With $84 trillion in generational wealth poised to change hands primarily from the baby boomers to Gen X and millennials through 2045—and an estimated $12 trillion going to philanthropy—younger investor/philanthropists are revealing much different priorities and views on how to manage and disburse their inheritance, a study from Bank of America finds.

Based on a survey of 1,052 adult (over the age of 21) high-net-worth individuals (worth at least $3 million excluding the value of their home), the report, 2022 Bank of America Private Bank Study of Wealthy Americans (38 pages, PDF), found that respondents over the age of 43 have broadly different views on investment risk, financial preparedness, and the effect of their philanthropy, compared to those age 21 to 43. While 68 percent of older respondents rely on investments in traditional stocks and bonds, 80 percent of younger investors believe alternatives such as private equity, commodities, and real estate are better investments, with 47 percent also investing in cryptocurrency. Although only 51 percent of parents believe their children are prepared to handle their inheritance, 91 percent of younger investors (compared to 56 percent of older investors) identified trusts and sheltered investments as central to their wealth-planning strategies. Younger respondents reported an aversion to simple charitable check writing and are two to three times more likely to use donor-advised funds (30 percent), charitable trusts (51 percent), or a family foundation (14 percent) than older respondents, suggesting a greater financial sophistication among adult children than their parents recognize.

The majority of parents (82 percent) believe their children share their philanthropic vision and goals, although only 51 percent of respondents indicated they support the same causes as their parents and 76 percent of younger respondents voiced a clear preference for a philanthropic identity apart from their family. Older respondents were pessimistic about the next generation’s philanthropic efforts compared to their own, while younger philanthropists were far more optimistic, with 87 percent believing their giving will be more effective.

(Photo credit: Getty Images/Darren415)