Despite only half of millennial and Gen X ultra-high-net-worth individuals (UHNWI) feeling prepared to assume responsibility for their family fortune—in the midst of the largest wealth transfer in U.S. history, estimated at nearly $84 trillion—they are making big plans for where and how to invest, a study from BNY Mellon Wealth Management and Campden Wealth finds.

Based on a survey conducted between March and July 2022 of 102 UHNWI with a family net worth in excess of $30 million—representing an aggregate $77 billion in family wealth—the report, The Next Generation of Wealth Holders in the United States 2022 (84 pages, PDF), found that even though many millennials and Gen Xers are eager to be involved in strategic and finance-related roles, generational family conflicts impede succession planning. While more than 60 percent of next-generation family members expressed an interest in strong communication as well as seeking external support for succession planning, 41 percent identified their diminished business roles and responsibilities and 36 percent voiced concerns over business strategy as substantial obstacles to a smooth transfer of wealth.

The report noted an “appetite for growth and...shaking up the family enterprise,” among next-generation family members. Once in control, 27 percent plan to shift toward alternative investments including private markets, hedge funds, and commodities, while another 24 percent want to integrate new technologies into business operations. Driven by a desire to diversify from traditional investments (78 percent) and to invest in an area before it becomes mainstream (70 percent), respondents intend to invest in digital assets and technologies once they assume control of their family business. Between 43 percent and 60 percent of next-generation family members plan to increase investments in artificial intelligence, fintech, robotics, and cryptocurrency.

More than half of respondents surveyed (51 percent) believe they can invest sustainably without sacrificing returns, while 68 percent believe sustainable investing is a permanent feature of the investment landscape, expecting that 43 percent of their portfolio will be dedicated to sustainability within five years—an increase from the current average of 17 percent. In addition, 82 percent identified philanthropy as a priority.

“Being in the midst of the largest wealth transfer in U.S. history, the next generation of wealth holders understand and embrace the gravity of this significant responsibility for a long-lasting family legacy,” said Campden Wealth director of research Rebecca Gooch.

“[W]e have seen many of our Next Gen wealth clients approach their investing strategy with a growth-oriented mindset and a profound sensitivity and passion for inclusion of sustainable investing,” said BNY Mellon Wealth Management chief investment officer Leo Grohowski. “Next Gens are also breaking the mold from their parents’ generation by embracing alternatives and new technologies but are being thoughtful and measured regarding the inclusion of digital assets in their portfolios.”

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