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Contributing factors to the changing face of wealth

Contributing Factors to the Changing Face of Wealth

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The distribution of wealth will inevitably shift as time passes and generations age. As it stands in today’s world, “Baby Boomers [comprise] 55% of the wealth and affluent market” with “the Silent generation representing an additional 15% of the market.” 1 And although millennials had a slow start due to the 2008 recession and stagnant wages, they are “on the whole the largest generation in the US workforce, and paving a path that increasingly leads to financial self-reliance, even if that path was delayed when compared to previous generations' entry into adulthood." 2

A report by the Federal Reserve “found that millennials have much less money than Gen Xers and Baby Boomers had at their age: with lower earnings, fewer assets, and less wealth." 2 In contrast, according to a Pew Research study “millennial households are earning more than previous generations did at their age nearly any time in the past 50 years.” 2  So what does this mean for millennials? It’s not exactly clear cut. “While the Fed found that individual incomes were falling for millennials, it did find that family incomes for married couples (household incomes) grew...individuals are earning less, but households are earning more.” 2

And it seems that due to the turbulent economic conditions that millennials had to face, they are “more financially savvy ...[and] managing their money differently. "More millennials are refinancing student loans, delaying a home purchase, and looking for creative ways to earn more money through side hustles." 2

So what exactly is contributing to the changing face of wealth? Here are four trends that show how younger generations’ approach to wealth is changing and will continue to change in the coming years.

Younger Generations are Reevaluating the way They Manage Finances

Millennials and Gen Zs saw the economic collapse in 2008 and were bound to do things differently to avoid repeating history. Additionally, with employers scaling back on guaranteed retirement benefits, younger generations are left to rely on themselves to fund their future. And while some people in younger generations have done very well with self-reliance, others wander and tend to become lost. Regardless,overall, they are attempting to redefine what finances are and mean to them. The realization that government is struggling to fund social security programs and pension plans has led them to think differently about their financial lives when it comes to planning for the future.

According to QZ, “when asked what [people would]...rely on most in 20 years, millennials’ top choice is their savings accounts (66%). The majority of Gen Xers (71%), by contrast, said they count most on their 401(k)s. And boomers rely most on pensions (54%) and Social Security (50%).” 3 With such a disillusionment with government and a decline of job security, it seems that more than any other working generation, millennials count on their savings as the number one holding place for their money.

What’s troubling, however, is that with more financial choices and less friction to switch, managing finances is becoming harder than it has ever been in the past. This, in part, contributes to the lack of financial literacy. Although there are some who take advantage of the opportunities of today and get ahead early on, they are few and far between. The majority are not spending time studying finance. A rise in a financial philosophy of “Just Wing It” has occurred due to the lack of trust in the system. How is one supposed to take advice from the people and institutions that caused 2008? 4 According to Banktracker, “53% of millennials and 32% of Americans overall spend no time managing their personal finances.” 5

2: Technology Makes It Easier for People to Be Perceived as Wealthy

There is a greater financial divide now more than ever amongst the younger generations. People think of Instagram stars and the Bitcoin kids as wealthy individuals. They do exist, but they are by far an extreme minority of the population. So many individuals chase riches in our social world, they observe and attempt to follow and replicate others. And although technology has definitely opened the possibility to earn wealth at a much younger age and in a wider variety of ways, it has also become a negative distraction when it comes to building financial wealth for most people.

However, financial institutions can change the narrative by riding this technology wave and making their services digital-first. As younger generations continue to become more tech-savvy, it’s likely that they’ll look to financial apps to automate their savings, help them budget smarter, and plan their financial future. However, with so many digital financial experiences, a person’s financial picture can be vastly spread across many mediums, currencies, and  institutions. As it was all designed to make life more convenient, it has actually created a much more complicated playing ground for younger generations to keep track of their finances today.

Women Are Having a Greater Financial Presence than Ever

A very important shift to recognize in the face of wealth is women. Women are having a greater financial presence than ever. With more women in the workforce, it seems that “not only are women generating and managing an increasing amount of wealth, they are also directing the economy itself—heading up major corporations and pivotal economic players like the International Monetary Fund and (until recently) the U.S. Federal Reserve.” 6 To illustrate that point, by next year “women are expected to control US$72 trillion, 32% of all wealth up from US$51 trillion in 2015.” 6  Today, 44% of millennial millionaires are women, whereas only 32% of baby boomer millionaires are women.” 7 And as the role of women in business and the economic sector continues to grow, it’s estimated that “by 2030, women will likely account for about two-thirds of U.S. wealth.” 8

The Way People Think About Wealth Is Changing

It seems that younger generations are less likely to want a large home, they may not even want to buy a home at all. Instead they want to be free and travel. They are opting out of accumulating material goods and seeking out exploration and experiences instead. 9 In fact, a whooping “[78%] of millennials would rather spend money on an experience than a thing.” 7 It seems the focus has shifted from accumulating possessions to finding purpose. According to Towers Watson, in the workforce, “retaining employees has a whole lot more to do with providing them a satisfying experience, inspiring culture and good quality relationships than it does rewards-based motivation.” 10

Furthermore, another pivotal factor of how people’s view of wealth has changed is appearance. Outward appearances used to be a sure tale-tell sign of wealth, but it’s simply no longer a relevant indicator as even some of the wealthiest people of younger generations opt for the t-shirt and jeans over three-piece suits.

A Paradigm Shift in Wealth

After looking into the monumental shifts that are happening in our financial ecosystem, one may define wealth differently than another. A Baby Boomer’s definition may vary drastically from a millennial’s definition. Are the faces associated with wealth changing? Or is the actual face of wealth and how it is defined changing? Regardless, at MX we’re here to help as this paradigm shift in wealth continues to evolve. We enable financial institutions to really know their customers, so as the face of wealth continues to change and be redefined by younger generations, institutions will have the relevant tools and services to reach their customers at every point of their financial journey.


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  1. https://www.marketingcharts.com/demographics-and-audiences/youth-and-gen-x-75103
  2. https://www.businessinsider.com/millennials-wealth-generation-experts-data-2019-1
  3. https://qz.com/1168292/wealthy-millennials-arent-investing-their-money/
  4. https://www.fool.com/retirement/2019/04/12/managing-personal-finances-millennials-wing-it.aspx
  5. https://www.mybanktracker.com/open-data/surveys/americans-spend-no-time-managing-finances-253555
  6. https://www.rbcwealthmanagement.com/us/en/research-insights/the-new-face-of-wealth-and-legacy-how-women-are-redefining-wealth-giving-and-legacy-planning/detail/
  7. https://www.ivyinvestments.com/content/millennials-are-changing-face-wealth
  8. https://www.regions.com/Insights/Wealth/hervision-herlegacy/your-money/The-Changing-Faces-of-Wealth
  9. https://www.cnbc.com/2017/09/07/millennials-would-rather-travel-than-buy-a-home.htmlhttps://www.forbes.com/sites/blakemorgan/2019/01/02/nownership-no-problem-an-updated-look-at-why-millennials-value-experiences-over-owning-things/#46a827ea522f
  10. https://www.forbes.com/sites/karstenstrauss/2013/09/17/do-millennials-think-differently-about-money-and-career/#529ddc626b89