Ultra-Wealthy “Millennials” Are Idealistic, But Not Alienated; Challenge Stereotype of the “Idle Rich”

Morgan Stanley Private Wealth Management/Campden Wealth “Next Generation” Survey Looks at Families Ranging in Net Worth from $25 million to Over $100 Million

Most Next-Gen Wealthy Look to Manage Wealth the Old-Fashioned Way, Via Advisors

NEW YORK--()--Ultra-wealthy “millennials,” those born between 1982-2000, are idealistic about the uses of their wealth, but say they are generally aligned with the values of their parents.

“The next generation members of ultra-affluent families are seeking to define their place in the family and find their voices. Education and opportunities will be central to their success. Areas such as philanthropy, values-based investing and entrepreneurism have high appeal with this group and present strong opportunities for engagement”

  • 63% of millennials view themselves as stewards of their wealth for future generations, compared with 46% of older siblings.
  • 58% view their wealth as a vehicle to help the community (vs. 38% of older inheritors).
  • 74% view their wealth as a source of empowerment to pursue what is most important (vs. 54% of older generation).

While they may think differently about their wealth than their parents or grandparents, next generation wealthy of all ages remain close to their families.

  • 95% say they recognize what is important to their families.
  • 64% believe their values are highly aligned with those of their parents.
  • Only 6% said they have belief systems that differ significantly from their parents.

These are among the findings of a Morgan Stanley Private Wealth Management and Campden Wealth-conducted survey of 87 ultra-high net worth individuals under the age of 40, who come from families with a minimum wealth of $25 million1. Over half (57%) had a family net worth of more than $100 million.

“A generation that stands to inherit considerable wealth tells us that the myth of the idle rich is just that – a myth. And, while they may use social media to connect in their personal lives, today’s next-gen wealthy say they prefer to manage their wealth in face-to-face meetings with an advisor,” said Douglas J. Ketterer, Head of Strategy and Client Management for Morgan Stanley Wealth Management.

“The next generation members of ultra-affluent families are seeking to define their place in the family and find their voices. Education and opportunities will be central to their success. Areas such as philanthropy, values-based investing and entrepreneurism have high appeal with this group and present strong opportunities for engagement,” said Mindy Rosenthal, President of the Institute for Private Investors and author of the study.

The myth of the “idle rich”

Among other key findings, the survey discovered that a substantial majority of wealthy inheritors do not plan to live a life of leisure, even though they could afford it.

  • 81% of the wealthy next generation – irrespective of age – believe it is extremely or very important to have a successful career.
  • 68% expect to continue working even after they inherit significant wealth.

In terms of their own spending habits, majorities believe it is extremely or very appropriate to borrow for education (67%), to purchase a primary residence (63%) or to fund a business opportunity, while only 7% believe borrowing to buy personal luxuries is somewhat appropriate.

Millennials are the most risk adverse among next generation wealthy

Perhaps reflecting the volatile market and economic environment in which they grew up, millennials are the most risk adverse of the next generation wealthy:

  • Only 11% say they are willing to undertake substantial risk for the possibility of substantial gain, compared with 33% among inheritors aged 30-40.

Managing wealth the old-fashioned way

A majority of next generation wealthy across all age groups (63%) believe working with advisors is necessary to make sound financial decisions, and half (49%) say they are extremely or very likely to continue working with their parents’ advisors.

While much is made of the growing power of digital and social media, most next generation wealthy prefer to manage their wealth the old-fashioned way:

  • 82% want more in-person engagement with their financial advisors
  • 74% want to do more business via phone
  • 68% want more e-mail communication
  • 15% want more social media interaction
  • 5% want more communication via internet video/Skype.

Morgan Stanley Private Wealth Management (www.morganstanleyindividual.com/pwm/) provides highly customized financial advice, investment solutions and brokerage services to individuals, families and foundations. As Morgan Stanley’s premier service for individuals and families with significant means, Private Wealth Management specializes in providing clients with custom-tailored financial solutions and a level of sophistication and access to expertise and investments typically reserved for large corporations, financial institutions and endowments.

Morgan Stanley (NYSE: MS) is a leading global financial services firm providing investment banking, securities, investment management and wealth management services. With offices in more than 43 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions and individuals. For more information about Morgan Stanley, please visit www.morganstanley.com.

Campden Wealth (www.campdenwealth.com), founded in 1987, provides education, news, research, conferences and other networking opportunities to principals of ultra high-net-worth financial and business-owning families, and the family office executives and trusted advisors who serve them. Campden produces global conferences and proprietary research serving the ultra high-net-worth, multigenerational family community, as well as Campden FO (Family Office) and Campden FB (Family Business), two market-leading magazines and websites that inform this highly targeted audience. Campden Wealth is a global business with offices in London, New York and Singapore and is the parent company of the Institute for Private Investors (IPI) (www.memberlink.net).

©2014 Morgan Stanley Private Wealth Management is a division of Morgan Stanley Smith Barney LLC. Member SIPC.

CRC 1023686 10/2014

1 Q2 and Q3 2013

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