Ultra-wealthy millennials and Gen Zers to displace boomers by 2040

The world’s ultra-wealthy population is experiencing a significant surge, with the number of individuals worth at least $30 million increasing by 5.4% since the beginning of the year, reaching a total of 510,810 by the end of June. According to a report by wealth intelligence firm Altrata, this growth is largely driven by the rising number of millennials and members of Generation Z who are joining the ranks of the ultra-wealthy.

Currently, millennials and Gen Z individuals make up only 8% of the ultra-wealthy class, which boasts a combined net worth of $59.8 trillion. However, this demographic is expected to play a much more significant role in the future, with Altrata estimating that they will make up over a third of the ultra-wealthy population by 2040. This shift is largely due to the great wealth transfer, which will see the baby boomer generation passing on their wealth to their younger heirs.

The Great Wealth Transfer

The great wealth transfer is expected to have far-reaching implications for firms that cater to the ultra-rich, from wealth managers to art dealers and nonprofits. As the younger generation takes the reins, their preferences and values will shape the way businesses operate and the products they offer. For instance, environmentally friendly cars and sustainable investing may become more critical, while traditional luxury items like yachts may decline in popularity.

Changing Industries and Preferences

One of the most notable differences between the older and younger generations of ultra-wealthy individuals is the industries in which they made their wealth and currently work. While older generations tend to have made their fortunes in traditional industries like banking and finance, younger generations are more likely to have made their wealth in the tech industry or through entrepreneurship. This shift is reflected in the fact that 15% of the next generation derives their wealth from hospitality and entertainment, while their older peers index below 5%.

Additionally, the younger generation is more likely to prioritize spending on luxury assets like real estate and high-end goods, rather than philanthropy. This is partly due to their stage in life, as they are often still building their businesses and may not have the same level of liquidity as their older counterparts. However, this also reflects a shift in values, with younger generations prioritizing experiences and personal fulfillment over traditional notions of wealth and status.

Implications for Businesses

The changing demographics of the ultra-wealthy population have significant implications for businesses that cater to this group. Companies will need to adapt to the changing preferences and values of the younger generation, whether it’s by offering more sustainable products or providing services that cater to their unique needs and interests. By understanding these shifts and evolving to meet the needs of the next generation, businesses can position themselves for success in a rapidly changing landscape.

Ultimately, the great wealth transfer represents a significant opportunity for businesses to connect with a new generation of ultra-wealthy individuals and provide them with the products and services they desire. By staying ahead of the curve and anticipating the needs of this emerging demographic, companies can build strong relationships with the next generation of ultra-wealthy individuals and thrive in a rapidly changing world.