per cent) and giving immediate financial relief to a friend or family member (27 per cent).

However, this is a sharp decline over last year when 65 per cent of Canadians expressed a desire to leave an inheritance before they're gone. The most prominent reason why Canadians are hesitant to leave an inheritance during their lifetime is that nearly half of respondents (45 per cent) are concerned that it could risk their finances in the future. Other deterrents include tax implications (19 per cent) and the absence of an immediate need (18 per cent). Another 18 per cent of respondents simply do not believe their recipient(s) deserve it.

"The transfer of wealth is something that is deeply personal and different for each client," said Petrera. "Whether you plan to leave an inheritance or windfall before or after death, it's important to understand the complexities associated with your unique situation and develop a tailored plan that helps ensure your wealth is given or received efficiently and without conflict."

The data referenced comes from an online survey conducted with 1,517 adult Canadians, 18 years of age of older. Surveys were conducted by Pollara Insights between August 15 and 16, 2022. A representative sample of this size would be considered accurate to within ±2.5%, 19 times out of 20.  Results have been weighted using the latest StatsCan data to be representative of the Canada population as a whole.

About Edward Jones Canada

Edward Jones is a full-service investment dealer which provides a range of investment products, services and solutions to retail investors. We have close to 850 financial advisors serving clients in Canadian communities from coast-to-coast. A member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund, the firm is also a participating organization in the Toronto Stock Exchange. Edward Jones is a proud supporter of partners in the health and wellness space such as The Terry Fox Foundation, whose mission supports initiatives positively impacting cancer research. For more information, visit edwardjones.ca. 

SOURCE Edward Jones

For more information or to arrange an interview, please contact: Adam McPhail, Proof Strategies for Edward Jones, [email protected] [phone]; Pooja Dawani, Proof Strategies for Edward Jones, [email protected], [phone]