While perception and reality frequently converge, this is not always the outcome. Millennials are an excellent case in point. Conventional wisdom suggests that adult Millennials (a/k/a generation “Y”), those between 18 and 33 years old, have no money.
Prudent hedge fund managers, particularly those aspiring to grow assets under management by way of the retail market, should not overlook generations “X” and “Y”. The Shullman Research Center’s report titled “Millionaires Have Their Own Generation Gap“ suggests that fully twenty-three percent of adult millionaires in the United States are Millennials. An additional twenty percent belong to generation “X”—persons aged 34 through 48 years.
Marketing professionals of all stripes have relentlessly pursued Baby-Boomers (the 49 to 67 year-old demographic) whose ranks account for forty-nine percent of all adult millionaires. Heretofore, the perception has been that Boomers define the wealthiest generation.
The extraordinary facts, as revealed in the Center’s report, establish with a fair degree of certainty, the combined financial clout of the “X” and “Y” generations is the rough equivalent of the Boomers’ economic sway. In raw numbers, the Millennial and Gen-X demographic accounts for fifty-four percent of the population, while Boomers represent thirty-two percent.
An Under-Served Market
Hedge fund managers, keen on attracting new investors, should weigh the merits of implementing a marketing strategy focused on the Gen-X and Millennial demographic … if one is not already in place.
The wealth and, by default, the investor potential of generations “X” and “Y” have been underestimated. As a result, this demographic has been poorly served, not only by hedge funds, but by the financial industry in general.
Differences Beyond the Balance Sheet
While the Shullman Research Center’s report provides invaluable financial data, hedge fund managers and other financial service professionals need to recognize the differences in the attitudes displayed by each demographic. Crafting a successful marketing strategy depends on careful comparison. Contrasts and similarities must be identified and incorporated into the strategic marketing plan.
Morgan Stanley Private Wealth Management, in concert with Campden Wealth, recently conducted a Millennial-focused survey, which offered useful insights on investment preferences and general attitudes toward wealth management. However, the Shullman Research Center’s report provides more depth by way of contrasts among Baby-Boomers, Millennials and Gen-Xers … something a marketing department can really sink its teeth into.
The facts are inescapable. The Boomers’ economic powerhouse days are in the rear-view mirror. Increasingly, the financial services industry is waking up to this fact and taking proactive steps to court Millennials and Gen-Xers on their terms. Hedge funds, for the most part, are not the point-of-the-spear in this regard and will be playing catch up if they don’t get on board soon, or worse, not be playing at all!
On the Jobs Front
As hedge funds ramp-up marketing efforts directed at capturing the Millennial and Gen-X investor pool, it is likely to generate job opportunities, particularly for candidates that have experience in dealing with this demographic. Naturally, hedge fund start-ups and small hedge funds will have the edge, as they will be more nimble in pursuit of Millennial and Gen-X investors than their larger competitors.