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Millennials and the Great Wealth Transfer

Nov 21, 2018 - Impact Investing by CCM Invests

It’s an interesting time to be a Millennial. Sure, this generation has had, and continues to have, unique challenges. Many graduated college with unprecedented student loan debt, only to be welcomed to adult life by the Global Financial Crisis. As a result, despite being the best-educated generation ever, Millennials represent 40% of unemployed people in the U.S., and those who do have a job are earning less today than the same age group in the past.1

CCM_TLNT.comBut it’s not all bad news, though, for Millennials. As the offspring of Baby Boomers - the generation that currently controls roughly 70% of the disposal income in the United States - this group now stands to inherit a staggering amount of wealth. This potential shift in capital is being dubbed the “Great Wealth Transfer” and the industry is taking note.

Estimates vary substantially, but over the next thirty years approximately $30 trillion of wealth will be passed from Baby Boomers to the Generation X and Millennial generations. Estimates are based on research from organizations such as the Boston College Center on Wealth and Philanthropy, which values Baby Boomer’s current wealth around $20 trillion. This money should continue compounding over the next few decades until much of it becomes inheritance.

So, what does this mean for the impact/ESG investment field? As we wrote in a recent blog focusing on Millennials’ shift in financial goals, these relatively-younger investors are already favoring investments that fall in line with their goals of making the world a better place.

Recent Blog: Shift in Financial Goals for Millennials

This trend can be seen in the retirement space. Except for government jobs, pension plans are almost unheard of for Millennials. The majority of retirement accounts available to Millennials are defined contribution plans - 401(k)s and 403(b)s - in which they choose their own investment options. While only about 10% of these plans, on average, have adopted impact/ESG investments, a recent study conducted by Morgan Stanley found that 90% of millennials desires sustainable investing options as part of their 401(k) plans.2

Although the exact details are hard to predict, the massive scale of this Great Wealth Transfer, combined with the generational differences, should have a large, and distinctive, impact on the investing world.

Gender Lens Investing


1 https://bestworkinc.com/10-serious-problems-millennials-face/

2 https://www.usatoday.com/story/money/2018/05/11/millennials-socially-responsible-investing/580434002/

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