For many families the issue of money and a legacy is not often discussed openly. It’s often difficult for both parents and children to broach the subject.
Over the next decade some $1 trillion in personal wealth is expected to be transferred from one generation to the next in Canada, with roughly 70 per cent of that being in the form of financial assets.
Yet, some recent studies have found that more than half of Canadians have not discussed instructions for their estate with their heirs, of which 12 per cent do not plan to talk about their inheritance plan with their beneficiaries.
One way to help ease the awkwardness of bringing up the subject is to think of a legacy as being about more than just money.
“A good way to start the conversation is to think about a legacy in terms of values and what you support and are passionate about,” says Mike Thiessen, manager of sustainable research at Genus Capital. “Financial legacy isn’t just about what you choose to donate in your will. It’s about consciously choosing to invest your money in a way that aligns your values and how your choices impact the world, either socially or environmentally, right now.”
A recent study on wealth and worth by U.S. Trust shows that millennials are the driving force behind this shift in thinking about legacies.
Seventy-six per cent of millennials say they consider their investment decisions to be a way to express their social, political and environmental values and 88 per cent say that a company’s impact in these areas is an important consideration when they make investment decisions.
Statistics from the Responsible Investment Association of Canada show that millennial investors are more than twice as likely as boomers to be interested in investments which are dedicated to solving social or environmental problems.
Millennials are 65 per cent more likely than boomers to consider environmental, social and governance factors when making investment decision and 85 per cent of millennials aged 18 to 35 are interested in responsible investing.
The U.S. Trust study also shows that women invest for impact more than men. Thirty one per cent of men now invest for impact, up 16 per cent since 2015, compared to 34 per cent for women. In general 55 per cent of HNW investors say they invest based on impact because it is the right thing to do, 52 per cent also think corporations must be held accountable for their actions and four in 10 believe companies with a positive impact also enjoy a better financial performance.
“Investing is becoming more than just financial returns,” Thiessen says. “We definitely are seeing growth in investing in greener and cleaner companies or funds focussed on renewable energy, health care, energy efficiencies and clean technologies. There is a strong case for fossil-free investing.”
Genus has developed a fossil-free fund which has outperformed its benchmarks since it was launched in 2013. The company says surpassing the four-year milestone finally validates its hypothesis that a divested portfolio can yield better returns than a carbon-heavy one.
“Perception has long been that hydrocarbons are a necessary part of a portfolio generating returns, particularly in Canada where oil and gas has played such a big part in our industry,” Thiessen says. “Data now shows that isn’t the case.”
Thiessen recommends that people use their values and beliefs as a great starting point to open up a conversation with their families about their legacy and inheritance.
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.