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U.S. Trust Insights On Wealth And Worth™ Finds Business Ownership Is Thriving, But Constrained By Taxes, Talent And Lack Of Planning

More than half (53 percent) of business owners provide, or have provided, substantial financial support (not a loan) to other adult members of their family, including their parents, grandparents, siblings, nieces and nephews.

  • Business owners are less likely than non-business owners to financially support adult children but are more likely to support other adult family members.
  • Fifty-seven percent of business owners do not have a financial plan that accounts for financial support needed by other adult family members.
  • Forty-four percent of business owners, compared to 31 percent of non-business owners, expect to financially support their parents or in-laws at some point.
  • Thirty-five percent of business owners, compared to 21 percent of non-business owners, indicate that they have forfeited income or advancement of their career in order to care for the special needs of children or parents.

“We’re seeing the next generation of entrepreneurs take a longer, multi-generational and purposeful approach to creating wealth, and business owners are generally more proactive about protecting their assets,” added Banks. “At the same time, despite all the advantages of owning a business, and maybe because of it, business owners face distinct challenges and may be most vulnerable to risks because so much of their income, assets and focus are tied to the business.”

When it comes to managing the needs of the business and personal finances and goals, many business owners pay greater attention to the business and put off important actions that can affect their overall wealth and financial security. This includes business succession planning, financial planning, estate planning, investment decision-making and wealth structuring.

  • Seven in 10 business owners (71 percent) agree that the needs of the business often take priority over their own personal needs and obligations, and approximately one-half (52 percent) focus more on the finances of the business than on their personal finances.
  • More than half (53 percent) of business owners say that minimizing the impact of taxes is an important factor in their investment decision-making; however, approximately four in 10 percent do not feel very well informed about the impact of tax increases on either their investment returns or income.
  • While three-quarters (78 percent) of business owners founded or co-founded their business, only 18 percent of baby boomers and 27 percent of business owners over the age of 68 intend to pass their business on to the next generation. Most plan to sell the business or close it when they are ready to leave, suggesting that a majority of next generation entrepreneurs are, or will, pursue business ownership on their own or with inherited family wealth.
  • At least one-half of young business owners, including 60 percent of millennials, have a formal succession plan to ensure the continuity of their business, compared to 34 percent of baby boomers and 44 percent of business owners over the age of 68.

Additional survey findings from the 2013 U.S. Trust Insights on Wealth and Worth can be found at www.ustrust.com/survey.

Survey MethodologyU.S. Trust 2013 Insights on Wealth and Worth is based on a nationwide survey of 711 high net worth and ultra high net worth adults with at least $3 million in investable assets, not including the value of their primary residence. Respondents were equally divided among those who have between $3 million and $5 million, $5 million and $10 million, and $10 million or more in investable assets. The survey was conducted online by the independent research firm Phoenix Marketing International in February and March of 2013. Asset information was self-reported by the respondent. Verification for respondent qualification occurred at the panel company, using algorithms in place to ensure consistency of information provided, and was confirmed with questions from the survey itself. All data have been tested for statistical significance at the 95 percent confidence level.

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