- Most Millennial Millionaires have most of their wealth in crypto and plan to add more in 2022 despite recent price drops, according to CNBC’s Millionaire Survey.
- According to the survey, 83% of Millennial Millionaires own cryptocurrencies.
- Millennial millionaires’ cryptocurrency holdings contrast with previous generations of millionaires and could create a new dilemma for wealth management firms and their client relationships.
Most Millennial Millionaires have most of their wealth in crypto and plan to add more in 2022 despite recent price drops, according to CNBC’s Millionaire Survey.
83% of millennial millionaires own cryptocurrencies, according to the survey, which asked investors with fixed assets of $ 1 million or more (excluding primary residences). According to the survey, more than half (53%) have at least 50% of their wealth in crypto and almost a third have at least three quarters of their wealth in bitcoin, ether, and other types of cryptocurrencies.
Millennial millionaires’ cryptocurrency holdings are in contrast to previous generations of millionaires: only 4% of baby boomers own cryptocurrencies, while more than three quarters of Generation X investors do not own cryptocurrencies, according to the survey.
The results suggest that cryptocurrencies are creating a huge generation gap in investing and wealth creation. While older generations of millionaires are still largely skeptical about cryptocurrencies and their future, cryptocurrencies have become the primary source of wealth creation and growth for many more young Investors, who got in early and made quick returns.
“This is a big difference between different generations of wealth,” said George Walper, president of Spectrem Group, which conducts the survey with CNBC.
Despite recent declines in the price of bitcoins and other cryptocurrencies, millennial millionaires have no plans to cut their investments in cryptocurrencies. About half (48%) plan to top up their holdings in the next 12 months, while another 39% plan to keep their current levels of crypto. Only 6% of Millennial Millionaires plan to cut their crypto investments in the next year.
A dilemma for wealth managers
With so many millennials and Generation Z investors becoming crypto millionaires, it will likely remain critical to their investments for years to come, creating a new dilemma for wealth management companies and the advisors come from wealthier older customers who don’t want crypto and the risks associated with it in their portfolio or products. However, their future depends on next-generation customers who are demanding crypto products and advice.
“I’m not sure the wealth management industry has recognized that they really need to think of these as completely different generations,” Walper said. “Most firms were hoping to ignore it. But millennial millionaires are not going to just ‘grow out’ of crypto.”
Walper said that legal and performance risks have made many wealth management companies reluctant to add crypto directly to their investment platforms. However, with a growing number of crypto financial products available, including crypto-based ETFs, many more companies are now able to start offering crypto products to younger investors.
“That allows them to offer exposure to bitcoin and other crypto, without being a direct holder,” he said.
Walper said that there are two broad categories of millennial crypto investors: those who have made millions with cryptocurrencies and those who have added to their existing wealth (mostly received from heirlooms or startups) by investing in cryptocurrencies. 45% of millennial millionaires credited inheritance as a factor in their wealth, according to a Spectrem poll. Among millennials worth $ 5 million or more, inheritance was the most important factor (at 75%) in their wealth.
At the same time, the millennials who entered cryptocurrencies years ago, with small stakes on their income, have become self-made millionaires thanks to the returns of cryptocurrencies which have vastly outperformed stocks and other classes of assets. The question now is whether millennials remain in the cryptocurrency market – and among the millionaire ranks – if bitcoin and other tokens experience sustained decline.
“They seem to be comfortable with volatility,” he said.
