Generational Difference Driving Innovations In Investments

It’s no surprise that generational difference will create problems in a household, but it’s also leading to innovations. That’s according to the 2017 U.S. Trust Insights on Wealth and Worth survey that was released Tuesday (June 13) and shows baby boomers and older investors rely on stocks, bonds and cash when it comes to investing. Millennials, on the other hand, only have 41 percent of their portfolios in stocks and bonds but have large cash positions on the sidelines for opportunistic acquisitions.

“As many as five different generations are now active in the workforce and contributing to family dynamics and financial decision-making,” said Keith T. Banks, president of U.S. Trust, Bank of America Wealth Management, in a press release discussing the survey results. “Perspective and participation of multiple generations are highly valued, but are also complex and require advanced planning and communication.”

U.S. Trust conducted a nationwide survey of 808 high-net-worth households with at least $3 million in investable assets to explore differences in generational experiences, expectations and behavior that influence the way they build, manage and share wealth. The study found a high degree of multi-generational financial interdependence but also emerging conflicts and distinctly different approaches in four key areas: investing, family, giving and work.  Among the key findings are that traditional investments are giving way to alternative, opportunistic and personalized strategies by a new generation of investors looking for growth, income and positive impact, with 39 percent of millennials owning private equity investments and 37 percent owning tangible assets  which include residential investment property, farmland, timber and oil and gas properties. Millennials also are driving growth and interest in impact investments, with 88 percent saying a company’s impact on the society and environment is an important basis of their investment decisions.

On the family front, the survey found that two-thirds consider it important to leave a financial inheritance to the next generation, only 42 percent of parents are very confident their children will serve as good stewards of family wealth. Even fewer adult children – 37 percent – are very confident in their parents’ capacity to use family money responsibly. As for work, 89 percent agree that the different generations improve work results, but close to half of working men and women feel they are competing for the same jobs with people a generation younger or older. Fifty-two percent of millennials feel they can’t advance their careers because of older colleagues working later in life, the survey found.