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How The Other Half Gives: Engaging Today's Wealthy

How The Other Half Gives: Engaging Today's Wealthy

For wealth managers, the approach to engagement and eventual relationships is completely different between the Gen-X/Y wealth holder and his/her wealthy parents.

This article originally appeared on LinkedIn


Wealthy baby boomers are transitioning record amounts of money to Gen-X and Gen-Y'ers at a rate estimated as much as $42 trillion over a 50-year period beginning in 1998. Whether this number is right or wrong, this creates one of the largest demands ever and associated opportunities for wealth managers who are engaged and connected with young, millennial (Gen-Y) wealth holders. The opportunity is obvious: grow old along with young clients who are living longer. What must a wealth manager/financial service firm/private banker/investment banker know about these young wealth holders? First, they need to remember that the entire courtship and engagement is social and new differentiators must be identified and communicated to this generation instead of those items important to baby-boomers. For wealth managers, the approach to engagement and eventual relationships is completely different between the Gen-X/Y wealth holder and his/her wealthy parents.

The easiest and most obvious way to engage wealthy millennials is via socially responsible investing and philanthropy. Never before has the concept of "doing well while doing good" been more infectious, especially among Gen-X and Gen-Y. Conferences like the recent Nexus Global Youth Summit convened by the Search for Common Ground are changing the way the world thinks of giving. The purpose of this conference was to "mash-up" young wealth holders with young social entrepreneurs. Its estimated that 100 of the attendees had a combined worth of $750 billion.

Today's business milieu requires wealth managers to create unique, personal relationships with each client. This is an important departure from the old days of gathering assets while simply producing good investment return. Requisite to investment relationships is engaging socially and across many levels. It is a significantly more complex relationship required today to engage and manage the mind/heart as well as pocketbook. In previous generations, success of a family's legacy was strictly counted in terms of dollars. Today's wealthy are want their legacy to be "counted" in ways of changing the world. Many have spun their previous family legacy into revamped, related socially responsible foundations. Motivation for this generational attitude shift are many. One interesting spin lies in the almost universal chant of the young and wealthy as having "lonely" childhoods. Many describe the notion of feeling isolated and alone where they might "dress down," order cheap menu items or participate in ridicule of "rich kids." Participating in social change allows today's young wealth holders to use their resources in a socially responsible way where they feel empowered and comfortable with wealth instead of embarrassed or ashamed of privilege.

Many next generation wealthy begin by taking a place on the family's foundation board. It's a great way to begin learning about the world and while training and gaining knowledge. Hands-on involvement in collaborative philanthropic partnerships can increase giving as well as empower the younger wealthy generation to transcend ideological, political, religious and national boundaries. According to Jonah Wittkamper, co-founder and global director of Nexus , this notion transforms the paradigm of wealth away from a culture of materialism into one of philanthropy.

Wealth managers, financial advisors, family offices and the like all can play a role in engaging families in a mission to achieve even greater impact. Old-style foundations and funds can be re-tooled and re-purposed for more socially responsible programming. Furthermore, when engaging over matters like philanthropy, there is the opportunity to form a deeper and longer lasting client relationship.

After all, isn't that what both sides are looking for?



April J. Rudin, Founder and President of The Rudin Group, is a financial services marketing strategist.

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