The coming decades will see the largest intergenerational transfer of wealth in history.
This huge transfer of wealth, estimated at around $100 trillion (£820 billion), will have global consequences. In the UK alone, at least £5.5 trillion, almost three times our annual GDP, will pass from my generation, the Baby Boomers, to Millennials (born between 1981 and 1996) and Generation Z (1997–2012) .
How we pass on this legacy to these so-called «Zennials» can completely change our way of life, shaping the global economy as well as our political, social and even spiritual landscapes. Whether this upheaval is a renaissance and second chance for a more enlightened capitalism or a regression to a polarized and highly unstable state of world affairs may well be the defining question of the next 10 years.
This huge flow of capital, fueled by decades of low interest rates and asset accumulation, is not just a possibility in the distant future: it is already underway. The bank of mom and pop is already doing this transfer of wealth. Parents are providing financial support to children and grandchildren as they seek deposits to secure a first-time mortgage or cover the sky-high rental costs that have made housing virtually unaffordable for many young people. This trend will continue.
House Prices and Income Indexes, England and Wales 1997 = 100
Of course, transferring wealth in this way is part of life: as each generation dies out, the next inherits its assets. . But this time we are witnessing not just the transfer of capital from generation to generation, but also the empowerment of a new generation to make dramatic financial, social and political changes.
Change is happening at a rapid pace
This tectonic shift is being driven by the stark contrasts between Baby Boomers and Boomers in their worldviews, ethical priorities, and level of technological capabilities.
The economic activity of Boomers is expanding like never before with the help of digital technology. Rapidly developing technologies are central to their financial activities — transferring capital and measuring its expenditure.
The idea of going to a bank to open an account is completely foreign to them; paper checkbooks have been relegated to the museum of curiosities, and cash is going out of fashion, with many teenagers having their own bank cards and apps.
Also, as digital natives for whom the iPhone and social media are integral part of their daily existence, they have a tremendous ability to influence public opinion and quickly bring about change.
Mature Zennial activists seeking radical social change will skillfully harness powerful technological forces to advance their ethical goals.They will have the power to shape not only capitalism itself, but society as a whole.
And they have completely different ideas about how they want to run the world. The financial power and technological resources of the Zenials will allow them to subjugate capitalism to their will. Perhaps break it too. And perhaps because their mission is focused, prioritizing social ethics and climate activism, the assumptions of previous generations will not matter much.And therein lie the seeds of danger. The boomer generation cannot simply be written out of the script. While boomer money will continue to play a huge role in financing the future, our influence must not fade. The well-intentioned but uncontrollable Zenial agenda requires Boomers to emphasize incentives, hard work, rewards and value creation.
0107 Millennial Squeeze
This must be integrated with the passion of the younger generation to realize ethical values. Profit and purpose must go hand in hand: the impact on capitalism, as it is also called.
The divisions are widening
Over the past decade, generation gaps have become more pronounced and tribalism has intensified.
Multi-generational caricatures were created, reinforced by social media. When discussing my new book with several colleagues of the same age, they did not believe that the “naive” and “earned” younger generation would be ready to roll up their sleeves, take responsibility and put in the hard work necessary for dynamic and productive development. economics.
They argued that zenials lack resilience and are supposedly unable to accept the limitations in their personal lives necessary to achieve the goals needed to create wealth.
Zenials were dismissed as a «buy and share» generation unfit for a viable modern economy. This caricature is widespread and widespread: the Oxford Dictionary's word of the year for 2022 was «goblin mode» — unapologetic self-indulgence, lazy, sloppy or greedy behavior. Many will short-sightedly consider this to be an accurate description of the next generation.
Zenials also disdain the older generation. They believe we feed off the fat of the earth, enjoy the asset inflation boom and leave them with leftovers to mine. They were unable to gain a foothold on the property ladder, even while earning significant salaries. They see a generation that is hierarchical, lacking creativity, dismissive of them and their goals, and fearful of technology, rather than embracing the changes that are coming.
My own point of view is that these descriptors are extremely harmful to society. the future not only of capitalism, but also of society and politics. I deeply believe that the Zenials are a prophetic generation seeking to move away from the individualism that characterized the Boomers: the transition from me to us is beginning to take shape, and it is a very welcome step.
< p>I have spent a significant portion of my time in as a banker, coaching, mentoring and investing in the next generation. I noticed a genuine enthusiasm for creative productivity that was not recognized by my generation.
Thus, there is a huge opportunity for Boomers to collaborate with Boomers to collaborate on startups and venture capital investments into the new companies of impact capitalism. Zenies are eager to invest, but they lack the experience of wiser old mentors—people who have seen inflation rise, lived through recessions, and witnessed the destruction of currency values. And, of course, I must have the capital to create these businesses.
Capital Starved
The central thesis of my new book is based on my active participation in the lives of the Zenial generation over the years.
I have concluded that their focus on social and environmental activism will lead to a major shift towards what I call socially engaged capitalism. This transformation has the potential to lead to greater stability and prosperity for all, find sustainable solutions to our environmental problems and help heal the social, political and generational divisions that seem to deepen every day.
Ken Costa suggests that younger generations are creating a society that draws on the hard-earned wisdom of Boomers
To achieve this goal, however, we need to build meaningful intergenerational relationships that combine the wisdom accumulated by Boomers (our hindsight) with understanding zenialov about social and environmental justice. The result will be a new vision that will deliver a thriving economy and a prosperous society and planet.
I grew up in a generation that focused almost exclusively on financial gain. Private ownership of assets is an important part of my financial toolkit.
I admit that from my point of view it was difficult to get rid of. But it was after the global financial crash of 2008 and while negotiating with Occupy London in a Bedouin tent on the grounds of the St Ethelburgh Reconciliation and Peace Center that I realized that I would have to find a way to solve my problems. — the established worldview of an up-and-coming generation whose contrasting experiences have become a great challenge to my own. And I have found that the new generation has a lot to teach us.
They, largely due to lack of capital, have been forced to adopt a less vested interest in asset accumulation.
Not necessarily by choice, but as a result of circumstances, they are much more likely to appreciate the value of renting rather than buying. I remember my daughter asking why anyone would insure their car for an entire year. It seemed much easier to insure it for the time it was in use rather than for periods of inactivity. Airbnb's growth reflects the use of assets that has become an important feature of their lives.
The wealth of 2,406 retirees
From the UK to the US, the «rent generation» has become a nickname for people aged 18 to 40 who have been excluded from the housing market. In Western society, we consider moving out of our parents' house to be a major milestone, and gone are the days of moving into your first home of your own. Instead, for many, renting is the only way to achieve this.
For those lucky enough to have access to the world of home ownership, the Bank of Mom and Dad usually helps. It's too easy for Boomers to become outraged, and sometimes this has even led to legal conflicts, but we must remember that this is one of the positive legacies we can provide.
If we want Zenies to participate in capitalism in the same way their parents did, capitalism must change. They can be given not only a reason to participate in society, but also a reason to want to do so. A generation without capital can never become a capitalist.
Every HR department knows the next generation's passion for purpose and its holistic view of well-being. Boomers have always had difficulty demonstrating vulnerability and authenticity, which has led to skepticism on the part of teens about whether they are in touch with their emotions, the driving forces of everyday human life.
They strongly believe that emotional and spiritual well-being improves every activity in which they participate, even their financial lives.
We can also learn from the younger generation's thirst for spirituality. Like baby boomers, we are dismissive of making decisions based on spiritual principles.
However, the new generation strives to find meaning and purpose beyond the purely material.
In his seminal work God Is Back, John Micklethwaite, editor-in-chief of Bloomberg, opened with the words: “The world is becoming more modern, but not more secular.”
Instead, spirituality is growing among Zenials. How this generation demonstrates its desire for community, values-based action, and recognition of motivations beyond the purely rational will determine the way capitalism changes in the future.
But despite these ideas, the next generation did not learn everything. I'm concerned about the rise of what I call «wiki morality,» where groupthink becomes the dominant factor in determining what's right.
Every market relies on truthful disclosure at the highest level. He cannot tolerate the phrase “this is my truth” as a motivating concept. There can be no ambiguity in how the truth is revealed in the business community. We must remember the importance of truth, by which I mean objective truth, which is sometimes threatened by relativism.
Money with meaning
For socially engaged capitalism to flourish, we must take seriously the zenial impulse towards a just social ethic. But capitalism, which fuels social energy, remains capitalism.
0809 Productivity growth has stagnated
It must also prioritize wealth creation, risk-taking, value-added creation, and productivity-enhancing incentives.
And while we can learn from Zenials' approach to well-being, they must also be equipped with the tools needed to become more resilient, leading to more informed financial judgments.
The result will be a harmony of increased profits and meaningful work — a new integrated a mode of operation that rejects the one-dimensional view that the financial world is the preserve of analysis and cold, hard rationality.
Such capitalism can only thrive if different generations listen, communicate and collaborate. This is already beginning to take shape in working and living together.
Central to this is the shift from the individualism that characterized my generation to collaboration, compassion, community and collective experience. This will include co-creation, co-investment, co-leadership, and even co-spirituality.
These trends reflect the realization that when we work together, we gain far more than we lose. Such movements can ease tribal divisions and create new creativity that will transform capitalism and make it fit for the 21st century.
Reconciling Generations
Our challenge is to learn to disagree well and take practical steps towards reconciliation of generations.
I grew up in South Africa. Nelson Mandela was one of my heroes and I met him several times. After years of imprisonment, he spoke of reconciliation, saying, “Bitterness is drinking poison and hoping the other person dies.” I think this is true across generational divides as well.
There will always be boomers who look down on the next generation as ungrateful and entitled to power, and zenials who imagine boomers to be backward and materialistic. It is important to rise above bitterness and hatred and start working on what matters to us. We must all avoid responding with the same stereotypical verbal knives thrown our way.
In the technological present, everything is accelerating. This may seem threatening to a generation unfamiliar with this pace of change.
We are also left with little cynicism and little hope. We need to be much more open to working with, listening to and advocating for the aspirations of the next generation, and trying to find solutions to the problems they face.
We must reach out to the Zenials and, through practical day-to-day training, mentoring, investment and encouragement, help create the new businesses of the future and leverage the growing capital at their disposal.
I call on the Zenials. Take advantage of such opportunities when they arise, seek partnerships with older generations and be prepared to have them as mentors and coaches. I often suggest that Zenials team up with Baby Boomers who have a track record—remote regions and a history of investment and risk—that can be helpful in building a new business.
The need for collaboration between generations is urgent.The next generation is already beginning to inherit the money, power and influence that will shape the next century. My generation believed that if you weren't a socialist at 20, you didn't have a heart, and if you were still a socialist at 40, you didn't have a head.
This is no longer the case. By the end of the decade, even more Zenials will control large corporations. There is no reason to believe that they will abandon their enthusiasm and desire to do good, and their desire to do well.
They will be able to implement a social program consistent with their views of justice and justice. justice. The desire to act alone, as opposed to the cooperation I described above, will bring untold harm to our society. The generation gap will undoubtedly threaten sustainable economic growth.
New social energy
Capitalism needs to be reformed, and intergenerational partnerships are the best way forward.
The idealism of the zenials, reinforced by the hard-earned wisdom of an older generation who have witnessed the cycles of the economy and have broader and longer experience, can create a new one in the long run socially engaged capitalism
It will combine the economic benefits of incentives and value with new social energy. Boomers' vigilance will be one of the cornerstones of this renewed form of capitalism.
This vigilance will moderate the purely ideological trends of the younger generation. Leveraging the experiences of baby boomers will ensure that the narrative of a strong, value-creating market economy is not lost in simplistic and unrealistic social goals.
Now more than ever, it is critical that we are open to perspectives, challenges, each other's strengths and weaknesses — even fears. This is the key to unlocking the power of intergenerational cooperation and unleashing a hope-filled destiny in the world.
The clash of generations will give way to a renewed, vibrant, sustainable, socially engaged capitalism leading to unimaginable prosperity and productivity, social cohesion and intergenerational respect. Is this the kind of future we all want to leave as a legacy?
Ken Costa is an experienced investment banker and writer. The $100 Trillion Wealth Transfer: How the Shift from Boomers to Gen Z Will Revolutionize Capitalism (Bloomsbury) will be published September 28.
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