Bank of America: 47% Of young investors have cryptocurrency investments. Bank of America published the 2022 Bank of America Private Bank Study of Wealthy Americans, which reveals a significant generational divide in financial strategies. Influence and control over the most critical portion of U.S. personal wealth, $84 trillion, are projected to shift from baby boomers to Youth of Gen X and millennials by 2045. This shift might have substantial ramifications for families, wealth managers, philanthropic organisations, and financial markets. President of The Private Bank of Bank of America, Katy Knox, said;
“Wealth planning necessarily involves many generations. As we see among our client families, financial practises and ideals take form early in life and are handed down to generations. These results indicate a more significant role for wealth advisers and the financial services sector in assisting families with asset transfer and meeting the demands of the next generation.
75% of investors between the ages of 21 and 42, compared to 32% of investors over the age of 43, do not believe it is feasible to produce above-average returns using conventional equities and bonds alone.
Eighty per cent of young investors seek alternative investments, including private equity, commodities, real estate, and other physical assets. Younger investors devote three times as much of their portfolios to alternative methods (16%) and half as much to equities (25%) compared to senior investors (5% and 55%, respectively). Whereas investors over the age of 43 believe that U.S. stocks provide the most significant growth potential in the future, youthful investors believe that the most significant growth opportunities lie in transformational digital assets. 47% of respondents had bitcoin holdings.
Since 2018, the percentage of affluent individuals who own sustainable assets has increased from 12% to 26%. Compared to older respondents, almost three-quarters (73%) of millennials employ sustainable investments, which 72% of all poll respondents say may have a good influence on the globe.
The discussion of family wealth is occurring, but it begins late and does not correspond to financial preparedness: 68% of parents claim they have discussed their family’s wealth with their children, including how much money the next generation would inherit. On average, parents do not commence discussions regarding family money and the transfer of wealth until their children reach the age of 27. 51% of parents believe their children are well equipped to manage family funds and any inheritances they may receive.
Five-eight per cent of respondents had little or no knowledge about trusts. Younger generations are more likely to contemplate employing trusts in their estate planning (91% vs. 56%) among those without a conviction. Various ways to achieve a better world: 82% of philanthropically involved parents feel that their children share the same philanthropic vision and aspirations as themselves. However, just 41% of older generations believe that the future generation’s humanitarian efforts will be as successful as their own. Younger generations are more confident in their capacity to fulfil philanthropic objectives; 87% feel their charitable contributions will be more successful than those of previous generations. In the last 12 months, the property ownership rate was;
• Within the previous year, sixty per cent of art collectors have added a new item to their collection.
• Almost as many individuals as 58% had intended to sell valuable work within the following year.
A growing role for wealth advisers in meeting the requirements of individuals: While satisfaction with wealth advisors is high — 97% of survey respondents are satisfied, including 74% who are extremely satisfied with their advisor relationship — the survey revealed discrepancies between the topics people wish to discuss with their advisor and the actual conversations that are occurring.
The following are the top three issues that high-net-worth individuals want to talk about with their advisors today:
- Tax planning (88%)
- Estate planning (81%)
• Investing in an inflationary climate and the optimal use of money in a setting with increasing interest rates (each 80%).
Approximately one-third of those who want to do so do not or do not adequately address these matters with their principal adviser. In a variety of areas, including estate planning, strategic credit utilisation, philanthropic planning, and investing for positive social or environmental impact, wealth managers have a significant opportunity to add value and build stronger relationships with next-generation clients, according to the findings.
Although the United States gets increasingly diverse with each generation, this diversity has not yet realised its full potential among the wealthy participants of our research. Still, a sort of variety uniquely American is well-represented within the older cohort: a portion of the rich community that is wholly or primarily self-made. According to our data, there are an equal number of self-made and inherited affluent individuals among baby boomers and the silent generation.
The younger respondents included in this research reflect predominantly inherited money since the self-made members of that generation are still accumulating wealth. As younger self-made individuals enter affluent society, they are expected to increase demographic and ideological diversity. In the following decades, the evolving views of the younger generation will affect how families invest, contribute, and pass on the money.
