Survey Shows How the Old Needs to Learn from the Young

Views on how to profit differ sharply across the generations

Ric Edelman: It's Tuesday, June 25th. One of my favorite clients was a gentleman who, I guess he became a client when I was fairly young in the business, in my early 30s. He and his wife were much, much older. They were in their 70s back then. And he was a physician, still practicing. Lovely people, the two of them. 

He was dapper. He reminded me of David Niven. He was always dressed right. He was what we would call old school. He went to medical school in the 1940s. And he was just a pillar of society. But dapper is the word that comes to mind. 

And I'll never forget when he reached out to us to seek an appointment. And it was of course a phone call. There was no Zoom back then. And we booked the appointment. No big deal. He comes into the office and he is dressed well, he looked like David Niven, or Cary Grant, or Clark Gable, just impeccably dressed, a very distinguished gentleman. 

I was dressed in a sport coat. I wasn't wearing a tie. This was uncommon back in the 1990s for a financial professional to not be wearing a tie. Business in general were suits and ties but certainly in the financial services sector is buttoned up a business as it gets. In fact, the very first time I was interviewed by the Wall Street Journal, it was a page one story. A profile on me and Edelman Financial. The story was not about our investment management strategy or our client acquisition approach or our staff relations and HR... had nothing to do with the business. The focus of the page one story in the Wall Street Journal was the fact that I had declared Edelman Financial to be a no tie zone. This was such a revolutionary concept that it was warranting that it warranted page one coverage in the Wall Street Journal. And why did I have a no tie zone? Well, simply because I didn't feel like wearing a tie to the office every day. One of the many ways I was innovative and perhaps you would say ahead of my time. 

So anyway, he comes into the office, we meet, he is aghast, quite frankly, but he maintains his composure. He is the consummate professional, but we engage in a very long conversation about what I'm wearing or more accurately, what am I not wearing. And we talked about it quite extensively and he admonished me to next time he comes to the office, I need to be wearing a tie. 

He became a client, we had a wonderful, marvelous relationship until their deaths many, many years later. Each time he would come into the office, at some point during our conversation, he would make a comment of the fact that I was not wearing a tie and his disdain of my wardrobe. 

But over time, he began to lighten up a little bit about it, and it got to the point that one day they arrived for a meeting, and you guessed it, he wasn't wearing a tie. Why do I tell you this story? It's because I want to ask you a question. And the question may seem to be irrelevant or off point, unrelated to the story I just shared. 

But the question is this, what's the best way to get above average returns? I'm going to share with you the results of a new survey from Bank of America of 1,000 high net worth investors. These investors have at least $3 million in investable assets. That means it doesn't include their home. And these high net worth rich people are at least 21 years of age. And Bank of America split their answers between those who are under the age of 44 and those who are 44 and older, and I'm going to share with you what they said the best way is to get above average returns. 

Okay, so we're talking about Bank of America's survey of 1,000 high net worth investors. They're all at least 21 years of age. They have at least $3 million in investible assets, meaning excluding their residence. Those who are 44 years of age or older, say that the best opportunity for generating above average returns, stocks. 65% of them said that. 31% said real estate is the best way to get outsized returns. Do you agree with those answers? If you do, I'm willing to bet that you, 44 years of age or older, because you would respond the way these other folks responded.  

And that's incredibly classic, isn't it? This is the way people in their 40s and 50s and 60s and 70s have created wealth. This is the way wealth has been created in this country for the past couple of hundred years, stocks and real estate. So not at all a surprise that 96% of those surveyed who are 44 or older say that stocks in real estate are the best opportunity for making money. 

But what about those under the age of 44? According to the Bank of America survey, those 21 to 43, here's what they said is the best way to make money. 31% of them said real estate. 28% of them said crypto. Yeah. Digital assets was the second highest ranked category for the best way to get above average returns. Stocks came in after that. We need to recognize that there is a massive change in attitude going on among the investing public, just as the new generation 35 years ago, quit wearing ties to the office. Today, nobody wears a tie to the office. In other words, the older generation has had its chance to influence the younger generation. 

You lost that opportunity around the time your kids became 15. Their formative years are over, and whatever you failed to instill in them by that time, you are never going to instill in them. Those 15-year-olds then became 25 and 35 and 45. They now have their own worldview, and they aren't going to suddenly abandon it to adopt yours. If those in their 20s and 30s and early 40s believe that crypto is the best way to generate returns in the future, they aren't going to suddenly change their minds and abandon crypto. In other words, crypto is only going to grow in popularity and be a mainstream holding in their diversified portfolio.  

In fact, let me ask you that: how much crypto is in your portfolio? If you're 44 or older, your answer is probably zero or 1%. In fact, 1% is the average answer. Among those who are 44+ in the new B of A survey. But those under the age of 44, the average crypto exposure and their portfolio, 14%. 

Now, if that is shocking you, perhaps that is a statement that you need to be paying more attention, that if we have today's youth, and I refer to young investors in their 20s, 30s, 40s as youth investing in an asset class that you have dismissed? Ignored? Derided? Well, guess what? You're gonna die sooner than they are, which means they're going to be in control. 

And when they're in control, crypto will be commonplace. In fact, of those in their 20s, 30s, and early 40s, nearly half of them, 49%, already own crypto, and another 38% say they're interested in owning it. We're talking about almost 90% of those under age 43 owning or about to be owning digital assets. And they rank crypto as the second-best opportunity for growth overall. Second only to real estate. Stocks are way down their list. This is why I talk about crypto so much on the show. This is why I talk about crypto throughout the financial services community, because we need to recognize that this is a brand-new asset class and it isn't going away. 

It's why I host every year, our VISION conference, which is the longest running and largest crypto education event exclusively for the financial services industry and accredited investors. And in fact, as I've been telling you for the past couple of weeks, just until the end of this week, you have the opportunity to watch all 18 of the sessions that we hosted at VISION in Austin earlier this month. 

One of the sessions is called Capturing Alpha in Crypto. The exact subject we've just been talking about. How do you capture above average returns in crypto? We also had a session on Crypto and Modern Portfolio Theory with Cesare Fracassi, Associate Professor of Finance at the University of Texas in Austin, and Andrew Pratt, Investment Manager with Wiser Wealth Management. 

You can watch all 18 of these videos. For just $24.99, you get access to all of them, you watch them all, you get 10.5 CE credits. And if you hold the professional designation of Certified in Blockchain and Digital Assets, the online self-study course that we offer to teach you about crypto, you can watch all 18 of these sessions at no cost. But you only have until June 30th, so hurry, hurry, hurry. Clock's ticking. Link is in the show notes and I'll see you tomorrow. 

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Ric Edelman: I’m glad you’re with me here on The Truth About Your Future. If you like what you're hearing, be sure to follow and subscribe to the show, wherever you get your podcasts, Apple, Spotify, YouTube – and remember leave a review on Apple podcasts. I read them all! Never miss an episode of The Truth About Your Future. Follow and subscribe on your favorite podcast app. 

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Links from today’s show: 

Double VISION (available through June 30!): https://dacfp.com/doublevision/  

Become Certified in Blockchain and Digital Assets: https://dacfp.com/certification/  

Edelman Financial Engines: https://www.edelmanfinancialengines.com/  

VISION Conference 2024: https://dacfp.com/2024-dacfp-vision/  

Bank of America Survey (2024 Study of Wealthy Americans): https://institute.bankofamerica.com/economic-insights/2024-study-of-wealthy-americans.html  

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