Huge generational divide among the wealthy when it comes to active investing
Millennials are nearly three times (73%) as likely to move their assets compared with baby boomers (29%) during times of volatility, reflecting a major generational divide among wealthy investors, according to a new survey, the Ernst & Young Global Wealth Management Research Report. Half of millennials reported increasing allocations to active investments, compared with just 22% of boomers.
“If you’re a millennial, your investing experience most likely started within the last 15 years, since the great financial crisis of 2008,” said Mike Lee, EY Global Wealth & Asset Management leader. “Your experience with traditional markets has been quite rocky. Whereas if you’re a boomer, you’re familiar with the mantra of steady markets.”
The volatility of the past few years has prompted wealthy investors to take a more defensive position. Their leading goals are now focused on protecting against inflation and ensuring financial security – with a marked decline in diversifying wealth and the importance placed on purposeful financial legacy, such as transitioning wealth to family and charity, the survey found.
The survey of over 2,600 wealth management clients around the world also revealed some interesting contradictions.
Though only two in five clients think that wealth management advisers have provided the right level of planning advice to them, family offices expect to increase their use of such advisers – from 6% in 2021 to 9% in the next three years.
In addition, 84% of clients view wealth transfer planning as equally or more complex than two years ago, with only 28% of them saying their adviser has engaged their children or family adequately in planning activities. Only 27% of clients' children believe that their needs are heard and met by their family's current wealth provider.
Family offices have increased their use of wealth management advisers in recent years, with 6% of them using them in 2021, 7% in 2023 and 9% saying they expect to use them in three years’ time.