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The Great Wealth Transfer – Billions To Change Hands By 2026

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9 minute read

Here comes the boom.

What is ‘The Great Wealth Transfer’? 

 

This term has been coined by several major wealth managers across North America; referring to the tremendous amount of wealth that will be transferred to younger generations over the next decade. Wealth amassed by baby boomers will eventually be passed down to their families or beneficiaries, typically with the aid of a trusted wealth manager or financial advisor. 

Similar in a way to climate change, when we visit some of the data that has been reported in both Canada and the US, this issue seems to be far more pressing than most people are aware. Depending on the publication, the exact amount of wealth that will be transferred is questionable. Cited in Forbes, a report done by the Coldwell Banker Global Luxury® program and WealthEngine claim that $68 Trillion will change hands in the US by 2030.

We spoke with Gwen Becker and Devin St. Louis, two VP’s, Portfolio Managers and Wealth Advisors for RBC Wealth Management, offering their expert insight into the industry and the vast amount of wealth that is changing hands in Canada. 

According to RBC Wealth Management, their numbers in terms of the wealth transfer report $150 billion is set to change hands by 2026. The industry as a whole is at the forefront of this generational shift, whereas a trusted advisor can onboard younger family members to ensure the highest level of support through the process. Gwen offers her perspective:

“Certainly just around the corner; something that we are definitely paying attention to. My practice has always been very relationship-driven. It has been my privilege to advise many of my clients for decades. I have been intentional to welcome and include multiple generations of the same family. I advise grandparents who are now in their 90s, to which the majority of their children are my clients and even beginning to onboard grandchildren.”

This is an example of what is referred to as multi-generational estate planning. Being in the midst of the ‘great transfer of wealth’, this type of planning is crucial for advisors to implement early so they can continue to support the same family in the future. According to the Canadian Financial Capability Survey conducted in 2019, 51% of Canadians over the age of 65 will refer to a financial advisor to seek literacy and support. Contrary to that, Canadians aged 18-34 show that 51% are more likely to use online resources to aid in their financial literacy. 

Devin offers his perspective on how the importance of family legacy plays a role when an advisor poses this question: What is your wealth for?

“If you sat down with a couple 10 years ago, they may say, when I pass away, whatever wealth is left can be distributed evenly amongst our children. That has changed quite a lot now because elder family members are now more concerned about how their wealth is passed on to the next generation. Onboarding grandchildren can ensure that a family legacy that receives their wealth, uses it to benefit their family and their community.”

An important question to consider. Clearly there is a shift in attitude towards having a family legacy live on through younger generations of a family. Evident that having the support of a financial advisor or wealth manager not only ensures the most efficient use of your money and assets but also ensures financial stability for your family in their future.

If we revisit the above study in how a younger demographic is more likely to utilize online resources, interesting how a more digitally inclined audience will be receptive to advisors. Boiling down to how millennials and younger age groups will perceive wealth management if those in that space fail to offer their services through online communication.

Devin agrees that RBC is uniquely positioned for this digital shift:

“interesting that everybody had to transform their processes online through this COVID-19 pandemic. Every company has been forced to step up their technology means, RBC has definitely risen to that occasion. RBC has adapted quickly, improving a great technology base that already existed. I don’t perceive it at this point to be a challenge. I believe we have the right focus. I think it’ll be a good transition for us.”

Gwen continues:

“I do agree that RBC is very well positioned. The younger generations below millennials that would eventually take over some of this wealth carries some challenges. How does that age demographic think, and what are their expectations of wealth management or financial advisors? It is difficult to understand what that generation will expect out of digital advisors. Estate planning matters, and it will always be tied to you knowing the family, it’s a relationship business”

Consider that RBC Wealth Management oversees $1.05 trillion globally under their administration, has over 4,800 professionals to serve their clients and was the recipient of the highest-ranking bank-owned investment brokerage by the 2020 Investment Executive Brokerage Report Card, safe to say their decades of professionalism, expertise and ‘get it done’ attitude speaks for itself.

So, what does this mean for younger members of families who may not understand the field of wealth management?

Starting the conversation early

Whether you are the elder family member who has their financial ‘quarterback’ preparing their estate to change hands or are younger family members who may be the beneficiary of wealth in the near future, starting the conversation amongst family members early is important for the process to be successful. Considering that some possessions have more than just monetary value, but an emotional tie to the family legacy can be a difficult asset to distribute evenly. Of course, it can be a tough conversation to have, it may involve discussing the passing away of a loved one or even setting a plan to cover future expenses. Gwen mentions:

“I encourage my clients to have open conversations with their children while they are alive so that their intentions are clear. Depending on the dynamics of the family, things such as an annual family meeting with a beneficiary can be effective once it’s put in place. If they are not comfortable leading that conversation, bring a trusted adviser to the table to be impartial and logical.”

There is no way to know what ramifications will come of this ‘great transfer of wealth’. It may be that we see the resurgence of a strong bull market in the near future, we may see new tech innovation that we cannot yet grasp or new business investments that continue to disrupt traditional processes. Only time will tell.

For more stories, visit Todayville Calgary

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RFK Jr. warns Americans ‘will be slaves’ if central bank digital currency is established

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From LifeSiteNews

By Doug Mainwaring

The U.S. presidential candidate cited the Freedom Convoy trucker protests in Canada when the government ‘was able to destroy their lives’ by freezing bank accounts.

Democrat presidential candidate Robert F. Kennedy Jr. declared in no uncertain terms recently that establishing a Central Bank Digital Currency in the country will be “the end of freedom; we will be slaves if we allow that to happen.”

In a wide-ranging discussion at the University of Austin about freedom of speech and civil discourse, Kennedy said he didn’t “get” the connection between CBDCs and the loss of freedom of expression and other freedoms until he witnessed the Canadian trucker protest.

“The truckers in Canada were protesting the COVID mandates, the lockdowns, masking mandates, vaccination mandates, and others,” Kennedy began. “They started in Alberta. They picked up thousands of trucks as they drove across Canada to Ottawa.”

When they got to Ottawa — they were trying to petition Prime Minister Trudeau — and they were exercising a right that we all take for granted in this country: the right to assemble, the right to protest, the right to petition their government, and the government instead condemned them as right-wing fascists and racists, which if you look at the videos, they’re the opposite. Looks like Woodstock. They were delivering bottled water, they were cooking food for the poor, they were picking up garbage. There were musicians on every block.

It was really a beautiful thing.

However, the Trudeau government perceived the protesters to be an existential threat.

“The government used facial recognition systems and other intrusive technologies to identify the participants,” he recounted, and weaponized that information against them to freeze their bank accounts so they couldn’t purchase diesel for their trucks, buy food for their kids, or pay their mortgages or rents.

A pivotal moment for Kennedy occurred when one of the truckers told him that because of the government’s action, he was going to go to jail because he couldn’t pay his alimony.

He said that transactional freedom is as important as freedom of the press, or freedom of speech, “because if you have freedom of speech in the First Amendment and yet when you exercise that speech — if the government doesn’t like it — they can starve you to death. They can throw you out of your home.”

They keep a social credit score on you so that if (for instance) you’ve got your mask off below your nose, or if you’re not social distancing properly, or if you violate some other social norm, you get penalties taken off your social (credit) score and at some point they punish you.

Penalized persons are then limited to buying groceries from “stores that are within a certain radius of your house. You can’t buy gas. You can’t buy an airplane ticket. You can’t buy anything else, so you’re basically under home confinement.”

The truckers in Canada were never charged with a crime. They were certainly never convicted. It was just (that) they were doing something the government didn’t like.

So the government was able to destroy their lives, and that is a very dangerous power to give government. And that’s why I’m against Central Bank Digital Currencies because that is part of the path to getting us where China is today.

That’s where they started. That’s where all these other countries … with a Central Bank Digital Currency (started). And it’s the end of freedom. We will be slaves if we allow that to happen.

Kennedy is far from alone in his alarm over the prospect of a CBDC being introduced in the U.S. or Canada.

Although digital currency offers some attractive features, it also would grant the federal government unlimited opportunity to weaponize the technology against citizens, allowing it to both spy on the spending habits of everyday Americans and block access to the money in their personal bank accounts.

U.S. Sen. Ted Cruz introduced the CBDC Anti-Surveillance State Act last month to prohibit the Federal Reserve from issuing a central bank digital currency that Republican sponsors of the bill believe could turn the nation into a “surveillance state” by handing over control of personal finances to federal government agencies.

“The Biden administration salivates at the thought of infringing on our freedom and intruding on the privacy of citizens to surveil their personal spending habits, which is why Congress must clarify that the Federal Reserve has no authority to implement a CBDC,” Cruz said.

“While Americans across the country are being punished for thinking, speaking, and voting the ‘wrong’ way, the last thing we need is the government surveilling personal finances,” Heritage Action for America explained in a statement concerning the new legislation. “Anti-CBDC legislation is necessary to safeguard Americans’ financial privacy in the face of potential surveillance, control, and political intimidation.”

“CBDCs present major privacy concerns for everyday Americans, including granting the government the ability to collect intimate personal details on U.S. citizens, and potentially track and freeze funds for any reason,” the Blockchain Association noted.

“Big government has no business spying on Americans to control their personal finances and track their transactions,” said Republican U.S. Sen. Rick Scott of Florida, a co-sponsor of the bill.

“It is a massive overreach,” he warned.

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Balanced budget within reach—if Ottawa restrains spending

Published on

From the Fraser Institute

By Jake Fuss and Grady Munro

This level of debt-financed spending has contributed to an estimated $941.9 billion increase in gross federal debt from 2014/15 to 2023/24. In other words, partly due to its spending habits, nearly one in every two dollars of debt currently held by the federal government has been accumulated under Prime Minister Trudeau.

The Trudeau government will table its next budget on April 16. Federal finances have deteriorated in recent years due to the Trudeau government’s string of budget deficits, and high spending has led to a significant amount of debt accumulation, which imposes costs on current and future generations. Yet if the government presents a plan in Budget 2024 to rein in spending growth, it could balance the budget in two years.

Far from its promise to balance the budget by 2019, the Trudeau government has instead run nine consecutive deficits during its time in office. And it doesn’t intend to stop, with annual deficits exceeding $18 billion planned for the next five years.

The root cause of these deficits is the government’s inability to restrain spending. Since 2014/15, annual program spending (total spending minus debt interest) has increased $193.6 billion—or 75.5 per cent. If we control for population growth and inflation, this represents an extra $2,330 per person.

This level of debt-financed spending has contributed to an estimated $941.9 billion increase in gross federal debt from 2014/15 to 2023/24. In other words, partly due to its spending habits, nearly one in every two dollars of debt currently held by the federal government has been accumulated under Prime Minister Trudeau. Debt accumulation will only continue barring a change in course, as the federal government is expected to add another $476.9 billion in gross debt over the next five years.

Simply put, the Trudeau government’s approach towards federal finances has been characterized by high spending, large deficits and significant debt accumulation.

This approach to fiscal policy is concerning. Growing government debt leads to higher debt interest costs, all else equal, which eat up taxpayer dollars that could otherwise have provided services or tax relief for Canadians. And these costs are not trivial. For example, in 2023/24 the federal government is expected to spend more to service its debt ($46.5 billion) than on child-care benefits ($31.2 billion).

Accumulating debt today also increases the tax burden on future generations of Canadians—who are ultimately responsible for paying off this debt. Research suggests this effect could be disproportionate, with future generations needing to pay back a dollar borrowed today with more than one dollar in future taxes.

Although the Trudeau government promises more of the same for the coming years, this need not be the case. Instead, a recent study shows the federal government could balance the budget in two years if it slows spending growth starting in 2024/25. The following figures highlight this approach. The first chart below displays currently planned federal program spending from 2023/24 to 2026/27, compared with the spending path that will balance the budget, while the second chart shows the resulting budgetary balances.

Figure 1

Figure 2

As shown by the first chart, to balance the budget by 2026/27 the federal government must limit annual spending growth to 0.3 per cent for two years. As a result, annual nominal program spending would rise from $469.4 billion in 2024/25 to $472.3 billion in 2026/27. For comparison, the Trudeau government currently plans to increase annual spending up to $499.4 billion during that same period.

Should the government implement this level of spending restraint, the federal deficit would shrink to $21.8 billion in 2025/26 (as opposed to $38.3 billion), and the budget would be balanced by 2026/27 (as opposed to a $27.1 billion deficit). All told, by slowing spending growth to balance the budget, the federal government would avoid accumulating significant debt. Moreover, this also sets the government up to return to budget surpluses in the following years, which could be used to start chipping away at the mountain of federal debt already on the books.

Rather than continue its current approach to fiscal policy, and risk needing to employ more drastic cuts in the future, the Trudeau government should implement modest spending restraint now and balance the budget.

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