YOUNG HEIRS AND WEALTH TRANSFER: BMO SURVEY FINDS WEALTHY PARENTS NERVOUS ABOUT HOW THEIR CHILDREN WILL HANDLE THEIR INHERITANCES

A recent articles in The Globe and Mail, Canada’s national newspaper, reports on a survey by BMO (Bank of Montreal) of several hundred of its wealthiest clients. When asked about wealth transfer, “only 58 per cent said they were confident their children would be able to properly manage the money left to them.” Andrew Auerbach, head of BMO Harris Private Banking, commented that “It’s not so much doubting the capabilities of the children. It’s simply that they haven’t really thought in a deep way as to what that [managing their inheritance] will look like.”

The banking sector has started calling wealth transfer “transliquification, ” meaning that “once the wealth is transferred, it will be ‘liquefied’ by their children.”

The solution currently being offered by some of the private banks, including Harris Banking and the Bank of Nova Scotia (a big national bank in Canada)—offer one-day seminars to young heirs, ranging in age from 14 to 25. This may become a growing trend. The Bank of Nova Scotia seminar includes such topics as investment acumen, stocks and bonds, taxes, borrowing, and debt.

A 51-page booklet from The Inheritance Project, entitled Coming into Money: Preparing Your Children for an Inheritance, takes a much deeper look at issues of wealth transfer. One-day seminars may be helpful for some young heirs who have the necessary emotional maturity to absorb some of what they hear, but young people age 25 and under are immature — particularly if they were raised in affluence. Unless parents do their work consistently, starting when their children are young, teaching them how to manage an inheritance won’t “take.”

Here is the text of the Globe and Mail article, called “A lack of faith in the next generation.” If you want to read it, don’t wait: Globe online articles are removed just a few days after publication. http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/a-lack-of-faith-in-the-next-generation/article1990850/comments/