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Capital Acumen ISSUE 33

The Generational Divide

How are wealthy families managing their wealth? According to a recent study from U.S. Trust, it depends on how old they are.

group of people faces looking at another group of people faces

Illustration by Robert Neubecker

Baby Boomers— the wealthiest generation in American history— are set to transfer $30 trillion to their children and grandchildren in coming years. But are they— and their heirs— prepared?

That’s one of many questions illuminated by the 2017 U.S. Trust Insights on Wealth and Worth® survey,** one of the most in-depth studies exploring the attitudes, behaviors, goals and needs of wealthy families in the United States. U.S. Trust has conducted the survey for more than 20 years, choosing this year to focus on generational parallels and divides.

The various generations examined share many values, but there are also differences that can lead to conflict and tension, the survey finds. For example, some parents and adult children question the ability of each other to manage family money, an issue that may arise from different preferences they have when it comes to both investing and supporting causes.

The 2017 U.S. Trust Insights on Wealth and Worth® survey zeroes in on attitudes and behaviors in a number of additional areas besides investing, including family dynamics, art collecting, work and business ownership. You can find detailed results and summaries on these topics at ustrust.com/survey.

A Lack Of Confidence

Nearly two-thirds of wealthy individuals consider it important to leave a financial inheritance to the next generation, but more than half of parents aren’t entirely confident that their children will serve as good stewards, and an even larger proportion of adult children aren’t very confident that their parents will do so. Only four in 10 overall are very confident that their children will use the money they receive responsibly, and only two in 10 think that their grandchildren will do so.

graph representing lack of confidence.

A Different Approach to Asset Allocation

We found that older investors rely primarily on stocks, bonds and cash. Millennials, however, allocate much less to stocks and bonds, and a lot more to cash, primarily for opportunistic acquisitions.

Similarly, seven in 10 millennials are more focused on generating income than on long-term capital appreciation, compared with four in 10 baby boomers, possibly a reflection of interest in funding a business start-up, buying a house or paying down debt.

graph representing A Different Approach to Asset Allocation
graph representing Generational Differences in Giving

A Trend Towards Tangible Assets

Looking for growth, income and positive impact, the younger generation is also passing up traditional investments in favor of alternative strategies, including private equity and tangible assets such as investment property, farmland, timber, and oil and gas properties.

graph representing Trend Toward Tangible Assets

Giving and Investing with Impact

Millennials also are driving growth and interest in impact investments, in which a company’s impact on society and the environment is an important objective.

Graph showing Giving and Investing with Impact

Related Insights

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