How UHNW Millennials View Their Wealth and the World

Ultra-wealthy millennials like the professional advice they receive but see room for improvement

A quarter of ultra-wealthy millennials said a family office exec was their primary advisor, and a quarter got advice from family. A quarter of ultra-wealthy millennials said a family office exec was their primary advisor, and a quarter got advice from family.

North American millennials born into ultra-wealthy families want to do good, are more financially conservative than their parents’ generation and more focused on wealth preservation, and consider assistance with wealth transfer the most important guidance their advisors can provide, according to a new study.

OppenheimerFunds and Campden Research surveyed 32 millennials whose family’s net worth was between $25 million and $1 billion, and whose individual net worth ranged from less than $25 million to $500 million. Half the respondents were female, 42% male and 8% unidentified.

Millennials in the study viewed their wealth as a means to advance favored causes that reflected their values. Ninety-six percent reported that they were involved in philanthropy — in part, the study suggested, because of their families’ existing charitable activities.

Seventy percent expressed interest in social and responsible investing, and 64% in impact investing. Many saw their commitment to these strategies as an extension of values their families had imparted, the study said.

Only 9% considered the “feel-good factor” as very important in assessing impact and values-based investment practices. The vast majority of respondents said results were important.

They looked for sustainable, long-term returns, and expected accountability from the managers of their assets.

Fifty-eight percent cited education as their main interest, 39% named environment, another 39% said water and 30% cited gender equality.

Millennials and Their Families

The study found ultra-high-net-worth millennials who came of age during the financial crisis more financially conservative and risk averse than Gen Xers and boomers.

They evinced deep attachment to their families, especially their parents.

Eighty-eight percent said preservation of the family’s wealth was important or very important, and 89% emphasized growing that wealth. Ninety-four percent considered stewardship of the family’s legacy important.

In another finding that reflected millennials’ focus on preserving both family wealth and its legacy, 75% of respondents — with and without children — said they planned to allocate half or more to the inheritance that would be left for the next generation.

The study identified a disconnect between current family portfolio allocations and “ideal” ones that would devote more resources to values-based investing strategies and opportunities.

Forty-five percent of millennials said their family portfolio had no such considerations, and 80% wished that at least some of the portfolio had them.

In terms of decision making, 59% of respondents said they served on their family’s wealth management board or committee, and an equal percentage said they had a decision-making role for family charitable activities.

Thirty-one percent reported that they made decisions about impact investing for the family. But only 18% said they made strategic decisions on the overall management of the family’s wealth.

Professional Advice

Millennials in the study generally welcomed the advice and knowledge of wealth managers and financial advisors. This was especially the case for advisors who had a personal relationship with the individual millennial and understood his or her specific goals beyond their families’ broader objectives.

Respondents identified the following as their primary advisors:

  • Family office executive: 25%
  • Private banker: 13%
  • Independent consultant: 13%
  • Trust manager: 6%
  • A family business executive: 6%

A quarter of respondents said “other.” Asked to elaborate, they named either their parents or another family member as their primary advisor.

Ninety percent of millennials in the study said guidance with wealth transfer was the most important service they sought from their advisors.

Eighty-five percent said finding and vetting direct investment opportunities was most important, and 88% wanted aggregated reporting of accounting, tax and estate information.

Less important were concierge services and estate management, identification of philanthropic opportunities and online/mobile access.

Millennials in the survey generally gave high marks to their primary wealth advisors for understanding, articulating and implementing family priorities, philanthropy, SRI and impact investing.

However, the study also identified areas that respondents thought needed improvement. The survey found a wide gap between a rating of “good” and one of “excellent” on several issues:

  • Impact investing: 67% good vs. 8% excellent
  • SRI: 50% good vs. 17% excellent
  • Environmental, social and governance: 50% good vs. 8% excellent
  • Philanthropy: 55% good vs. 18% excellent

Moreover, in evaluating their advisors’ ability to deliver strategies for resolving family conflicts, 55% of millennials rated their advisors as only fair or below.

--- Check out For the Wealthy, It’s Hard to Find Good Help on ThinkAdvisor.

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