The New Class War: The Wealth Gap Among Millennials

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The wealth gap between wealthy millennials and the rest of their age group is the largest of any generation, fueling a new wave of class tension and resentment. A recent study.

Even as the majority of millennials struggle with student loans, low-wage jobs, unaffordable housing and low savings, the millennial elite is outpacing previous generations. According to the study, the average millennial at age 35 has 30 percent less wealth than baby boomers at the same age. Yet the top 10% of millennials have 20% more wealth than the top baby boomers at the same age.

“Millennials are so different from each other that it is not particularly meaningful to talk about the ‘average’ millennial experience,” wrote the study’s authors, Rob Gruyters, Zachary Van Winkle and Annette Eva Fassang. “There are some millennials who are doing great — think Mark Zuckerberg and Sam Altman — while others are struggling.”

The study found that millennials — generally defined today as those between the ages of 28 and 43 — have repeatedly experienced financial hardship. Coming of age during the financial crisis, they have lower levels of home ownership, higher debt than assets, lower wage and unstable jobs, and lower rates of dual-income family formation.

At the same time, the authors say the top 10% of millennials have benefited from higher rewards for skilled jobs. As they put it, “returns to higher work speeds have increased, while returns to lower speeds have stagnated or declined.”

Millennials who “went to college, got graduate-level jobs, and started families relatively late,” according to the report, ended up with “higher levels of wealth at similar life trajectories than baby boomers.”

There may be another factor behind the generation of so much wealth among millennials: inheritance. In what is known as the “Great Wealth Transfer,” baby boomers are expected to lose between $70 trillion and $90 trillion in wealth over the next 20 years. Much of this is expected to go to their millennial children. According to Cerulli Associates, high-net-worth individuals worth $5 million or more will account for about half of that total.

Wealth management firms say some of that wealth is already starting to trickle down to the next generation.

John Matthews, head of UBS, said the massive transfer of wealth, which we have all been talking about for the past 10 years, is continuing. Private Wealth Management Division. “The average age of the world’s billionaires right now is about 69 years old. So this whole transition or transfer of wealth is going to start accelerating.”

Tensions between millennials are likely to increase as more wealth transfers in the coming years. Displays of wealth by millennial “nepo babies” on social media can add to the generational class war and create the appearance of lavish lifestyles for non-wealthy millennials to overspend or maintain.

A Wells Fargo survey found that 29% of affluent millennials (defined as having $250,000 to more than $1 million in investable assets) admit that they “sometimes buy things that others wouldn’t.” cannot afford to be affected.” According to the survey, 41% of affluent millennials admit to funding their lifestyle with credit cards or loans, compared to 28% of Gen Xers and 6% of baby boomers.

The battle between affluent millennials and the rest of the population may also shape their attitudes toward wealth. For more than four decades, the majority of American-born millionaires and billionaires have been self-made, mostly entrepreneurs. A study by Fidelity Investments found that 88% of American millionaires are self-made.

Yet inherited wealth may be more common. Among the new billionaires last year, heirs who inherited their fortunes amassed more wealth than self-made billionaires for the first time in at least nine years, a UBS study found. Is. And, all billionaires under the age of 30 on Forbes’ latest billionaires list inherited their wealth for the first time in 15 years.

The rise in wealth among millennial heirs is also creating a lucrative new market for wealth management firms, luxury companies, travel firms and real estate brokers.

Clayton Origo, one of the top luxury real estate brokers in Manhattan, has built a thriving business on moneyed millennials. The founder of the Hudson Advisory Team at Compass has sold over $4 billion in real estate and regularly brokers over $10 million in transactions. Lately, he says, the “vast majority” of his business has been from buyers in their 20s and 30s who have inherited them.

“I just sold a $16 million apartment to someone in their mid-20s, and the buyer had access to the family trust,” he said. “The wealth behind these kids is extreme.”

Inherited wealth has become a specialty of Origo. He says he works to build close relationships with young money elites in family offices, trusts and New York membership clubs like Casa Cipriani.

The pattern is familiar: a rich family demands rent for their son or daughter. A few years later, they want to buy a $5 million or $10 million two-bedroom condo in a new, high-security building downtown.

“My gig is working very quietly and very discreetly with the richest families in the world,” Origo said.

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