High-net-worth business owners differ from typical high-net-worth individuals in at least two ways: They have significantly higher household income and tend to take on responsibility for the well-being of extended family members. Thats one of the many findings in to a new study from U.S. Trust.
Almost four in five non-retired business owners (77%) have an annual income greater than $200,000 and 26% earn $1 million or more, the majority of whom are young entrepreneurs under the age of 49. By comparison, 59% of non-retired, non-business owners have an annual income greater than $200,000 and only 9% earn more than $1 million a year, according to the study.
Business owners are also more likely to support adult member of their extended family. More than half (53%) said they provide, or have provided, substantial financial support to other adult family members, including their parents, grandparents, siblings, nieces and nephews. Interestingly, theyre less likely than non-business owners to financially support adult children, the study found.
In general, business owners tend to pay greater attention to their business than they do to their personal finances and goals, with 71% agreeing that the needs of the business often take priority over their own personal needs and obligations. As a result, they often put off important actions, such as business succession planning, financial planning, estate planning, investment decision-making and wealth structuring.
As far as business succession planning goes, older business owners tend to be more delinquent than their younger counterparts. According to the study, only 34% of baby boomers and 44% of business owners over the age of 68 have formal succession plans to ensure the continuity of their businesses. Among young business owners under the age of 49, in contrast, at least half have plans, and among millennials, 60% do.
Interestingly, only 18% of baby boomers and 27% 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, according to the findings.
The study, titled U.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. It was conducted online by independent research firm Phoenix Marketing International in February and March of 2013.