Generational differences are easily visible when it comes to technology, music and clothes. It turns out that there are also significant generational gaps when it comes to investment propensities.
When asked where they see the biggest opportunities for growth, 29% of investors aged 21 to 42 cited cryptocurrencies and digital assets, compared to just 7% of older adults.
Dreamstime
Specifically, a
Bank of America
Private Bank study released on Tuesday found that younger wealthy investors hold fewer stocks and are significantly more gung-ho about cryptocurrency and digital assets than older wealthy investors.
When asked where they see the biggest opportunities for growth, 29% of investors aged 21 to 42 cited cryptocurrencies and digital assets, compared to just 7% of older adults. In contrast, only 12% of younger investors listed domestic stocks, compared to 41% of adults 43 and older.
“The younger generations have been raised in a time of incredible progress where new innovations are quickly embraced and old innovations are quickly discarded,” said Ken Shepard, head of private banking investments at Bank of America.
“This is likely a contributing factor to why 75% of our respondents between the ages of 21 and 42 feel that it is not possible to achieve above-average returns with traditional investments alone and are instead adopting non-traditional solutions such as cryptocurrencies and alternative investments.” says Shepard.
It is also notable that younger investors allocated an average of 25% to stocks and 15% to cryptocurrencies, according to the study. In contrast, older investors allocated an average of 55% to stocks and 2% to cryptocurrencies.
Be a trusted source of advice. Advisers need to pay particular attention to where younger investors are getting their advice – especially when it comes to cryptocurrency. Half of the younger group said they turn to social media for this type of guidance. That compares with 30% of the older group, according to the survey. This can represent an opportunity for counselors to provide preventive guidance and training on complicated topics that young people want to become more familiar with.
Some advisers are already advising clients on crypto-assets, while others have not yet made it a priority or say they have no intention of doing so. But as younger investors come to greater wealth—on their own or through inheritance—advisors who ignore crypto and other digital assets may be leaving money and relationships on the table. 41 percent of younger investors polled for the Bank of America survey said professional advisors are a source of information about cryptocurrency.
“Even in situations where clients are not ready to commit their personal capital, they still look to their investment provider for a pulse on how the world is changing,” says Shepard. “This starts with providing education on topics like cryptocurrencies long before they are ready for adoption [them] in their portfolios.”
The survey was conducted in May and June among 1,052 adults aged 21 and older with at least $3 million in investable assets, excluding primary residences.
