Talk to any financial adviser and they know two things: 1) Baby boomers are by far the wealthiest generation in U.S. history; 2) You can’t take it with you when you go.
The baby boomer accumulation of wealth is widely accepted and documented. It is the reason many of our best major gift/planned giving prospects are age 54 to 72. And we’ve enjoyed record setting years of philanthropy as boomer alumni share their wealth. But the winds of change are blowing.
The international accounting organization Deloitte estimates that, in less than two years, Boomers share of net household wealth will peak. And by 2030, Boomers will represent less than half of net household wealth, which will then decline with increasing mortality rates in the demographic.
At the same time, Deloitte estimates, “Generation X will experience the highest increase in share of national wealth” … “growing from under 14 percent of total net wealth in 2015 to nearly 31 percent by 2030.” And, “The Millennial generation will experience the fastest growth rate of net wealth.”
Two philanthropic takeaways from this data:
- The clock is ticking on getting in front of our best major gift and planned giving prospects. When their wealth transfers, will the next generation have the same affinity for your program?
- Capacity scores today may mean little tomorrow.
- Relying too heavily on boomer alumni prospects can have ramifications that start to show — soon.
- Gen X and Millennial alumni will come into wealth at times and in ways we cannot anticipate.
What should we do? Give your team resources to prioritize outreach to boomer alumni prospects currently engaged with your initiatives. This is vital as boomers are currently making decisions about their wealth. And as the winds of change blow, remember that in the relationship business we reap what we sew.
If your annual fund program is more transactional, it is time to take a page from Amazon and Netflix to make alumni feel welcomed, appreciated and valued when they take the time to visit their alma mater digitally. By delivering relevant content, we can bolster alumni affinity and develop meaningful connections. As wealth transfers into new hands, these connections can make all the difference for the future of your program.
The Deliotte report includes a warning that, “firms that haven’t yet woken up to Generation X’s potential may be too late to the party.” We can learn a lot from our friends who manage wealthy relationships. Will you heed the warning?
Go here to read Deliotte’s full report.
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By Kevin Bauman, Director of Philanthropic Initiatives, Capture Higher Ed