Money Moves

Help upcoming generations in their quest to put their wealth to work for a better world

The largest intergenerational transfer of wealth will pass an estimated $30 trillion to younger generations over the next decade and up to $70 trillion over the next 20 years. How will wealth management advisories adapt their practices to attract and retain younger clientele?

The clients of wealth management firms and private banks are transitioning that wealth to their children and grandchildren. These children, who primarily consist of Millennials and Gen X, have very different views on money management than their Baby Boomer parents.

While Gen X has already begun to inherit wealth from older generations, Millennials are likely to inherit a large portion of the wealth yet to be transferred. Millennial earning power will increase by nearly 75% over the next few years.

As nearly $30 trillion changes hands over the coming decade, advisors must recognize how Millennial financial and philanthropic interests differ from those of older generations in order to stay relevant and form enduring client relationships.

Millennials manage their money differently than their parents.

Despite facing greater debt and impacts of economic recessions, Millennials tend to embrace generosity to a greater degree than their older counterparts. Whether in terms of supporting non-profit organizations, speaking out about the social issues they care about, or intentionally prioritizing sustainable investing opportunities, younger generations are looking to make a positive impact on the world.  

Despite these trends, few advisory firms have captured a key component of financial wellbeing that particularly appeals to Millennial clients: philanthropy.

Younger generations more intently consider how to use their privilege in order to positively impact their communities.

Younger generations are leading the charge to make an impact: 46% of Millennials say they’ll give this year compared to only 14% of Baby Boomers and 24% of Gen X, per Investopedia. Similarly, 55% of surveyed Millennial donors expect to contribute over $500 this year, while only 26% of Baby Boomers say the same, according to Frontstream.

Similarly, Morgan Stanley’s Institute for Sustainable Investing surveyed active individual investors and found that 86% of Millennials are interested in sustainable investing.

Financial institutions are poised to take advantage of these trends by leading the charge to make philanthropy more accessible to younger generations. By incorporating giving into the client relationship, firms will attract and retain altruistic clients.

Doing so instills the notion that philanthropic and financial goals are not mutually exclusive—in fact, they’re fundamentally intertwined. By aligning these goals, financial institutions can tap into an ever-growing market and empower customers to make an impact.

 As charitable giving becomes increasingly intertwined with a client’s other financial goals, there is an opportunity for firms to provide in-house charitable services in a personal and highly customized way.

“Given the seemingly unstoppable movement toward holistic wealth management relationships, philanthropy really can’t be left out of wealth plans anymore,” says Aite-Novarica Strategic Advisor Wally Okby in his new report, Expanding Delivery of Philanthropic Advisory Across Wealth Management.

It is increasingly essential for wealth management firms to equip younger clientele with philanthropic solutions to meet their charitable needs.

Luckily, technology makes it easier than ever to administer charitable services.

Book a demo to learn about software that powers scalable philanthropic opportunities within your practice.