Bank of America Private Bank recently released the 2024 Study of Wealthy Americans, which found that millennials and Gen Z allocate three times more of their portfolios to alternative investments – asset classes other than stocks, bonds and cash – than older generations. Paul Anghinetti, market executive for Bank of America Private Bank in Rhode Island and southeastern Massachusetts, spoke with Providence Business News about the study and findings on younger investors.
PBN: What stood out to you most about the research?
ANGHINETTI: Older and younger generations are surprisingly far apart on many investment issues. Younger people are increasingly looking beyond the traditional stock and bond markets to build their wealth and are driving demand for everything from real estate and private equity to digital assets and gold. The older set favors domestic equities, real estate and emerging equities.
PBN: Can you give an example of this divide between young and old investors?
ANGHINETTI: Even for a simple question like “How’s the economy doing?” the answer varies widely by age. Young people, defined here as Gen Z (ages 21-26) and millennials (ages 27-43), are twice as optimistic as older wealthy people about the U.S. economy. Fifty-one percent of people ages 21-43 said the U.S. economy was “very good” or “excellent,” compared with 24% of those 44 and older.
PBN: How does this generational divide affect the way wealthy Americans invest?
ANGHINETTI: Three-quarters of younger people say it’s no longer possible to achieve above-average returns with stocks and bonds alone, compared with just one-quarter of those who are older. In fact, younger investors seem to favor just about any kind of investment besides traditional opportunities. The one category where all investors seem to agree on investment potential is real estate.
PBN: Why are young people skeptical of traditional stocks and bonds?
ANGHINETTI: Younger investors have lived through two significant market declines. It’s easy to see how a 2½-year bear market (2000-2002) and a 50%-plus loss in stock prices (2008-2009) could instill skepticism about the stock market. Social media also plays a role, with half of younger people getting their financial content from sources that could be promoting untested advice as easily as it sources well-researched guidance.
PBN: Is there anything that concerns you about the study?
ANGHINETTI: Broadly speaking, just 48% of wealthy Americans have the basics of an estate plan in place. The basics would include a will, living will/advanced health care directive and a durable power of attorney. Even among the older generation, only 54% have all those documents currently in place. The study found that those who work with an adviser more commonly have the basics in place compared with those without an adviser.
