Millennials and Gen Z Allocate Three Times
More of Their Investment Portfolios to Alternative Investments than
Older Generations
NEW
YORK, June 18, 2024 /PRNewswire/ --
High-net-worth individuals believe U.S. stocks offer the best
opportunities for growing assets, but that conviction is less held
by younger investors finds the 2024 Bank of America Private Bank
Study of Wealthy Americans. Millennials and Gen Z are increasingly
looking beyond the traditional stock and bond markets to build
their wealth and are driving demand for everything from investment
real estate and private equity to digital assets and
gold.
"We're living through a period of great social, economic and
technological change alongside the greatest generational transfer
of wealth in history," said Katy
Knox, president of Bank of America Private Bank. "Our
study shows that wealthy Americans are focused on diversification,
long-term goals and making a lasting impact with their
wealth."
Younger Investors Driving Demand for Alternative
Strategies
Seventy-two percent of younger investors (ages
21-43) believe it is no longer possible to achieve above average
investment returns by investing solely in traditional stocks and
bonds, compared to only 28% of investors over the age of 44 that
hold the same view.
The study found that among younger high-net-worth investors:
- 47% of their portfolios are in stocks and bonds, far lower than
investors over the age of 44 (74%).
- 17% of their investment portfolios are allocated to
alternatives, compared to 5% allocated by older investors. Most
(93%) say they plan to allocate more to alternatives in the next
few years.
- Nearly half (49%) own cryptocurrencies and another
38% are interested in owning it. They rank
cryptocurrency among the top opportunity areas for
growth, second only to real estate investments.
- 45% own physical gold as an asset and another 45% are
interested in owning it. Overall, 41% of the wealthy own (18%) or
are interested in buying (23%) physical gold.
Passing on Wealth: Gaps in planning for generational
transfer of wealth
Despite the importance placed on
sharing and sustaining family money, gaps in planning,
communication and guidance could derail these well-intended
goals.
- One in five respondents report having experienced strain over
an inheritance, including 54% of younger respondents.
- Half (52%) of wealthy Americans do not have the three basic
elements of an estate plan, consisting of a will, advanced
healthcare directive and durable power of attorney.
- Nearly half (48%) of respondents have not considered hard
assets, including real estate, art and collectibles and other
tangible assets, in their estate plans.
- 56% of respondents have established a trust; however, only 27%
say they understand trusts and their benefits very well.
- 69% of parents of adult children have talked with their
children about family wealth plans. They start those conversations
only after their children have reached the age of 31, on
average.
Giving with Purpose, Collecting with Passion
Giving
back is a near-universal trait among the wealthy, inspired mostly
by a sense of responsibility (52%) and a desire to make a lasting
positive impact (40%). However, where they give and other passions,
such as owning art and collectibles, varies greatly by
generation.
- 91% of the wealthy are ardent supporters of philanthropy.
Younger donors are nearly two times more likely to support
homelessness (41%), social justice (33%) and the
environment/climate change (32%) compared to older donors (21%, 18%
and 17%, respectively).
- 40% of the wealthy overall either own or are interested in an
art collection, including 83% of millennials and Gen Z.
- 65% of study respondents, including 94% of those under the age
of 44, are interested in collectibles. Millennials and Gen Z are at
least two times more likely than older generations to be collectors
of watches (46%), wine or spirits (36%), rare or classic cars
(32%), sneakers (30%) and antiques (30%).
In addition to influencing the next generation, the "Great
Wealth Transfer" will also contribute to women controlling more
wealth than ever before, according to Bank of America Institute.
Over the next decade, $30 trillion in
U.S. wealth is expected to be transferred to women influencing
financial decision-making, philanthropic giving and more.
For an in-depth look at insights visit 2024 Bank of America
Private Bank Study of Wealthy Americans.
2024 Bank of America Private Bank Study of
Wealthy Americans Methodology
Escalent, an independent market research company, conducted an
online survey on behalf of Bank of America Private Bank. The survey
consisted of 1,007 high-net-worth (HNW) respondents throughout the
U.S. Respondents in the study were at least 21 years of age with at
least $3 million in investable
assets, excluding primary residence. The margin of error is +/- 3,
reported at a 95% confidence level. The respondents are a
nationally representative sample of the U.S. high-net-worth
population and not necessarily clients of Bank of America or its
wealth and investment management businesses.
About Bank of America Institute
Bank of America Institute is dedicated to uncovering powerful
insights that move business and society forward. Established in
2022, the Institute is a think tank that draws on data and analyses
from across the bank and the world to provide timely and original
perspectives on the economy, sustainability, and global
transformation. The Institute leverages the depth and breadth of
the bank's proprietary data, from 69 million consumer and small
business clients, 57 million verified digital users, $4.1T in total payments in 2023 and $1.27T in consumer and wealth management
deposits. From this robust data set, the Institute provides a
unique perspective on the health of the economy. It also elevates
thought leadership from throughout the bank that addresses
long-term trends and shares these findings with the general
public.
Bank of America
Bank of America is one of the world's leading financial
institutions, serving individual consumers, small and middle-market
businesses and large corporations with a full range of banking,
investing, asset management and other financial and risk management
products and services. The company provides unmatched convenience
in the United States, serving
approximately 69 million consumer and small business clients with
approximately 3,800 retail financial centers, approximately 15,000
ATMs (automated teller machines) and award-winning digital banking
with approximately 57 million verified digital users. Bank of
America is a global leader in wealth management, corporate and
investment banking and trading across a broad range of asset
classes, serving corporations, governments, institutions and
individuals around the world. Bank of America offers
industry-leading support to approximately 4 million small business
households through a suite of innovative, easy-to-use online
products and services. The company serves clients through
operations across the United
States, its territories and more than 35 countries. Bank of
America Corporation stock is listed on the New York Stock Exchange
(NYSE: BAC).
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Reporters may contact:
Julia Ehrenfeld, Bank of
America
Phone: 1.646.855.3267
Julia.Ehrenfeld@bofa.com
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SOURCE Bank of America Corporation