We recently attended an insightful presentation by Altrata, a leader in data intelligence, that discussed how the global wealth landscape is rapidly changing and redefining where wealth is concentrated and how it’s deployed. They cited five key trends, or shifts in the landscape, that organizations will need to understand to effectively engage and support the ultra-wealthy in the years ahead.
Below we summarize Altrata’s key takeaways regarding these trends and share some helpful parallels with our own research that confirms UHNW clients’ increased interest in philanthropy and charitable planning.
#1 Growing and emerging wealth hubs
While the highest concentration of wealth is still in North America, emerging UHNW hubs are Asia and India. The UHNW wealth population in Asia, for instance, is expected to surpass that of Europe by 2030, requiring advisors to develop and hone cross-border expertise.
#2 Mobility amid volatility
Geopolitical volatility is prompting the ultra-wealthy to further diversify their assets, from managing multi-national companies and family foundations to owning real estate across the globe. Financial advisors will need to think beyond domestic borders when supporting UHNW clients.
#3 – 5 Generational changes, the rise of ultra wealthy women, and changing personal priorities
We’re discussing these three shifts in tandem because they’re all – at least in part – expected to occur as part of the Great Wealth Transfer, during which an estimated $31 trillion of Baby Boomer assets will, by 2033, pass either to the next generation and/or to women who will inherit it from their husbands (because they historically live longer than men). This is an opportune time for wealth management advisors to better understand these demographics and tailor their services and solutions accordingly to retain those assets and capture new ones.
With respect to women, until recently, they’ve comprised only 10 or 11% of the UHNW population. However, Altrata expects this number to jump to 20% by 2040, now that the Great Wealth Transfer is underway and also because more women are achieving high-level professional careers. Women are also more drawn to philanthropy – 60% who are UHNW cite philanthropy as their top interest – and they’re more motivated to give based on empathy, while men typically donate to further self-interest.
As for today’s younger generations, they, too, are more socially conscious and impact-driven than their Boomer elders who typically focus on creating or building a legacy with their wealth. Check out our Shaping Tomorrow study and our discussion with Financial Advisor to see how Millennials and Gen Z volunteer more and show greater interest in using formal giving vehicles. Additionally, Altrata says the “Next Gen Wealthy” is prioritizing sustainability considerations when making purchases and prefers to increase wealth through experiences and personal development versus passively owning assets.
Philanthropy: The Ideal Tool
An ideal tool for advisors to resonate with these audiences is philanthropy. Offering year-round charitable planning guidance will help clients achieve maximum impact with their dollars, engage in meaningful service to their communities, and align their giving with their financial, legacy and estate planning goals.
The time is ripe to do so, too. Consider the following findings from The Philanthropic Institute’s Study of the Philanthropic Conversation. The study was conducted via an online survey of 300 financial advisors and 103 HNW individuals (“clients”) with $5 million or more in investable assets who are actively engaged in charitable giving. This research is also the third time since 2013 that TPI conducted a national study of advisors’ approaches to and HNW clients’ expectations of philanthropy discussions.
The TPI study was co-sponsored by DAFgiving360™ and Foundation Source, with additional support from the Boston Foundation with a goal of updating landmark research to help new generations of philanthropists work more effectively with their closest advisors.
- 75% of HNW clients say they would be more likely to select an advisor who is knowledgeable about philanthropy. That’s up from just 40% in 2018.
- Less than half of HNW clients — just 49% — consider their advisor very knowledgeable about charitable giving vehicles.
- 78% of HNW clients now use at least one structured giving vehicle (donor-advised fund, charitable trust, private foundation, or giving circle) — nearly double the 43% reported in 2018.
- 90% of advisors say discussing philanthropy with clients benefits their practice, up from 78% in 2018.
- 88% of advisors (up from 74% in 2018) say that having philanthropic discussions deepens existing client relationships and 92% says it helps establish new relationships (up from 60% in 2018)
Want to learn more about helping clients with their giving?
Schedule a call with us or reach us at 800-839-0054. Together, let’s #begiving.
