Gen Z, millennials relying on ‘bank of mom and dad’ to meet financial goals


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calfunnymoney03

Good morning!

According to a new study by Edward Jones Canada, the majority of young Canadians rely on “Mom and Dad’s bank” to help them achieve their financial goals.

In fact, more than half (55 percent) of Gen Z and Millennials (aged 18-34) need a financial inheritance or windfall to reach their goals, according to the survey. That is 13 percent more than the national average.

But while younger generations are the most likely to receive a wealth transfer, they are also the most likely to give one. The study found that 14 percent of younger cohorts have initiated a wealth transfer since the COVID-19 pandemic began in March 2020. That compares to just one percent of those aged 35 to 54 and four percent of those aged 55 and over.

“We’ve all heard about the ‘mom and dad’s bank’ that supports the younger generation through wealth transfer, but our data shows a strong willingness on the part of the younger generation to return the favor,” Julie Petrera, Senior Strategist of Client Needs at Edward Jones Canada said in a press release. “It’s a timely reminder that our strategic approach to finance should not be defined by what is considered normal or traditional, but by what matters most to you. Your individual circumstances, goals and priorities should be the basis for making these meaningful financial decisions.”

Overall, a quarter of Gen Z and Millennials have made and/or received a wealth transfer since the pandemic began, which is 11 percent higher than the national average.

The reasons for initiating wealth transfers appear to vary by age. Younger generations used wealth transfers to meet immediate needs such as personal financial (38 percent) or economic (33 percent) factors, major purchases (25 percent), and significant life events (18 percent).

Among the older cohorts, wealth transfers were largely prompted by the death of a family member or friend: 51 percent among those aged 35 to 54 and 63 percent among those aged 55 and over. In comparison, it was much less of a factor for Gen Z and Millennials at just 28 percent.

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“Transferring wealth is something that is deeply personal and different for each client,” Petrera said. “Whether you wish to leave an inheritance or fortune before or after death, it is important to understand the complexities associated with your unique situation and to develop a tailored plan that will help ensure your wealth is managed efficiently and without conflict is given or received.”

In general, the poll found that a majority (54 percent) of Canadians would like to pass on at least some of their heritage during their lifetime. The top reasons for transferring wealth are to ensure conflict-free distribution (34 percent) and to provide immediate financial relief to a family member or friend (27 percent).

However, this year’s number is significantly lower than a year ago, when 65 percent of Canadians hoped to do the same. The top reason for hesitation for nearly half (45 percent) of Canadians was risking their own financial future. Other reasons include tax implications (19 percent), lack of immediate need (18 percent), and unworthy recipients (18 percent).

Nonetheless, experts are predicting an era of unprecedented wealth transfers in the next decade. In fact, Canadian inheritances are expected to reach as high as $1 trillion.

The large intergenerational wealth transfer has already fueled the luxury real estate market. Don Kottick, CEO of Sotheby’s International Realty Canada, said in an interview with Larysa Harapyn last year that wealth transfers are the reason many millennials have been able to move up in the housing market.

“At this point … we’re starting to go through the largest wealth transfer we’ve ever seen,” Kottick said. “[Millennials]basically skipped the first-time home buyer — they went straight into single-family homes.”

The Edward Jones survey surveyed 1,517 Canadian adults ages 18 and older.

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GOLD IS UNLOCKED The CEO of Agnico Eagle Mines Ltd., Canada’s largest gold producer, said he was confident gold prices would break out of a months-long slump and described his investment in a Mexican copper project as opportunistic rather than precious metals. Gold appears to be suffering because the US Federal Reserve and other central banks have been raising interest rates so rapidly in recent months, making fixed income assets like bonds more attractive. Once the Fed stops raising interest rates, “gold will be released and go up,” said Ammar Al-Joundi, Agnico’s chief executive officer. Gabriel Friedman of the Financial Post reports. Photo by Sean Kilpatrick/The Canadian Press

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  • Statistics Canada releases travel figures between Canada and other countries for July.

  • Physicians specializing in infectious diseases, emergency medicine and pandemic management will release a report entitled “Evaluating Canada’s Pandemic Border and Travel Policies: Lessons Learned” assessing the impact and effectiveness of the federal travel restrictions put in place to deal with COVID-19.

  • The Standing Committee on International Trade holds a meeting on trade opportunities for Canadian companies in the Indo-Pacific.

  • Standing Committee on Environment and Sustainable Development holds meeting on clean technologies in Canada.

  • Prime Minister Justin Trudeau will hold a bilateral meeting with South Korean President Yoon Suk Yeol. Foreign Minister Melanie Joly and Francois-Philippe Champagne, Minister for Innovation, Science and Industry will also be present.

  • Prabmeet Sarkaria, President of the Ontario Department of Treasury; and Peter Bethlenfalvy, Ontario Minister of Finance, will release Ontario’s public accounts for 2021–2022.

  • Arielle Kayabaga, Liberal MP for London West; and Monte McNaughton, Ontario Minister for Labour, Immigration, Education and Skills Development, will make an announcement regarding broadband infrastructure.

  • Gudie Hutchings, Minister for Rural Economic Development; Alberta Minister of Services Nate Glubish; and George Chahal, Liberal MP for Calgary Skyview, will make an announcement about improving high-speed Internet access in rural Alberta.

  • Secretary of State for Education and Child Care Jennifer Whiteside and Secretary of State for Child Care; Katrina Chen and Karina Gould, Secretary of State for Families, Children and Social Development, discuss childcare savings in BC

  • Data from today: Canadian Retail; US S&P Global Manufacturing PMI

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A majority of Canadian companies have placed inflation high on their list of concerns for the remainder of the year, suggesting the country’s years of battling inflation is weighing on business owners. The Canadian Survey on Business Conditions found that 60 percent of respondents saw high inflation as their top short-term challenge — the biggest concern since the survey began in spring 2020. “Businesses are pretty much grappling with costs,” said Stephen Tapp, chief economist the Canadian Chamber of Commerce. “Running a business right now is extremely expensive and difficult given the lack of access to labor and the significant increase in input costs.” Read the full story from the Financial Post’s Stephanie Hughes.

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You may be considering buying an electric vehicle as we move toward 2035, when all new vehicles sold will need to be electric. If you are in the market for a new vehicle but the price of an EV seems excessive, you should be aware of the federal and provincial discounts available for purchasing an EV. Our content partner MoneyWise Canada has details on how you can claim the rebates and lower your costs.

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Today’s post was written by Noella Ovid, with additional coverage from The Canadian Press, Thomson Reuters and Bloomberg.

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