The new class war: A wealth gap between millennials (2024)

A version of this article first appeared in CNBC's Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer.Sign upto receive future editions, straight to your inbox.

The wealth gap between rich millennials and the rest of their age group is the largest of any generation, creating a new wave of class tension and resentment, according to a recent study.

Even as the vast majority of millennials struggle with student debt, low-wage service-jobs, unaffordable housing and low savings, the millennial elite are surpassing previous generations. According to the study, the average millennial has 30% less wealth at the age of 35 than baby boomers did at the same age. Yet the top 10% of millennials have 20% more wealth than the top baby boomers at the same age.

"Millennials are so different from one another that it is not particularly meaningful to talk about the 'average' Millennial experience," wrote the study's authors, Rob Gruijters, Zachary Van Winkle and Anette Eva Fasang. "There are some Millennials who are doing extremely well—think Mark Zuckerberg and Sam Altman—while others are struggling."

The study finds that millennials — typically defined as those between the age of 28 and 43 today — have faced repeated financial headwinds. Coming of age during the financial crisis, they have lower levels of homeownership, larger debts outweighing assets, low-wage and unstable jobs, and lower rates of dual-income family formation.

At the same time, the authors say the top 10% of millennials have benefited from greater rewards for skilled jobs. As they put it, "The returns to high-status work trajectories have increased, while the returns to low-status trajectories have stagnated or declined."

The millennials who "went to college, found graduate level jobs, and started families relatively late," ended up with "higher levels of wealth than Baby Boomers with similar life trajectories," according to the report.

There may be another factor creating so much wealth among millennials: inheritances. In what's known as "the great wealth transfer," baby boomers are expected to pass down between $70 trillion and $90 trillion in wealth over the next 20 years. Much of that is expected to go to their millennial children. High-net-worth individuals worth $5 million or more will account for nearly half of that total, according to Cerulli Associates.

Wealth management firms say some of that wealth has already starting trickling down to the next generation.

"The great wealth transfer, which we've all been talking about for the last 10 years, is underway," said John Mathews, head of UBS'Private Wealth Management division. "The average age of the world's billionaires is almost 69 right now. So this whole transition or wealth handover will start to accelerate."

Tensions between millennial classes are likely to escalate as more wealth is transferred in the coming years. Wealth displays on social media by millennial "nepo babies" could add to the intra-generational class war and drive nonwealthy millennials to overspend or create the appearance of lavish lifestyles to keep up.

A survey by Wells Fargo found that 29% of affluent millennials (defined as having assets of $250,000 to over $1 million of investible assets) admit they "sometimes buy items they cannot afford to impress others." According to the survey, 41% of affluent millennials admit to funding their lifestyles with credit cards or loans, versus 28% of Gen Xers and 6% of baby boomers.

The battle between rich millennials and the rest could also shape their attitudes toward wealth. For over four decades, the vast majority of millionaires and billionaires created in America have been self-made, mostly entrepreneurs. A study by Fidelity Investments found that 88% of American millionaires are self-made.

Yet inherited wealth could become more common. A study by UBS found that among newly minted billionaires last year, heirs who inherited their fortunes racked up more wealth than self-made billionaires for the first time in at least nine years. And, all the billionaires under the age of 30 on the latest Forbes billionaires list inherited their wealth, for the first time in 15 years.

The surge in wealth among millennial heirs is also creating a lucrative new market for wealth-management firms, luxury companies, travel firms and real estate brokers.

Clayton Orrigo, one of the top luxury real estate brokers in Manhattan, has built a thriving business on moneyed millennials. The founder of the Hudson Advisory Team at Compass has sold over $4 billion in real estate and regularly brokers deals over $10 million. He says the "vast majority" of his business lately is from buyers in their 20s and 30s with inherited wealth.

"I just sold a $16 million apartment to someone in their mid-20s, and the buyer accessed the family trust," he said. "The wealth that is behind these kids is extreme."

Inherited wealth has become Orrigo's specialty. He says he works on forging close relationships with family offices, trusts and young money elite mingling at New York membership clubs like Casa Cipriani.

The pattern is familiar: A wealthy family calls wanting a rental for their son or daughter; a few years later, they want a $5 million or $10 million two-bedroom condo to buy in a new, high-security building downtown.

"My gig is working very quietly and very discreetly with the wealthiest families in the world," Orrigo said.

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