A pending “great transfer” of wealth, projected to amount to over $84 trillion, is poised to reshape the AWM industry.
According to a report by Cerulli, of those, heirs will get $72.6 trillion, and $11.9 trillion will go to charities.
As younger investors inherit assets, their investment objectives could create new opportunities different from those of the generations before them.
Early indicators suggest a shift in investment, hinting at the emergence of new investment management industry trends.
For example, a Bank of America Private Bank report reveals that 75% of Millennials and Gen Z investors won’t rely on traditional stocks and bonds.
These investors, aged 21 to 42, hold a quarter of their portfolio in stocks, compared to older investors with 55%.
In fact, the younger generations are convinced that relying solely on that won’t yield above-average returns.
Instead, they are open to alternative investments, including crypto, private equity, private debt, and direct investment in companies.
Moreover, younger investors also perceive the potential for wealth growth in their personal brand or business. At the same time, those aged 43 and above prefer traditional asset classes, mainly domestic and international stocks.
Real estate remains popular across all age groups.
As they inherit wealth, new investors are more likely to advocate for diverse investment options, bringing private markets into the spotlight.
Consequently, employers should look for investment management partners capable of adapting their strategies to cater to the evolving preferences of the next generation.