OPINION: Talk of the sharing economy has been greatly overshared
In the past 10 years there has been a lot of talk about how young people – particularly Millennials (those born between the 1980s and 1995 who became adults at the turn of the century) – and are not interested in owning yachts. It is possible that there is some truth in this, but so far there is no evidence for it. In fact, the data argues against it.
Airbnb, Lyft and Uber are often cited as an example of how Millennials have embraced the sharing economy more than other generations. In 2015 John Zimmer, the co-founder of Lyft, predicted that most Millennials would not own a car by 2020. Many car manufacturers listened and invested in ride-sharing companies to protect against this expected shift. But it has not happened.
It is easy for older people to forget that many Millennials graduated during the Global Financial Crisis (that older generations caused) or that many started their careers with large student loans. This is why they did not rush to buy cars or houses.
This is why they did not rush out to buy cars …
Academic research from Nicholas Klein at Columbia University and Michael Smart from Rutgers University shows that Millennials who have achieved financial independence actually own more cars that anyone forecasted. “We caution planners to temper their enthusiasm about ‘peak car,’ as this may largely be a manifestation of economic factors that could reverse in coming years,” write the pair.
The same is true for houses. In 2015 far fewer Millennials owned houses at the age of 30, than 30-year-old Baby Boomers did in 1975. However, recent research suggests that Millennials are now catching up and buying at a much faster rate than Baby Boomers did. It is far too early to say that millennials will not want to own aircraft or yachts when they have the cash. But we have to give them time.
Older people have always been the biggest buyers of yachts – John Pierpont Morgan was 45 before he bought the steam yacht Corsair in 1882. It takes time to accumulate wealth. To paraphrase, robber Slick Willie Sutton: “Older people buy yachts because that’s where the money is.”
Young ultra-high net worth individulas
Although there are some very high profile young ultra-high net worth individuals (UHNWIs) – who could be potential owners – they are very much the minority. And many of them have most of their wealth tied up in their own (often private and hard-to-value) companies.
WealthX estimates that the average age of a billionaire was 65.7 in 2018. It says half of all the world’s billionaires are between 50 and 70 years of age. There are more billionaires aged over 90, than under 30 years old. This will not change soon and is good news. Older customers are more likely to have sold companies or have diversified their wealth, making a large asset purchase easier.
Longer life expectancies mean that many older owners have got a good few years of sailing left in them. When Morgan was born the average life-expectancy was 45 years (he made it to 76), baby girls born today in the US have an average life-expectancy of 81. There are also going to be a lot of older people around. The US Census Bureau says that in 2016 Americans aged 65 years old and older accounted for 17.24% of the country’s population – by 2035 it says it will be 21.14%. In 2050 it estimates that over-65s will account for more than half of all Americans.
It is way too early to say that the next generation is not interested in buying yachts. They – like other generations before them – are busy accumulating wealth. And, until they are ready to buy, there are a lot of older prospects out there.
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