Private banking for the next generation
Some $30 trillion will transfer from the baby-boomers to their children and grandchildren in the next 30 years. These younger generations think differently and bank differently. Private banks must adapt their businesses to ensure the money stays with them.
The baby-boomer generation was born between 1946 and 1964, the product of a spike in births after troops returned home from the Second World War. They grew wealthier than the generation preceding them, having benefited from post-war subsidies and job creation. They were more engaged in social and political issues driven by the war they had avoided. They were healthier and more active than the generations preceding them. And they were the first to introduce the notion that generations differ in their outlooks, tastes and lifestyles – leading to the segmenting of Generations X, Y and Z that followed. Now that thee baby boomers are heading towards their 70s, the transfer of their wealth to the generations succeeding them is becoming an urgent issue. It is estimated that over the next 30 years between $27 trillion and $41 trillion will be transferred from the baby boomers to Generations X and Y. This club of inheritors ranges from the ages of 20 to 45 and are the first to feel little duty to remain with their families’ private banks. Pressure is therefore mounting for banks to adapt to the different preferences of the younger generation. Those preferences might end up reshaping the private banking industry as a whole.