MYITKYINA, MYANMAR - JULY 30: In this handout photo provided by the Maddox Jolie-Pitt Foundation, ... [+]
It may be time to reconsider the millennial jokes. The truth is, while this generation is much criticized, millennials are starting to shake up the old-school philanthropy norms and wealth managers would be wise to take note.
Gen Y and Z on the Rise:
Today, millennials (gens Y and X) are inheriting an estimated $550 billion a year—30% of the wealth transferred annually—and that percentage is only projected to grow. These young investors, ages 21-41, represent 42% of the U.S. population, now surpassing Baby Boomers as the largest generation. According to a recent report by Giving USA and the fundraising firm Dunham+Company, they've significantly increased their charitable contributions over the past six years. In 2022, the average donation from millennial households surged by 40 percent compared to 2016, elevating their yearly contribution from $942 to $1,323. Meanwhile, during the same timeframe, average annual giving by Gen X households dropped by 4 percent, and boomers witnessed a decline of 12 percent.
It's All About Purpose: Purpose isn't just a buzzword for this generation; millennials are emerging as a force to be reckoned with in the landscape of modern philanthropy. Unlike previous generations, millennials approach giving with distinct values and preferences and are reshaping traditional philanthropic trends and practices. With their emphasis on purpose, impact, and transparency, millennials are revolutionizing how charitable contributions are made and perceived.
How can wealth managers connect with and support millennial givers?
Offer Philanthropic Services: Given that fifty-nine percent (59%) of Gen YZ wants or expects their primary financial advisor to provide services beyond financial advice and investment management (compared to 25% of Boomers+), wealth management firms are wise to integrate philanthropic advisory services into their offerings. This can involve providing guidance on effective giving strategies, connecting clients with causes they care about, and facilitating charitable giving transactions.
Understand Millennial Values: Wealth managers should invest time in understanding what makes this generation tick. Many millennials prioritize social impact and sustainability in their investment decisions, so offering philanthropic investment options aligned with these values can attract and retain millennial clients. And despite all the jokes about avocado toast and entitlement, millennials are actually taking philanthropy to a whole new level. It's not just about throwing money at a cause anymore- they're rolling up their sleeves and getting their hands dirty with volunteering, mentoring, and using their skills to make a real difference. This hands-on approach to philanthropy reflects their desire for direct involvement and tangible impact.
Connect Via Technology: Utilizing technology platforms that streamline the philanthropic process can appeal to millennial clients accustomed to digital solutions, even when it comes to doing good (crowdfunding, anyone)? Wealth managers can offer online platforms or mobile apps that make it easy for clients to research charitable organizations, track their giving, and receive updates on the impact of their donations.
Focus on Customized Solutions: Recognizing that millennial clients have diverse interests and causes they care about, wealth managers should offer personalized philanthropic solutions tailored to individual preferences. This may involve conducting in-depth discussions to identify clients' passions and values and developing customized giving strategies aligning with their unique charitable goals.
Educate and Collaborate: There's still plenty that wealth managers can help Millennials with as far as getting their financial houses in order and planning out their philanthropic endeavors. Remember that the wealth of this generation is still growing—and at a rapid pace. Successfully engaging them now could mean a lot over the long term for wealth managers.
