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A Sudden Windfall: BMO Wealth Management Report Reveals a Shift in Canadians' Financial Priorities After Receiving Wealth Unexpectedly

  • The majority of Canadians who receive an unexpected sum of money intend to pay off debts and share their newly acquired wealth with friends, family and charity
  • An estimated $1 trillion in personal wealth will transfer to the next generation of Canadians by 2026


TORONTO , Dec. 10, 2018 /CNW/ - BMO Wealth Management today released a report revealing that while more than half of surveyed Canadians currently prioritize achieving lifestyle goals in retirement, their financial goals shifted when asked to imagine an unexpected acquisition of wealth.

The report, A Sudden Windfall: A Blessing, Not a Burden, highlights the potential sources of financial windfall:

  • Winning the lottery
  • Receiving an inheritance
  • Legal settlements from divorce or injury
  • An insurance payout
  • The sale of a business
  • Earnings from stock market investments


When asked to imagine receiving an unanticipated windfall, Canadians aged 35 and older shifted their financial priorities.

Before financial windfall

After financial windfall

Achieve lifestyle goals in retirement

55%

Share with family, friends, charity

64%

Increase my wealth

49%

Pay off all debts

64%

Protect current wealth

40%

Invest in the stock market, a business or property

47%

Manage taxes in retirement

27%

Financial goals or priorities would remain the same

38%

Financially help my (grand) children

20%

Buy the big ticket items I always wanted

17%

Other

4%

Splurge and spend freely

10%

Other

1%

 

The change of financial priorities is notable as the report also reveals Canada is forecast to see approximately $1 trillion in personal wealth transferring to the next generation by 2026, with roughly 70% of this sum in the form of financial assets.

"Regardless the source of wealth, receiving a substantial sum of money unexpectedly carries sociological and psychological implications. While the significant investment opportunities can be exciting, be cautious of psychological issues associated with sudden wealth syndrome," said Chris Buttigieg , Director, Wealth Institute, BMO Wealth Management. "It is important to seek expert advice to discuss how a windfall will alter your financial goals and which causes matter most to you and your loved ones." 

The report also includes respondents' top investment and retirement concerns affected by a sudden windfall:

  • Seeking advice to invest wisely (46 per cent)
  • Will it change their retirement outlook? (18 per cent)
  • Can they stop working immediately? (12 per cent)


BMO offers the following tips for Canadians managing a sudden windfall:

Take your time: While the sudden acquisition of wealth can be exciting, it is important to remain calm and think about how a windfall will influence your financial goals.

Establish a wealth plan: Consult a team of trusted wealth advisors to discuss your financial goals and priorities, to help assess your new-found wealth and assist implementing the strategies to achieve your goals effectively.

Pay off debts: Move forward by taking care of financials debts - especially those with high interest - or consider a debt-swap strategy.

Establish an emergency fund and a budget: If you don't have one already, a windfall is the perfect opportunity to create an emergency fund.

Share the wealth and define your legacy: Your new financial situation may call for an update to your estate plans and a discussion on how you wish to be remembered. There are many favourable tax benefits for making generous charitable donations or establishing a long-term giving vehicle, such as a donor-advised fund or a foundation, to connect to the causes that are important to you.

To view a copy of the full report, which includes additional survey findings and financial tips, please visit https://www.bmo.com/main/wealth-management/wealth-insights#plan.

About BMO Financial Group 
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider - the 8th largest bank, by assets, in North America . With total assets of $774 billion as of October 31, 2018 , and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.

SOURCE BMO Financial Group


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