The great wealth shift: how Gen Z and millennials are redefining investment
Younger investors are reshaping wealth management, here’s how.
Younger investors are reshaping wealth management, here’s how.
It’s no longer business as usual in wealth management.
A seismic shift is underway. Over the next two decades, an estimated $124 trillion in global assets will change hands, mostly passing from “baby boomers” to their children and grandchildren. Dubbed the great wealth transfer, this phenomenon is already beginning to reshape how financial institutions think about investing.
According to research by Cerulli Associates, about $106 trillion will be inherited by Generation X, millennials, and Gen Z through 2048; with the remainder going to charities*. That’s not just a lot of money; it’s a complete reimagining of who holds wealth and how it’s managed.
But here’s the catch: stocks and bonds may no longer cut it for younger investors.
A generation investing differently
Gen Z is taking a radically different approach to investing. As mentioned by the World Economic Forum’s Global Retail Investor Outlook 2024, nearly 30% of Gen Z start investing in early adulthood, compared to just 9% of Gen X and a mere 6% of Bay Boomers*. Even more impressive? By the time they start working, 86% of Gen Z already have some knowledge about personal investing. For Baby Boomers, that number was just 47%.
This signals a critical shift: today’s younger investors are better educated, more digitally native, and more confident in taking financial matters into their own hands.
“Stocks and bonds aren’t enough anymore,” says Lauren Sanfilippo, Head of CIO Sustainable Investing Thought Leadership at Bank of America Merrill Lynch*. “Younger investors are more open to new financial vehicles, including alternative investments.”
What Wealth Managers need to know
If traditional products aren’t the only game in town anymore, what do wealth managers need to consider when engaging with this rising generation?
Environmental, Social, and Governance (ESG) factors aren’t a trend, they’re a core consideration. A Bank of America Private Bank survey found that younger investors are significantly more likely to evaluate a company’s ESG performance before investing.
From crypto and private equity to venture capital and collectibles, alternative assets are gaining traction. Historically reserved for institutional or ultra-high-net-worth investors, these assets are becoming more accessible and desirable. The influx of inherited wealth will likely increase interest in these options among younger investors.
This generation doesn’t want to be told what to do, they want to understand, participate, and co-create. Personalised portfolios, transparency, and digital platforms that empower investor control will become non-negotiables.
A new era for advice
For wealth managers, this shift represents both a challenge and an opportunity. Legacy approaches won’t resonate with a generation that grew up with real-time data, social impact investing, and financial influencers. The firms that adapt, educate, and partner with younger clients will be the ones who thrive in this new era. The wealth is coming. The expectations are changing. Is your business ready to meet the moment?
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