Non-Consensus Investing in 2024: What are the Big Consumer Trends to Stay on Top Of?

Ram Ahluwalia, Justin Guilder, Biota Macdonald

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Episode Description

Join the CIO of Lumida Wealth, Ram Ahluwalia, as he unravels the complexities of alternative investments with Biota MacDonald, a research leader at Mintel.

Episode Transcript

[00:00:00] Hey, Biota. Hey, Justin. How are you? Good. Very excited for this conversation. It's been a while since Permissionless, Rob. It has been. I met Biota at Permissionless and we shared an Uber and went to a couple after events. And what I learned is that Biota is a research leader at Mintel. And Biota a moment, but she focused on studying consumer trends.

And identifying enduring trends, I believe is half of investment success. So I was picking her brain during that experience. I said, you know what? We got to elevate this to a public conversation. I'd also just came back from a tour of quite a few different countries in Southeast Asia, and there's quite a few trends that she's going to share with us.

Some of those crossing generations, Gen Z, Gen X. Gen Alpha, which is the next generation e com, social media, brands, direct to consumer [00:01:00] trends in luxury, in value athleisure, work from home, and then opportunities around generative AI. So we've got a lot to get into, but Bayard, do you want to introduce yourself and Mintel?

Sure, yeah for sure an ambitious hour we have with all the topics we want to discuss, but I'm Biotta McDonald Director of Marketing Strategy with Mintel Compra Media in my job I really focus on trends, consumer insights a lot of the clients I work with are financial services and insurance but I really think that being, oh, I'm sorry, being a A thought leader with Mintel really involves keeping track of a lot of the macro issues that are going on economy consumer trends across generations, and things like that.

So I'm really excited to chat with both of you. I do have to give A plug, Ram's session that he moderated at Permissionless was definitely my favorite. So I was really glad to get a chance to chat with him after and continue the conversation here. [00:02:00] So very excited for this. Thank you.

Likewise. You've got to have one of the best jobs in the world. Basically, your job is to identify trends and research trends and predict the future. And then people ask you for your opinion on those things. It really doesn't get much better than that. And we have to invest on trends.

We got to put risk capital at work. So we have upside and downside. You got only upside. I love that you said that because I jokingly tell my friends sometimes that I get paid just to have opinions on things and I, I am a researcher at heart very much. So I love listening to podcasts to read about what's going on in the world.

And so connecting the dots just makes it such a fun, dynamic job for sure. We will come back to that at the tail end. What do you read and learn to stay on top of trends? Let's get right into it on the generational observations. You got Gen Z, Gen X, Boomers, Gen Alpha. What are the observations that, that you have here?[00:03:00] 

Yeah, I would say my specialty area is very much the younger generations. And I think there's a lot. of ways that the younger generations, Millennials and Gen Z in particular, are really pushing a lot of broader trends that we see. Three I guess that I'll highlight just to start off with.

I think, Especially brands that are focused on a high net worth client typically tend to overlook younger generations, right? There's a lot of talk about student debt and lower net worth than prior generations and their parents generations. But I think my thesis is actually that story is very much changing and likely to change drastically in the next decade.

There's three reasons. The first is really around. Parenthood trends. This seems a little bit random, but when we think about the ways that brands often target consumers, it's very much about key life stages those moments and those customer [00:04:00] touch points when you can meet the consumer where they are.

That's shifted drastically for younger generations in terms of parenthood. So either delaying parenthood to later ages or foregoing parenthood entirely and how that really translates into a big deal for brands is thinking about how the ways that can actually influence the net worth of a younger consumer.

And the ways that even that influences being an older parent can actually change the way that you may parent your kid, being much more involved really wanting to set your kid up for success. One of the ways we see that panning out in financial services, especially as we're starting to see much more of a focus on Parenthood as a sort of life stage.

Child free wealth is financial planning company, SEC registered that has popped up and I haven't seen a lot of banks or even high net worth focused finance brands really going [00:05:00] after or changing up their messaging with this sort of broader trend. Yeah. And I think it's a missed opportunity as we think about the ways that changes in, in parenthood status really shape the way that you may spend or save or invest down the line.

So changes in parenthood status I would say would be the first. The second for sure is the great wealth transfer. A lot of dispute about how much this may actually be, but roughly 68 trillion of assets is predicted to be passed down from older generations to younger. There's actually a lot of younger generations, 51 percent of millennials and Gen Z actually anticipate receiving an inheritance from family members.

So there is some level of expectation there but I think those two combinations are both the changes in parenthood status as well as this inheritance gifting are ways that I would expect that younger generations will boost their net worth. And then really quickly I'll add ownership of [00:06:00] crypto.

I know Both of maybe this group in particular being very bullish on crypto and expecting that there may be a resurgence in crypto prices down the line I think that also bodes really well for younger consumers. So some percentage of that inherited wealth is going to go into crypto and a different kind of asset allocation and different mix of services.

Because, Justin any initial reactions? I think the first is, I'm a millennial, but man, did I feel like a boomer when you said generation alpha? And I was like, what generation is that? That was a hard one to wrap my head around. I guess those are my kids, probably, though. A 12 year old and a that's generation alpha.

I shouldn't think about it. I should get to know it. I think delayed parenthood or foregoing parenthood is very interesting because I think the cost of a child is significant. And so that certainly makes sense in terms of helping a couple [00:07:00] or individual build wealth, where they're able to defer costs.

I'm also curious as do that have helped What are the spending trends that unlocks? So if you were not spending on all of the kinds of child care or child swag related spending, and maybe you don't have private school I do, right now, two times over, which limits the spend sometimes, it definitely would unlock a lot of discretionary spending, I can take more trips, I could buy more goods, or invest more, probably should be doing all of that, so I'm curious as to a layer deeper, what trends is that revealing?

Where's the money going to go, right? Yeah, and I think that's such a good call out, Justin. The sort of way that is really panning out is very much around this idea of [00:08:00] luxury. It's interesting, younger consumers are, There's a paradox where there is this cost consciousness recognizing that economic times are tough, but also wanting to appreciate those sort of small moments those luxuries in life.

And so while there is this cost consciousness, there's also this interest in living it up, whatever that means to the consumer. And some of the broader trends we've noticed is that there's, Especially for, just generally, but I think especially for females travel and experiences are a big bucket.

68 percent of Gen Z, 71 percent of Millennials are interested in exclusive access to experiences and events. Yeah. So we've seen a lot of financial services brands in particular, trying to unlock some of that through credit cards, through their travel portals really elevating that experience for consumers.

And I do think that it's interesting. There is this slight split I'll throw out [00:09:00] another sort of demographic difference where we're noting a little bit is that I say generally, but especially females for travel and experiences because males tend to, there's a skewing towards purchases that drive status or are tied to hobbies.

So if you think of those luxury cars or tech like computers, electronics, gaming, watches, and during the NFT craze, this involved PFPs, especially like Bored Apes. But I think a lot of that feeds into some of the societal expectations that are gender norms. And then I've been really interested in the way that split has actually compounded the loneliness epidemic to some degree.

Because if you think about experiences and travel often being done in community, done like with your friends and family and then some of the, if you're investing your money more on items that, Achieve status. There is this isolation that can [00:10:00] come from that. It's not necessarily that your money's enabling some of those relationships and those community bonds that can form.

So that's a lot of, I think what we're, the way that we're seeing the money passed quite insightful. And of course, we saw and continue to see in China, if you want to get married. You need to own a house. It's a form of status. So there's a connection between developing a family and accumulating status items, perhaps.

Can I just follow up here also around that diatomy between spending for luxury items, but also having this sense of savings. Is that a result of people going through COVID and are you like the. Brevity of life and the fear that, you may not have this opportunity. And how does that relate? If that is the issue, how does that relate to like past responses to crises, like [00:11:00] depression versus people who went through, I don't know, Vietnam war or war two or something like that.

That's a good call out. I think there's an element of the still emphasis on saving that I think for younger generations is seen as. An adult thing to do. That's like the the joking way that some of my colleagues have spoken about it. We've also seen this emphasis on credit score and trying to improve credit with younger generations.

And that's also in that line of an adult thing to do. And I think some of it does have to plays out in the desire to eventually own a home. Some of the concerns. Financially around how high interest rates are and how unattainable some of that, like the owning of real estate can be, especially if your credit score is bad.

But I do think that to your point, Justin, there is a lot of this uncertainty does pan out, like if there is the [00:12:00] ability to save, I think younger generations aren't necessarily trying to not save, that there is this uncertainty that's playing into their behavior. a YOLO mentality, like around a Robin Hood type concept, where they feel like in order to get a path to wealth that, They need to invest in riskier assets because it's harder to buy that home in 1978 for 50, 000 and then get a mortgage at a teen's interest rate that you refinance out of, or is that the low savings or good?

Yeah. I also think there is this baby distrust that doing things the way that And I say are because I am also a millennial like you, Justin. I think there is this distrust that if we follow sort of the playbook of what we're expected to do that things will pan out as well as they have for our sort of boomer parents.

So yes, ROM for sure, this sort of YOLO [00:13:00] mentality, I think that does play into younger generational interest in investing in some of these newer asset classes like crypto or NFTs because there is such a larger growth potential that you could invest in index funds and maybe, stocks will continue to perform as they have or you could get in early to this newer asset class and, your investments could go to the moon.