Wealth in America is growing and those holding the assets are getting younger.
In just one decade, the number of multi-millionaires in the U.S. has doubled. Today, about 172k households reportedly earn $25 million or more annually, up from 84k ten years ago. But even more significant is the fact that more and more of those assets have moved into the hands of younger generations. Since 2014, the average age of those earning $25 million or more has plunged by 11 years—from 58 to 47.
Part of this transfer of wealth is due to the increased affluence arising from the tech industry, which is predominantly populated by younger generations. But according to Forbes, in the U.S. alone, over $30 trillion in assets are expected to be handed down from the baby boomer generation to their younger offspring before 2060.
With millennials now the largest living adult generation, how they choose to spend all that capital will shape the world economies over the next 100 years. Here are some things to consider:
Very clearly, the priorities of these younger generations are different from their parents. Their behaviors and spending habits reveal that they enjoy collecting experiences and making connections more than collecting property and other ‘stuff.’ This trend has helped launch billion-dollar start-ups like Uber, TripZero, and Airbnb.
As witnesses to the bank failures and data breaches, the up and coming generations have built less trust in financial institutions than previous generations, so they will be looking for alternative ways to invest and grow their wealth.
At the same time, this younger demographic will be more keen on taking more financial risks and will feel less rooted than their parents. To them, the purpose of holding real estate will be more about generating consistent revenue and providing freedom to travel than about providing a home base.
What does this trend mean for business and the rest of us?
Businesses will want to assess their value beyond the one-dimensional financial goals of yesteryear. They’ll need to consider the triple bottom line model by monitoring their economic value, the degree of social responsibility that they’re engaging in, and their environmental impact. They’ll need to respond to the more globally-aware, multilayered values of the upcoming younger generations.
The rest of us need to keep it front of mind that a new breed of players is already starting to step into the shoes of their parents, taking on the mantle of the new decision-makers, from CEO’s to policy-makers and government officials. Their choices will be different from their forebears and will have an abiding influence on the trends in business.
This wealthier new breed of consumers will bring a new mindset, ease with access to cash, and a degree of flexibility that the previous generation was unaccustomed to. Their freedom and spending power will influence the focus for new startups and the decision-making of legacy businesses. We can only hope that they also bring with them a demand for a greater degree of transparency, ethics, and authenticity than we have seen in global leaders over the last century.