Generation Y millionaires take more risks, take more advice

Baby Boomers looking a little dull...

Next-gen millionaires are more bullish investors than their older generation counterparts, with almost four in ten buying into high-risk asset classes such as venture capital and derivatives.

That’s according to new research by US-based financial services firm Fidelity Investments, which surveyed over 540 individuals with investable assets of at least $1 million.

It found that eighty-one per cent of Generation X and Y millionaires – those up to 48 years old – said they preferred to pursue aggressive investment strategies, compared to 27 per cent of the baby boomers.

Wealthy next-gens also had a more diversified investment portfolio than the older generation. 51 per cent of Gen X and Y millionaires, for example, owned foreign currency; 43 per cent invested in international individual securities; 39 per cent bought into venture capital; and 38 per cent chose derivatives. The baby boomers’ figures (respectively) were 6, 27, 12 and 10 per cent.

In the short term, the next-gens surveyed planned on making changes to their portfolio, while 39 per cent of the baby boomers were more conservative and didn’t plan on adding anything until the end of the year.

But the younger HNWs weren’t just more bullish about investing, they were also more confident about their own abilities, with 71 per cent considering themselves knowledgeable about investing, compared to 44 per cent of their old-generation counterparts.

Asking for advice

Perhaps surprisingly, then, the report found that next-gens millionaires were also more likely than the older generation to turn to financial advisers for investment recommendations, with 92 per cent using a financial adviser, compared to 68 per cent of the baby boomers.

According to the study, the financial crisis was the main reason why the young HNWs sought financial advice, with 69 per cent of those surveyed admitting doing so because of more volatile market conditions. This compared to only 17 per cent of the baby boomers.

However, next-gens remained very much involved in their investment decisions, with those working with an adviser saying they independently managed almost half of their own assets. In comparison, baby boomers HNWs who have financial advisers said they managed only a third of their wealth by themselves.

61 per cent of the Gen X and Y millionaires also said they made their own investment decisions but used advisers as sources of information and to get a second opinion. Only six per cent admitted to delegate their decisions entirely to an adviser, compared to one in five of the baby-boom generation.

According to the report, next-gen millionaires tended to use other people as their sounding board when making investment decisions. Apart from their advisers, they were more likely to turn to family and friends, with 23 per cent of those surveyed doing so, compared to only thirteen per cent of the older generation.

Work hard, play hard

But younger millionaires aren’t just focused on how to maximise their money, the research found. In fact, they were more likely to indulge in comforts than the older generation. Eighty-seven per cent of Gen X and Y HNWs, for example, spent their holidays abroad every year, compared to only 56 per cent of the baby boomers. Similarly, 63 per cent of the next-gens millionaire owned a second home and nearly four in ten flew first class, compared to 21 and 5 per cent respectively for the older generation.

And if they liked to spend more, Gen X and Y millionaires also liked to give more, as they averaged $54,000 in annual philanthropic donations, compared to $12,000 for their older counterparts. They also volunteered more of their time to charitable causes, with 82 per cent volunteering or serving on charity boards, compared to less than 50 per cent for the baby boomers. 

This piece first appeared on Spear's Magazine

Read more by Giulia Cambieri

Photograph: Getty Images

This is a story from the team at Spears magazine.

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Like it or hate it, it doesn't matter: Brexit is happening, and we've got to make a success of it

It's time to stop complaining and start campaigning, says Stella Creasy.

A shortage of Marmite, arguments over exporting jam and angry Belgians. And that’s just this month.  As the Canadian trade deal stalls, and the government decides which cottage industry its will pick next as saviour for the nation, the British people are still no clearer getting an answer to what Brexit actually means. And they are also no clearer as to how they can have a say in how that question is answered.

To date there have been three stages to Brexit. The first was ideological: an ever-rising euroscepticism, rooted in a feeling that the costs the compromises working with others require were not comparable to the benefits. It oozed out, almost unnoticed, from its dormant home deep in the Labour left and the Tory right, stoked by Ukip to devastating effect.

The second stage was the campaign of that referendum itself: a focus on immigration over-riding a wider debate about free trade, and underpinned by the tempting and vague claim that, in an unstable, unfair world, control could be taken back. With any deal dependent on the agreement of twenty eight other countries, it has already proved a hollow victory.

For the last few months, these consequences of these two stages have dominated discussion, generating heat, but not light about what happens next. Neither has anything helped to bring back together those who feel their lives are increasingly at the mercy of a political and economic elite and those who fear Britain is retreating from being a world leader to a back water.

Little wonder the analogy most commonly and easily reached for by commentators has been that of a divorce. They speculate our coming separation from our EU partners is going to be messy, combative and rancorous. Trash talk from some - including those in charge of negotiating -  further feeds this perception. That’s why it is time for all sides to push onto Brexit part three: the practical stage. How and when is it actually going to happen?

A more constructive framework to use than marriage is one of a changing business, rather than a changing relationship. Whatever the solid economic benefits of EU membership, the British people decided the social and democratic costs had become too great. So now we must adapt.

Brexit should be as much about innovating in what we make and create as it is about seeking to renew our trading deals with the world. New products must be sought alongside new markets. This doesn’t have to mean cutting corners or cutting jobs, but it does mean being prepared to learn new skills and invest in helping those in industries that are struggling to make this leap to move on. The UK has an incredible and varied set of services and products to offer the world, but will need to focus on what we do well and uniquely here to thrive. This is easier said than done, but can also offer hope. Specialising and skilling up also means we can resist those who want us to jettison hard-won environmental and social protections as an alternative. 

Most accept such a transition will take time. But what is contested is that it will require openness. However, handing the public a done deal - however well mediated - will do little to address the division within our country. Ensuring the best deal in a way that can garner the public support it needs to work requires strong feedback channels. That is why transparency about the government's plans for Brexit is so important. Of course, a balance needs to be struck with the need to protect negotiating positions, but scrutiny by parliament- and by extension the public- will be vital. With so many differing factors at stake and choices to be made, MPs have to be able and willing to bring their constituents into the discussion not just about what Brexit actually entails, but also what kind of country Britain will be during and after the result - and their role in making it happen. 

Those who want to claim the engagement of parliament and the public undermines the referendum result are still in stages one and two of this debate, looking for someone to blame for past injustices, not building a better future for all. Our Marmite may be safe for the moment, but Brexit can’t remain a love it or hate it phenomenon. It’s time for everyone to get practical.