In the next decades, the largest inter-generational handover of wealth ever will take place.
This great wealth transfer, estimated at around $100 trillion, will have global implications. In the UK alone, at least £5.5 trillion nearly three times our annual GDP – will be passed from my generation, the Baby Boomers, to Millennials (born between 1981 and 1996) and Gen Z (1997-2012).
How we hand this legacy over to these so-called “Zennials” has the power utterly to transform the way we live, moulding the global economy, and our political, social and even spiritual landscapes. Whether this upheaval is a renaissance and a second chance for a more enlightened capitalism, or a regression into a polarised and highly unstable state of global affairs, may well be the defining question of the next 10 years.
This vast flow of capital fuelled by decades of low interest rates and asset accumulation is not just a distant future possibility: it is already well underway. The Bank of Mum and Dad is already delivering this transfer of affluence. Parents are extending financial support to children and grandchildren seeking deposits for first-time mortgages, or covering the sky-high rental costs that have made housing almost unaffordable for many young people. The trend will continue.
Of course, passing on wealth in this way is part of life: as each generation dies out, the next inherits its assets. But this time, we are not merely witnessing an intergenerational handover of capital but the empowerment of a new generation to implement dramatic financial, social and political change.
Change at pace
This tectonic shift is spurred on by the stark contrasts between Boomers and Zennials in their worldviews, ethical priorities and level of technological empowerment.
The Zennials’ economic activity is digitally enhanced as never before. Fast-developing technology is central to their financial activity – in transferring capital and assessing how it is spent.
The idea of walking into a bank to set up an account is totally foreign to them; paper cheque books have been consigned to the museum of curiosities and cash is falling out of favour, with many pre-teens having their own bank cards and apps.
In addition, as digital natives for whom iPhones and social media are an integral part of their daily existence, they have a great capacity to influence public opinion and implement change at pace.
Coming-of-age Zennial activists seeking radical social change will adeptly harness powerful technological drivers to secure their ethical objectives. They will have power to shape not only capitalism itself but society as a whole.
And they do have very different ideas about how they want the world to be run. For Zennials’ financial muscle and technological resources will enable them to bend capitalism to their will. Conceivably to break it too. And perhaps because theirs is a purposeful mission prioritising social ethics and climate activism, the presuppositions of previous generations will matter little.
And herein 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 part in bankrolling the future, our influence must not be on the way out. The well-intentioned but unchecked agenda of the Zennials needs the Boomers’ emphasis on incentives, hard work, reward and value creation.
This must be integrated with the younger generation’s passionate desire to implement ethical values. Profit and purpose should run together: impact capitalism, as it is also known.
Over the last decade, generational divides have become more pronounced and tribal affiliations have intensified.
Caricatures of different generations have been built up, reinforced by social media. When discussing my new book with several colleagues of a similar age they did not believe that “naïve” and “entitled” younger generations would be prepared to roll up their sleeves, pull their weight and put in the hard work required for a dynamic and productive economy.
They claimed Zennials lacked the resilience, and were supposedly unable to accept restraints on their personal lives necessary to achieve the objectives essential for wealth creation.
Zennials were dismissed as a generation who “shop and share” and are unfit for a viable modern economy. This caricature is widespread and pervasive: the Oxford Dictionary’s word of 2022 was “goblin mode” – unapologetically self-indulgent, lazy, slovenly or greedy behaviour. Many, short-sightedly, will see this as an accurate descriptor of the next generation.
The Zennials are similarly dismissive of the older generation. They believe that we have fed on the fat of the land, enjoyed the asset inflation boom and left them with scraps to scrabble over. They have been unable to acquire a foothold on the property ladder even when earning significant salaries. They see a generation that is hierarchical, lacking creativity, dismissive of them and their objectives, and fearful of technology, rather than embracing the change that will come.
My own view is that these descriptors are immensely damaging to the future, not only of capitalism but of society and politics as well. I profoundly believe that the Zennials are a prophetic generation who are seeking a shift away from the individualism that has characterised the Boomers: a move from me to we is beginning to take shape, and it is a highly welcome one.
I have spent a significant amount of my time as a banker coaching, mentoring, and investing in the next generation. I have observed a genuine enthusiasm for creative productivity which has been unrecognised by my generation.
As such, a huge opportunity exists for the Boomers to collaborate with the Zennials in working together on start-ups and venture investment in impact capitalism’s new companies. The Zennials long to invest, but lack the experience of wiser, old mentors – people who have seen inflation rise, lived through recessions and witnessed the destruction of currency value. And of course have the capital to seed these ventures.
The central thesis of my new book is based on my active involvement with the Zennial generation over many years.
I’ve come to the view that their focus on social and environmental activism will create a major shift towards what I call socially energised capitalism. This transformation has the potential to bring about greater stability and prosperity for all, create sustainable solutions to our environmental problems, and help heal the social, political and generational divisions that seem to deepen day by day.
However, to achieve this we need to build a meaningful intergenerational relationship that combines the wisdom accrued by the Boomers – our hindsight – with the Zennials’ insight into social and environmental justice. The result will be a new foresight which will secure a flourishing economy and thriving society and planet.
I grew up in a generation that focused almost exclusively on financial returns. Private ownership of assets is an essential part of my financial toolkit.
I admit that from my point of view, this has been difficult to shake off. But it was after the Global Financial Crash of 2008, and during my negotiations with the Occupy London group in a Bedouin tent in the grounds of St Ethelburga’s Centre for Reconciliation and Peace, that I knew I would have to find a way to resolve my well-established world view with the up-and-coming generation whose contrasting experiences presented a great challenge to my own. And I have found there is much that the new generation can teach us.
They have, largely as a result of being capital starved, been driven to adopt a less proprietorial interest in accumulating assets.
Not necessarily out of choice, but as the result of circumstance, they are much more likely to appreciate the value of renting rather than buying. I remember my daughter asking why anyone would insure a car for a full year. It seemed much easier to insure it for use rather than periods of inactivity. The growth of Airbnb reflects this utilisation of assets which has become a prominent feature of their lives.
From the UK to the US, ‘Generation Rent’ has become a moniker for those between ages 18 to 40 who have been priced out of the housing market. In Western society we consider moving out of our parents’ home a milestone, and gone are the days when one can move out into their first owned home. Instead, for many, renting is the only way to achieve this.
For those lucky enough to access the world of home ownership, they tend to be helped out by the Bank of Mum and Dad. It is all too easy for Boomers to be resentful, and this has sometimes even resulted in legal conflict, but we must remember that this is one positive legacy we can ensure.
If we want Zennials to engage in capitalism the same way as their parents, capitalism must change. They cannot be only given a reason to participate in society but a reason to want to. A generation without capital can never be capitalists.
Every HR department knows the next generation’s desire for purpose and their holistic view of well-being. It has always been difficult for the Boomer generation to show vulnerability and authenticity, which has led to a scepticism from the Zennials as to whether they are in touch with their emotions – the drivers of day-to-day human experience.
There is a strong feeling among them that emotional and spiritual well-being enhance every activity in which they are involved, even their financial lives.
We can also learn from the younger generation’s thirst for spirituality. As Boomers, we have been dismissive of any spiritually guided decision-making.
However, the new generation is reaching out to find meaning and purpose beyond the purely material.
In his seminal work God is Back, John Micklethwait, the editor-in-chief of Bloomberg, opened by saying “As the world becomes more modern it is not becoming more secular.”
Instead, spirituality is surging among Zennials. How this generation demonstrates its desire for community, for values-based action, and for the recognition of motivation beyond the purely rational will be a defining way in which capitalism will be changed in the future.
But despite these insights, the next generation has not got it all right. I am disturbed by the growth of what I call ‘Wiki morality’, where groupthink becomes the dominant determinant of what is appropriate action.
Every market relies on truthful disclosure at the highest level. It cannot tolerate ‘this is my truth’ as a motivating concept. There can be no ambiguity in the way in which truth is disclosed within the business community. We must remember the importance of truth, by which I mean objective truth, which is at times under threat from a relativist view.
Money with meaning
For a socially energised capitalism to flourish, we must take seriously Zennials’ impulse towards equitable social ethics. But socially energised capitalism is still capitalism.
It must also prioritise the creation of wealth, the taking of risk, the adding of value and incentives that make for increased productivity.
And although we can learn from the Zennials’ approach to well-being, they also must be equipped with the tools necessary to build a resilience which will lead to sounder financial judgments.
The result will be a harmony of enhanced profit margins and meaningful work – a new integrated mode of operation that rejects the one-dimensional notion that the financial world is the preserve of analysis and cold hard rationality.
This kind capitalism can only thrive with intergenerational listening, communicating and collaborating. This is already beginning to take shape in co-working and co-living.
Central to it is a shift away from the individualism which has characterised my generation, towards collaboration, compassion, community and collective experience. It will include co-creating, co-investing, co-leading and even co-spirituality.
These trends reflect the realisation that when we work together, we gain far more than we give up. Such movements have the potential to weaken tribal divides and deliver a new creativity which will transform capitalism and make it fit for purpose for 21st century life.
The challenge is for us to learn to disagree well and to take practical steps towards generational reconciliation.
I grew up in South Africa. Nelson Mandela was one of my heroes and I met him on several occasions. After long years of imprisonment, he spoke of reconciliation saying, “Bitterness is drinking poison and hoping the other person dies.” I think this applies just as much in the case of generational fractures.
There will always be Boomers who look down on the next generation as ungrateful and entitled, and Zennials who imagine the Boomers as backward and materialistic. The important thing is to rise above bitterness and hatred and get to work on the things we care about. We must all avoid retaliating with the same stereotyped word knives that are being thrown in our direction.
In the technological present, everything is accelerating. This may appear threatening to a generation unfamiliar with such a pace of change.
In addition, we have become long on cynicism and short on hope. We need to be much more open to working with, listening to and championing the aspirations of the next generation and trying to find solutions to the issues that they face.
We must reach out to Zennials and through practical day-to-day coaching, mentoring, investing and encouragement, help to create the new businesses of the future and utilise the increasing capital at their disposal.
I encourage Zennials to embrace such opportunities when they arise, to seek out partnerships with the older generation and be willing to have them as mentors and coaches. I often suggest that Zennials team up with Boomers who have track records – a hinterland and a backstory of investment and risk taking – that can be helpful in building new businesses.
The need for intergenerational collaboration is urgent. The next generation are already beginning to inherit the money, power and influence that will shape the next century. My generation believed that if you were not a socialist at the age of 20 you had no heart, and if you were still of that view at 40 you had no head.
This is no longer the case. By the end of the decade even more Zennials will be in control of major corporations. There is no evidence to suggest that they will abandon their enthusiasm and commitment to doing good as well as a desire to do well.
They will be in position to implement a social programme consistent with their views of fairness and justice. The desire to go it alone, the antithesis of the collaboration I described above, will bring about incalculable harm to our society. Generational fracture will undoubtedly threaten sustainable economic growth.
A new social energy
Capitalism needs a reformation, and intergenerational partnership is the best path ahead.
The idealism of Zennials, underpinned by the hard-earned wisdom of the older generation who have witnessed cycles in the economy and have a broader and longer-term perspective, can deliver a new socially energised capitalism.
It will draw together the economic advantages of incentives and value with a new social energy. The vigilance of the Boomers will be one of the cornerstones of this renewed form of capitalism.
This vigilance will temper the purely ideological currents of those in the younger generation. Co-opting the experience of Boomers will ensure that the narrative of a robust market-driven, value-creating economy will not be lost in simplistic and unrealistic social objectives.
Now more than ever, it is imperative that we are open to each other’s viewpoints, challenges, strengths, weaknesses – even fears. This is the key to unlocking the power of intergenerational collaboration and unleashing a hope-filled destiny into the world.
The clash of generations will then give way to a renewed, invigorated, sustainable, socially energised capitalism leading to unimaginable prosperity and productivity, social cohesion and generational respect. Surely that is a future we all wish to leave as our legacy?
Ken Costa is a seasoned investment banker and author. The 100 Trillion Dollar Wealth Transfer: How the Handover from Boomers to Gen Z Will Revolutionize Capitalism (Bloomsbury) will be published on 28 September.