Heirs don’t want to invest like their parents
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The largest transfer of wealth in modern history is underway, and the heirs set to inherit trillions of dollars in family fortunes are preparing to use the money very differently from the generations that built it.
Over the next two decades, an estimated $83.5 trillion is expected to pass from baby boomers and older entrepreneurs to their children and grandchildren, according to UBS.
“The world is entering a historic intergenerational wealth transfer,” UBS told CNBC. Billionaire families alone are expected to transfer about $6.9 trillion by 2040.
For many wealthy families, the first generation built fortunes in concentrated areas they knew well: family businesses, property, or local blue-chip shares, wealth experts told CNBC. Their children are more likely to be internationally educated, more mobile and open to a wider range of investments.
“The first generation were ‘builders,'” said Elizabeth Hart, CEO and founder of Legacy Wealth Advisors. “Their wealth is usually tied to a single asset class they understand deeply, often a family operating business or local blue-chip shares.”
By contrast, younger heirs tend to “view wealth through a global lens,” Hart said, adding that they are more open to diversified investments across asset classes and markets.
That shift could redirect some of the inherited wealth away from traditional stores of family capital, particularly real estate. Hart said that Asian families, in particular, have historically invested “almost exclusively in property for generations,” but second- and third-generation heirs are increasingly looking to diversify into other assets and geographies.
A Natixis Investment Managers survey found that millennials are far more likely than older investors to seek exposure to private assets, with 53% expressing interest. They are also more likely to discuss cryptocurrencies with advisers, with 62% doing so, while 44% plan to increase or begin crypto investments within the next year.
The younger generation also appears more comfortable with risk. Natixis found that 78% of millennials in the Asia-Pacific region want opportunities to beat the market, compared with 38% of baby boomers willing to take risks to get ahead.
Money as a means to an end
Tobias Prestel, founder of Prestel & Partner, said younger wealth holders increasingly see money less as an end in itself and more as a means to achieve goals.
“For most elder people, money is a thing, and money is good for more, for most younger ones, money is just a tool,” Prestel said. “They are more looking into how the tool is used than enjoying the treasure chest.”
The changing mindset is also influencing spending habits. Instead of building collections of traditional status symbols, some younger heirs are prioritizing experiences, mobility and international lifestyles. Prestel said younger wealthy individuals are less likely to collect cars and more likely to own residences around the world, combining…