The Great Wealth Transfer: How Fund Managers Can Prepare for Next-Gen Investors

The private markets industry stands at the cusp of an unprecedented shift. Over the next two decades, approximately $84 trillion in assets will transfer from Baby Boomers to the next generation—marking the largest intergenerational wealth transfer in history. The question is: Are fund managers ready?

This seismic shift presents both opportunities and challenges for fund managers, who must adapt their operations and service delivery to meet the expectations of a new generation of investors that thinks, acts, and invests differently.

What is the Great Wealth Transfer?

The Great Wealth Transfer refers to the massive intergenerational transfer of wealth from Baby Boomers (born between 1946-1964) to their children and grandchildren over the next two decades. With an estimated US$84 trillion in assets set to change hands, this represents the largest wealth transfer in history. This transfer encompasses various assets, including private business ownership, real estate holdings, investment portfolios, and other financial assets.

The scale of this transfer is unprecedented, driven by several factors:

• Baby Boomers have accumulated significant wealth through decades of economic growth
• Increased life expectancy has allowed for greater wealth accumulation
• Rising property values and strong market performance have enhanced asset values
• Many Boomers have benefited from defined benefit pension plans and strong saving habits

This wealth movement isn't just about money changing hands—it represents a fundamental shift in how investments will be managed, as younger generations have markedly different approaches to wealth management, investment preferences, and expectations for service delivery.

Understanding Next-Gen Investors

Unlike their predecessors, next-generation investors have grown up in a digital-first world. They expect seamless technological experiences in all aspects of their lives, including their investments. These digital natives bring fundamentally different expectations and behaviours to the investment landscape.

They've grown accustomed to instant access to information, transparent processes, and sophisticated user interfaces across all their digital interactions. This generation is also notably more focused on sustainable and impact investing, often questioning traditional investment approaches and seeking deeper alignment between their investments and personal values.

Key Areas Fund Managers Need to Address

Digital Transformation and Self-Servicing

The next generation's expectations for digital experiences extend far beyond basic online access. Fund managers must fundamentally rethink their service delivery model to remain competitive. This transformation should encompass the entire investor journey, from initial onboarding through to ongoing portfolio management and reporting. Modern investors expect a seamless, mobile-first experience that provides instant access to their investment information and enables self-service for routine transactions.

The next generation of investors, particularly Gen Z and millennials, strongly prefer self-service options over traditional interactions. A Gartner survey found that 38% of Gen Z and millennial customers abandon service issues if they can't resolve them through self-service, and only 16% see phone calls as an effective use of time. With just 14% favouring phone communication, fund managers must prioritise seamless digital experiences that empower investors with instant access and control.

Enhanced Transparency: Impact Investing and ESG

Next-gen investors have grown up in an era of unprecedented access to information, and they expect the same from their investments. Traditional quarterly reports and annual meetings no longer suffice—investors now expect:

• Real-time visibility into their portfolios
• Detailed breakdowns of fees, expenses, and performance
• Clear communication about investment strategies and decisions
• ESG metrics and impact measurements to assess alignment with their values

A survey by the DeVere Group found that nearly 73% of Millennials and Generation Z demand environmental, social, and governance (ESG) criteria in their investment portfolios. This new generation is not just interested in financial returns; they also want to understand the broader impact of their capital and ensure their investments align with their ethical values.

Modernised Communication

The communication landscape has evolved dramatically, and fund managers must adapt accordingly. Today's investors expect:

• Multi-channel communication options that align with their preferences
• Self-service portals for routine inquiries and document access
• Automated updates for significant events and portfolio changes
• Personalised reporting capabilities that allow customisation
• Interactive digital content that enhances understanding

Younger investors prefer short, high-impact digital communications rather than long reports or one-on-one calls. By adapting to their preferences, fund managers can enhance engagement and retention.

Data Security and Privacy

While embracing digital transformation, fund managers must prioritise security to protect sensitive investor information. Next-gen investors are hyper-aware of cybersecurity risks and expect transparency regarding data protection.

To build trust, fund managers must:

• Implement comprehensive cybersecurity protocols
• Maintain transparent data protection policies
• Conduct regular security audits
• Communicate clear security practices to investors

Investors want assurance that their data is protected, and fund managers who fail to provide this will struggle to gain trust.

Implementation Strategy

The transition to serving next-generation investors requires a strategic, systematic approach. Fund managers should begin by:

1. Assessing current capabilities – Identify gaps in digital service delivery, transparency, and communication.
2. Developing a digital transformation roadmap – Prioritise high-impact changes with clear implementation timelines.
3. Investing in scalable technology – Ensure platforms integrate seamlessly with existing systems while maintaining security.
4. Focusing on user experience – Build intuitive investor portals that are mobile-friendly and meet next-gen expectations.
5. Adapting to evolving investor needs – Maintain flexibility in communication and service offerings.

To stay competitive, fund managers must not only adopt new technology but reimagine how they interact with and serve investors.

Conclusion

The Great Wealth Transfer represents a pivotal moment for fund managers. Success in this new era requires a comprehensive digital transformation strategy that addresses the sophisticated expectations of next-generation investors while maintaining the highest standards of security and service.

This transition isn't just about implementing new technology—it's about fundamentally reimagining how fund managers interact with and serve their investors.

Caruso's comprehensive fund management platform is specifically designed to help fund managers navigate this transition. Our digital-first approach, coupled with enterprise-grade security and compliance features, provides the foundation needed to attract and retain next-generation investors. To learn more about how Caruso can help future-proof your business, contact [email protected].