16th June 2017

Bank of America's Wealth and Worth survey finds generational diversity

The 2017 US Trust Insights on Wealth and Worth® survey has found that generational diversity is a source of both tension and innovation in families and businesses. Millennials are challenging traditional approaches to investing, philanthropy and pursuit of life and career goals, but family traditions and financial support are the foundations of success and multi-generational family wealth planning.

US Trust conducted a nationwide survey of 808 high-net-worth (HNW) households with at least $3m in investable assets to explore differences in generational experiences, expectations and behaviour 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.

Main findings:
Traditional investments are giving way to alternative, opportunistic and personalised strategies by a new generation of investors looking for growth, income and positive impact.
• 39 per cent of millennials own private equity investments and tangible assets (37 per cent), which include residential investment property (63 per cent), farmland (24 per cent), timber (23 per cent), and oil and gas properties (36 per cent).
• Millennials also are driving growth and interest in impact investments, with 88 per cent saying a company’s impact on the society and environment is an important basis of their investment decisions.
• In terms of investing, the study found that baby boomers and older investors are relying primarily on stocks, bonds and cash with aggressive equity allocations of 60 per cent, on average, that conflict with their lower risk tolerance and importance placed on asset preservation.
• By comparison, millennials have only 41 per cent of their portfolios allocated to stocks and bonds, but they have large cash positions (47 per cent of their portfolios on average) reserved primarily 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 US Trust, Bank of America Wealth Management. “Perspective and participation of multiple generations are highly valued, but are also complex and require advanced planning and communication.”