The Great Wealth Transfer

Hello friends, and welcome to The Unsophisticated Investor! Brought to you by Scott & Rob, the founders of PitchedIt!

If you want to be one of the first to get access to some of the most exclusive private market investment opportunities in Europe, join our limited waitlist now.

Now, let’s get into it 👇

The Great Wealth Transfer is officially underway! Over the next few decades, the biggest intergenerational wealth handover in history will take place with the largest part of this wealth transfer being between members of the "Baby Boomer" generation and their children and other heirs. In the United States alone, it is estimated that about $84 trillion will change hands, with about $72 trillion going to their millennial and GenZ heirs, and the rest going to charity. It’s set to make millionaires of many!

The question that interests us is “What does this mean for the markets?”. Obviously, that depends on the decisions made by the recipients of these vast sums of money. And while this transfer is already underway, it will take the guts of 20 years or more to play out, as the youngest Baby Boomers (People born between 1946 and 1964) are only turning 60 this year.

Millennials and GenZ have come to expect very different services from the brands and service providers their parents and grandparents have dealt with and we’re keen to see how wealth managers adapt to these new clients. Will the heirs of this fortune choose the same mix of stocks, bonds, cash and real estate that their boomer parents/grandparents gravitated toward? Or, explore radically new investment opportunities in search of greater growth or purpose? Well, we’re already seeing some clues emerge: 75% of millennial and Gen Z investors surveyed for Bank of America Private Bank’s “2022 Study of Wealthy Americans” believe “it’s not possible to achieve above-average returns solely on traditional stocks and bonds.”

And while we don’t believe older millennials (the ones who will receive most of this inherited wealth) will be what forces the hand of current wealth managers and advisors, GenZ will most certainly expect a fairly radical change. If you were asked to think about the financial services industry and to conjure up an image to go with it, you wouldn’t be alone in thinking of old buildings with wood panelling, archaic systems, paper and pen processes and old men in suits. And while the industry as a whole has come a long way, in many respects you wouldn’t be far off.

The next generation of wealth clients, and certainly the ones after that, will not find the existing propositions attractive and the digitisation of current services is only half the battle. The newer generations are drawn to transparency and peer validation. They use social media to research and learn. They seek community. They like brands they can get to know and feel familiar with before purchasing. And none of this suits the traditionally opaque world of finance. 

A report from the CFA Institute on GenZ investors states that they are bigger risk takers than previous generations and “almost half (48%) say that they know more about investing than their parents, and one in three (33%) are extremely or very confident in their ability to make investing decisions”. That confidence, coupled with greater access to alternative investments will see them leaning further and further away from your traditional 60/40 portfolio. According to the Bank of America Private Bank study, wealthy investors aged 21 to 42 show a greater preference for private equity, private debt and direct investment in companies.

We’re already seeing a shift in the market from traditional institutions to fintech startups. Whether it's banking, insurance, payments, investing, wealth management or other, fintech startups are wrestling market share away from incumbents because they fit the mould of what the newer generation has come to expect. And while traditional players are beginning to take note and make moves to adapt, we believe it's the startups who are poised to take further control. And we’re looking forward to being a part of it!

What we’ve been working on at PitchedIt

• Refactored the deposit/withdrawal system for user accounts 💰

• Started the process of automating investment agreements 📑

• Made UI improvements to portfolio distribution metrics 📊

The Unsophisticated Investor is brought to you by Scott & Rob, the founders of PitchedIt. We’re both sick of private markets being a playground exclusive to the ultra-wealthy so we started a company to challenge the status-quo. PitchedIt’s singular focus is to unlock private markets for Millennial and Gen Z retail investors and help them build wealth through the highest performing private market opportunities.

Scott & Rob
PitchedIt Co-Founders