Panel
Moving Beyond Financials: Mega-Trends Shaping Business and Finance | Global Conference 2024
Milken InstituteHiromichi Mizuno, Raphael Arndt, Jonathan Goldstein, Saira Malik, Andy Sieg, Hiro Mizuno
- A generational wealth transfer is expected to be delayed by approximately 20 years due to increased longevity, potentially occurring later than previously forecasted as the average lifespan exceeds 100 years.
- A "longevity revolution" is predicted to drive business opportunities across nearly every industry, while consumer tastes will shift to align with these demographic changes.
- Over $100 trillion in wealth creation is forecasted over the next decade, coinciding with two billion people joining the global middle class.
- Financial literacy is expected to improve significantly for younger generations due to increased access via social media and potential mandates requiring financial courses in over 20 high school states.
- The traditional 60-40 portfolio allocation is projected to evolve into a 50-30-20 split (equities, fixed income, and alternatives), with younger investors incorporating infrastructure, private credit, private equity, farmland, and real estate.
- A period of structurally higher inflation and interest rates is anticipated to replace the era of low inflation and easy money, leading to lower equity market returns despite US technological leadership.
- Wealth disparity is expected to continue widening, potentially causing a seismic societal and political shift, with forecasts suggesting a 200 basis point return trade-off will not be accepted by younger investors.
- Governments are predicted to become larger and more intrusive, utilizing inheritance, wealth, income, and capital gains taxes to push toward wealth redistribution due to younger generations' rejection of unfettered transfers.
- Investment decision-making will increasingly incorporate additional dimensions beyond risk and reward, including sustainability, biodiversity, and personal identity, driven by a belief that damaging companies are not sustainable long-term.
- The luxury market is expected to continue benefiting from consumer trends favoring quieter, more subtle brands, while sustainable and social-mission-driven brands may achieve significant success without negative return trade-offs.
- Wall Street is projected to experience demographic shifts in hiring to include more diverse candidates and educational backgrounds to build trust with minority cohorts like Hispanics and Latinos.
- Portfolio decisions in family offices are expected to shift almost immediately upon the entry of the next generation, moving toward more technology-integrated solutions including AI.
- Political outcomes, particularly regarding US presidential elections, are expected to influence the business climate and result in more populist, interventionist governments that drive inflation and voter-centric policies.
- ESG and sustainability trends are characterized as durable regardless of election results, though older political candidates may not prioritize them immediately.
- Concerns are raised regarding the potential for AI to become a dangerous force, necessitating measures to ensure it acts as a force for good.
- Natural capital and biodiversity reporting are expected to emerge quickly in response to voter views, with institutions like superannuation systems in Australia potentially influencing global corporate behavior.
- Younger generations are predicted to be less trusting of traditional institutions and democracy, viewing consumer products and investments as reflections of their identity and seeking stronger, more intrusive government oversight.