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Financial Planning > Trusts and Estates > Estate Planning

How HNW Millennials and Gen Zers View Their Wealth

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What You Need to Know

  • Younger generations have different views on how wealth should be saved, spent and given away.
  • Fulfilling the family element may be simpler for the next generation, especially if they were born into a family with an estate plan in place.
  • Generational differences are critical for advisors to understand when it comes to estate planning.

The “Great Wealth Transfer” is coming, with projections anticipating over $84 trillion in assets to be transferred to heirs or given to charities over the course of the next few decades.

Advisors are having conversations with clients and their families right now about their goals as we approach this transfer, but there are key generational differences that will make a long-term impact on the wealth transfer for years to come.

The recipients of this wealth, primarily millennials and Gen Zers, have a much different perspective than their predecessors on what it means to be wealthy, and how wealth should be saved, spent and given away.

What’s Driving This New Perspective?

SEI’s client base is predominantly “G1”: first-generation ultra-high-net-worth individuals who worked for and built their wealth on their own.

This segment often grew up middle class, which tends to make them more cautious when it comes to saving and spending their money. Even as UHNW investors, they have a unique perspective on money, likely influenced by the fact that they at one point or another did not feel fully financially secure.

Their children most likely never grew up wondering if they will be prepared.

This level of comfort that comes along with financial security has created a mindset among many of the next generation where they are less concerned about themselves and their financial success, and feel more comfortable spending or giving money away.

Self, Family and Community

Wealth planning allocation should be broken into three sectors: self, family, community — fulfilling needs of each sector in that order.

But, the definition of “wealthy,” and the guidelines for living a comfortable lifestyle, look a lot different for the next generation.

Advisors and clients are faster to check “self” off the list and instead put more thought and consideration into providing for their families and/or giving back to their communities.

With the next generation, there’s a heightened focus on community and philanthropy. Because they have more confidence that their and their families’ futures will be taken care of, their focus shifts to issues in the greater community that can be addressed.

Fulfilling the “family” element may be simpler for the next generation, especially if they were born into a family with an estate plan in place, which allows them to turn their attention to making an impact elsewhere.

Having greater ease in planning for the self or family will allow them to have a more intentional, immediate impact through philanthropy, offering instant gratification that they are putting their wealth to work and making a difference today.

It’s important to determine what excess wealth looks like for each client based on their spending and then implement a plan for what’s left over based on what’s truly important to them.

A Refreshed Vision of Philanthropy

As the next generation focuses on giving back to the community, the shift will not only be in their monetary donations, but in their philanthropic interests as well. Their parents may have prioritized a more personal involvement in their charitable giving by sitting on the board of a foundation or working with friends and families to give back on a local level.

Philanthropy has not only been a positive way to give back, but affiliations with organizations is also often a critical part of their social lives and self-identities.

The next generation, however, is more interested in making a difference on a global scale.

Rather than being highly involved with one organization, they tend to focus more on maximizing the impact of their charitable giving and cast a wider net to give back outside of their own communities.

Broader global issues like climate change or racial injustice will often take precedence over local community groups.

The differences between generations are neither good nor bad. They are, however, critical factors that advisors should be preparing to address when it comes to their families’ estate plans.

As millennials and Gen Zers begin to hold the majority of the world’s wealth, we should expect that their needs and expectations will look vastly different from their parents’, and now is the time to initiate conversations to support them.

Kelley Wolfington is senior wealth strategist, SEI Private Wealth Management, which is an umbrella name for various wealth advisory services provided through SEI Investments Management Corp., a registered investment advisor.


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