Dr Eliza Filby on generational change, work and the future of wealth

0:00Welcome to Six Degrees of Purpose, where Oli and I get the privilege of talking to some extraordinary guests and thinking about the trends that shape relationships, money and their meaning. And what a conversation we have for you today. We were lucky enough to be joined by Dr. Eliza Filby, a generational historian, social commentator and advisor to governments and industry around generational shift and the major changes happening in our society today. she's been called the generation whisperer she's written a fantastic book called Inheritocracy which I highly recommend you pick up if you haven't read it already and it was fascinating wasn't it?

0:38It was please do let us know if there are topics that you'd like us to cover and any feedback that you have on the series as it goes through we'd love to hear from you feel free to contact us on thisis6 and that's either the number or written.com So let's dive into the conversation. So welcome Eliza Philby to Six Degrees of Purpose. Delighted to be here. For anyone who's been living under a rock for the last few years, you are a leading generational historian. You're a social commentator, an author of an excellent book called Inheritocracy, and also a driver of social change around demographic shifts.

1:22So I know you've advised governments, industry, and we'll unpack that a little bit more during the conversation. Sure. So Liza, how did you get into it? In heritocracy or just becoming this job that I made up? Becoming everything that you are today. So I started my career as an academic, as a historian, and I still very much see myself as a historian, although I write very much about the present, actually quite a lot. but I was an academic in a history department writing about the 1980s thinking this is really interesting and I'm sort of really gripped by this period but I was a child during this period I was a very like an infant during this period and I'm really struck by the generation that was born in the 80s and was coming of age post 2008 financial crisis and I just got sort of gripped by this idea of sort of generational cohorts and how much are they generalizations and stereotypes and how do those narratives form and how truthful are they and how global are they etc etc and realized that actually I was really keen to not confine my knowledge to the academy but to disseminate my work in a much broader way and to a much broader audience not just on you know social media but but to business as well realizing the potential that if I'm going to write about millennials and gen z and how society is changing in terms of work and wealth and want what is it that is useful out of all of that for businesses for entrepreneurs for for you know people seeking to create institutions and organizations that actually speak to today not with the sort of preoccupations and prejudices and preconceived ideas that belonged to yesterday.

3:07Now, that makes sense. I suppose there's a legacy that could carry on and could influence how things are happening. I think we're seeing that now, right? I mean, the businesses that are not sort of adapting to not just technological change, but demographic shifts are being left behind much quicker than the businesses that were unable to make that shift in the 80s, 90s, naughties whatever i think one of the core responsibilities is of of of business leaders is to be reactive to that i think i think and and one of the core principles i think of being an entrepreneur is actually spotting the opportunities in that change right yeah and and quite often becoming fixated on that and it's not just people saying you know entrepreneurs just like to to answer problems.

3:59But it's also, I think, actually, as an entrepreneur, you're really reading society and seeing where those opportunities are arising and, you know, coming up the goods to solve them. Yeah. And you write very clearly about the bank of mum and dad. What is the bank of mum and dad? So it's the eighth largest mortgage lender in the UK. And it is a considerable financial organization, quite often built on kindness and love, quite often built on control. But I jest, this term came about around 2013 to describe the increasing amount of money that was trickling down the family tree. Now, there's always been inheritance.

4:45There's always been inheritance. And in fact, it's the bedrock, as we know, of sort of, you know, aristocracy and generational wealth. But what began to happen post 2008 was the increasing reliance of young people well into their 20s on their parents' wealth and support. And because of the weird inheritance laws that we have in this country, that you have to gift all your money away before that threshold of seven years, so you don't pay inheritance tax, we have a culture in the UK of gifting right gifting it's very different in the us for example and and in part you know australia has no inheritance tax so so it's the gifting combined with an economy where certain things were becoming really expensive post 2008 rent buying of houses education costs you know just at the time when wages were stalling so people in their 20s became increasingly reliant on this financial organization that was, you know, very much near and dear to them, which was their parents.

5:53And it's important, the backdrop to all of this is that, yes, we've always had inheritance and we've always had wealthy families, but there is a considerable unprecedented amount of money in the baby boomer generation and also actually Gen X that is really in two sort of streams. It's in property and it's in pensions and investments. So it's that considerable amount of wealth that was built on the backs of the liberalization of financial markets in the 1980s, the privatizations of pensions, and the access of cheap available property that has not been offered or available to their kids. but that bank of mom and dad didn't just become necessary, but also was bigger than ever before.

6:49And I write about in the book that, you know, we sort of benchmark ourselves against the boomers, but the opportunities that we have in many ways, you know, in terms of tech and, you know, you know, food delivery and all sorts of things, we've had loads of opportunities they didn't. But in terms of the certain big things in life, in terms of property, in terms of wage growth, in terms of the affordability and opportunity that tertiary education, we have not had that same access that parents had. So when it came to early adulthood, the Bank of Mom and Dad in the 2010s and certainly now in the 2020s has become the major financial organization that gets young people through early adulthood.

7:34now it's a divisive thing because not everyone has access to it and some people only have access to it in the form of a place to stay or some people have access to it in the form of child care or some people have access to it in the form of inheritance at the point when their parents actually die rather than a gift when their parents are still alive um but i wrote the book because i wanted to understand this evolution of this financial aid that at a time when the market became dysfunctional and the state frankly wasn't you know was withdrawing post 2008 the bank of mom and dads stepped up to smooth the path for their children and that's why i called the book rather provocatively in heritocracy because this whole theory was it's not what you're earning anymore because wages have stalled.

8:29It's not what you're learning anymore because the returns on the investment of education, although we're all getting them, have dwindled. It's whether you have access to the bank mom and dad that is increasingly defining what job you do, how and whether you can move to a big city, the cost, price or access to education, certainly the sustaining of early adulthood, the affordability of housing, And of course, the affordability of raising a child is now ever more increasingly dependent on whether you have access to that parental help. That's a long-winded answer to your question. It combines with two things actually that jump to mind.

9:13The first thing is, this conversation comes about a time where there was the book Die With Zero that came out a couple of years ago. And actually that has become quite prevalent with that gifting idea or that spending time and doing things together within your lifetime rather than after you've gone. And so that has brought about a change in the way in which people want to give money or want to spend time as a family. And I think that also combines with that experiences that are different to perhaps the baby boomer. Yeah. I think that's really interesting. I'm writing an article at the moment for the Times about Generation Alpha and how much money parents spend on their kids.

10:00Right. And it's estimated the average spend is about a quarter of a million pounds before the age of 18. And actually the most expensive, expensive years as a parent comes after 18. It used to be before. When you thought they were going to leave. And the average parent in the UK tends to believe that they should be funding their kids to whatever degree up until the age of 29. Wow. Right? In some capacity. Now, it could be a Netflix subscription. It could be a house deposit. But that idea of they will become financially dependent, not at 18, not at 16 when my mom became financially independent, but at 30.

10:36Okay. So I think there's definitely that change in perception. I think older generations recognize that it's really difficult to be young these days. And we're looking at tightening labor market. We're looking at slight uncertainties around the value and cost of education. you know um i think there's that sort of recognition of oh it's much harder for them than it was for me i think you're right though to a point to a second cultural phenomenon which is i think i hear a lot which is you only get 18 summers with your kids yes well actually you get 29 by the south because actually multi-generational holidays have been one of the mega trends of the last last um eight years eight to ten years but i think i think you're right that that sense of you know and I think we all felt it during COVID didn't we that sense of actually how do we spend our time as opposed to how we want to spend our time what's really important to us and family and being together and experiencing things together and you know hashtag making memories um quite often you know amplified if you can share them on social media has, I think, really, um, distinguished parenting today compared to parenting when I was younger, my mom and dad were not hashtag making memories.

12:01Like we made loads of memories. We met quite often without spending any money, I should say. Um, but it wasn't a self-conscious rationale or sort of prescient in their mind. It's, I think it's a really interesting point you've hit on there it is really important focal point of modern parenting is that how can I really get you know soak this experience up because all you hear is it goes so quick and it does you know I have an eight-year-old and a five-year-old it goes so quick how does financial education play into this so we talk with our clients a lot about how you know in the UK we're particularly poor educating our children about money about mortgages, about debt, about compound interest, one of our pet subjects.

12:48However, we look at Gen Z and it looks like they're more financially engaged in a non-traditional way around finances. I'd love to hear a bit more about that. I wrote a piece on this actually about Gen Z being the most financially literate generation in history, because I think they are. They're just not going to traditional sources to get the information. And the thing that we often sort of look to as a society is, oh, why are we learning this in school? Well, you know, teachers have got enough on their plate and they probably don't feel confident as do any of us to teach financial education.

13:22And there is a genuine question, you know, why have I learned Pythagoras theorem and not how to do my taxes at school? But I don't think actually school is the place. Some basic financial education at school might be, I think, you know, is now being in the UK at least integrated into the national curriculum. But I think the more interesting question, if you look at Gen Z, is the way in which financial education, obviously on FinTalk, financial TikTok, or on more and more actually on YouTube, following specific financial influences that speak to you and their priorities and what you prioritize, et cetera, et cetera.

14:03Learning about basics like tax thresholds, like, you know, best investments, you know, all of those things, the increasing use of chat to be tea to ask the questions you might feel embarrassed to ask another person, I think is really interesting. I think it's definitely a gender divide. You know, they may be the most financially literate generation in history, but it's more young men than young women. And yet young women statistically feel more financially confident, but more financially secure, I should say, but less financially confident. Why do you think that is? So I think it's because when women are spoken to about money, it's often how they spend it, not how they build it.

14:49And I think that that's a cultural consequence of, you know, the female consumer being at the heart of advertising and marketing industry, but also the perception that women do the weekly shop and not do the yearly investments. And that is changing. So I think there is a genuine shift happening. Women, young women really educating themselves on their financial sort of knowledge and also thinking about their financial future independent of men. It's really interesting. for the book we ran some polling on inheritance and women were younger women so under 45s were more likely to see their inheritance as theirs than as something that was shared if they were in a couple whereas men were more likely to see something shared this is interesting because i think this touches on security because you're putting there on spending i think that there is gender divided on security yes very often when we speak to our clients the first thing that will come out from um perhaps our female clients is that their priority their purpose is around security but making sure that they can use their wealth to enjoy themselves um so i i think that's it touched on an interesting point the other bit that's sort of under the surface of all of this that we've talked about so far you mentioned it with control in in your sort of first sentence actually is is our experiences with money and how we um either mirror or go against what how we've learned about money through our parents yes um so very often we have our clients are typically a family an ecosystem each individual typically has a very different experience of wealth and their children are likely to have even more of a different experience of wealth but their um feelings are infiltrated with how they've learned about money and how their parents have been.

16:45And so I think underlying all of this, going back to that sort of baby boomer era, is how and what was talked about with regards to wealth and how that makes people feel today with how they express their feelings to the next generation. Yeah, I mean, that's such an important point. I mean, one's financial attitudes are shaped between the ages of seven and 12. really young, really young. And just to illustrate this point, I was doing a piece of research with Schroder's and the task was to interview a load of wealthy widows who had inherited their husband's money. Many of them hadn't worked. You know, these were women in their 70s and 80s.

17:28And one of them said to me, you know, my financial advisor doesn't really understand that when my husband died, he inherited a completely different person with completely different attitude towards money whose parents were methodist who grew up with nothing and my husband was a risk taker and and you know an enjoyer of life i am a totally risk averse person who would rather save save save save save and has very different priorities when it comes to investing and she said what he couldn't understand, the financial advisor, was that just because we had been married for 50 years, that I had really been shaped much earlier.

18:13And he hadn't actually asked me or been curious about the formation of my attitude towards money separate from my husband. And I think you're right that in the book, one of the things I really wanted to tease out was the difference between those that had grown up with one set of values around money or one set of sort of, you know, conditions and then made a lot of money. And their biggest fear was how do we sort of infuse that responsibility, that diligence, that sort of respect for money when it came to their kids who were going to grow up in very different materially wealthy conditions. And it's something I worry about.

19:10I mean, I grew up with no central heating and, you know, and a TV that I had to sit and wait when I wanted to watch the programs that I wanted to watch. Now my kids grow, you know, have never been cold, never been hungry and have on-demand TV. You know, I'm like, sometimes I make them watch analog just so they learn how to wait. So I think there is a sort of really important thing here, which is to speak to your client's point about that fear around How do I help my kids understand that? And the thing is with kids is you show, you don't tell. It's what they're observing. It's not what you're, it's not what you're telling them to do.

19:53It's what they're observing. You know, how much screen time you have quite often determines later in life, how much screen time they get addicted to. And it's like money. It's the kinds of things you're spending your money on is the kind of things they will come to expect for them. so you know i think i think it's a great idea if you fly business and they fly coach but actually maybe yeah they'll grow up actually expecting business so i i think it's i think it's just you know it's not about preaching you know austere kind of parenting but i think it's that awareness piece of of everything you are demonstrating as a parent it's bloody hard and it's a thankless task but it's those standards you set for yourself is the standards that you're showing for your kids we had a conversation a few months ago with the financial psychotherapist vicky rainel um and she shared a story about how the parents had constantly given the kids this message that money doesn't grow on trees yeah and yet there was serious wealth created in the family due to the sale of a business right and there was a tension between you know we do want to upgrade our car we do want to move to a larger house we do want to do these things how do you still pass the values on that you know the kids should be having and we sort of concluded that it was really around purpose and when we think a lot about purpose of wealth what is it it's not money for the sake of it it's it's to achieve something and to achieve a purpose for the family but it's an incredibly complex thing to navigate i would say what does that mean what's that purpose what it what is that purpose security is that purpose you know philanthropy is that purpose you know yeah what what and it can be it can be anything and it can be very different for different people yeah and it is dependent actually a lot of time on their upbringing yeah we we had a conversation with one individual that said i wanted to move to london to get a job work hard yeah so i could do do well sure to your points earlier and um but mum and dad couldn't afford to send me there so they gave me the bus fare to get to london and that was it i was on my own and i and so for me independence financial independence for my children is really important and that's something i want to infuse in my strategy for our family's wealth going forwards right so that's completely different to perhaps health being um you know I've seen my family not spend money on things they should do with regards to their own health and actually I don't ever want to be in that situation so it's a very different purpose yes and it's it's very often led by experience yeah and and quite often trauma frankly as well um and I think I think it's really interesting when we're talking about entrepreneurs because as an entrepreneur you quite often have a narrative that you quite often have to retell as a pitch you know when you want investment or you're raping people into your dream and all this kind of stuff and you build this narrative you build this narrative um of quite often it's a rags to riches story um you know and it's it's one of in total endurance and relentless commitment and ultimate success.

23:17And actually for your kids, that can be so disabling. Even hearing it in the background, don't assume that it's inspiring. In what way can it be disabling? Because I think one of the most difficult things being a child of someone super successful, right successful in inverted commas is either trying to emulate um and repeat that success or try and earn their respect in a different way that they they may not understand and it's it's one of the things when i work with with families helping them understand that um is a the world's changed you know perhaps your story wouldn't work today um be also because of the conditions that you provided for your kids as part of your success story they're inevitably going to have a very different life to you and a very different experience and a very different motivation to try and embed that in your children I would say is virtually impossible right they will take bits of it but I think it's it's just the most important thing that you want to do for your kids is set the example.

24:37Don't preach them the path. You know, if we're talking about health, you know, this morning I did not have time to work out. So I worked out while my kids were having breakfast. Now it's evidence suggests that a mother that does exercise rather than a father that does exercise tends to result in children that take exercise and their health much more seriously. And I was getting them to count down my reps and count the seconds I was squatting and all this kind of stuff. And I think it's that thing of help mummy do this because she's prioritizing this. And I think that's where, you know, it's don't be so sort of consumed in your own narrative of success as that being an inspiration to your kids.

25:26It quite often will be an inspiration to people you don't know, right? Or maybe employees, one would hope, or maybe, you know, other people in your life, but don't assume that it's an inspiration to your kids because, you know, your kids are there basically to basically tell you everything you've done is wrong. And I love that because, you know, Parenting is a thankless task. And I think the other thing about parenting is the most important thing always, always is yes, you know, security of love and consistency of love, but it's time. And it goes back to your point about, does this wealth give me time with my kids?

26:12Not opportunity for my kids, but time with my kids in a way that they value, not I value. You know, if they value playing football in the local park, rather than going in the executive box in Chelsea, you play football in the park, you know? So I think there's, again, it's like, I think the relationship between professional success and personal success quite often are in conflict, you know, and I have to code switch. You know, I spend the time in my professional life with people listening to me, hanging on my every word. I get home, then no one listens to me. No one listens to me at all. And I have to say things four different times.

26:57And then I got told back, why have you said it four different times? You know, so I think it's like, you've got to come down off your pedestal, having been that success in life to really kind of ground yourself in always with children they will teach you more than you will teach them i find this interesting and how it translates into business with regards to the hard work piece because i think that hard work bit parenting bit in business looks different today to what it looked previously as in and i think that what i mean by that is um when we all grew up working longer hours and being present was deemed to be hard work and you are working your hardest to get to be successful when you own a business you run a business you are an entrepreneur because of the generation we've grown up in you could be forgiven for wanting that from your team but we have to think differently going back to that diversification of thought but also the way in which the world has changed to get more out of people to be successful in that environment we have to think differently because hard work looks different today than it does before i know you think a lot about this yes i mean as much as the wealth piece i do a lot on the future of work and one i think there's kind of like two things i think is the backdrop to all of this and the world has changed but it's been continually changing since the 60s so in in the 1950s there was a u.s poll done by a group of psychologists that asked people do you think you're an important person right do you think 1950s US.

28:35Can you imagine, estimate how many people thought they were an important person? It was just 12%. The poll was run again in 1990, right? 80 % of people. So we're not talking about millennials. We're not talking about Gen Z. We're not talking about Gen Alpha. We're talking about Gen X. We're talking about boomers. We're talking about silent generation before them and the Second World War generation. So we have seen rising individualism, right? And when people think about I, they think less about we, particularly in a work professional context. Right. Let's add the layer of social media and bespoke algorithmic tech.

29:12Let's add the rise of smaller families and individualized parenting. Okay. With no deference in the family home. Right. It used to be that, you know, parents be like, here's your dinner. Now it's like, what do you want for dinner? You know, it's flipped. It used to be that kids should be seen and not heard and were slightly living in fear of their parents in a benign way, one would hope. Now, parents are deferential to the kids. It's flipped. The power dynamic in the home is flipped. Add the layer on top of that, which is individualized schooling. So the school system is entirely individualized, right?

29:49You don't get rewards apart from sport working together, right? So all of that collectively you plonk that person who's grown up with social media and an amplified voice and everything I do say or eat or wear is fed back to me as a is a as a comment or a question or a feedback loop we've got individualized parents where my parents love me and pay me loads of attention and tell me I'm great all the time and plus an individualized school system where it's all about me and then you plonk that person into a workplace which is still built on hierarchy still built on you know you put up you shut up you work your way up be grateful you're here and it jars there's a jarring there and quite often I'm sitting in c-suite or you know rooms full of people that have built businesses and I'm like they're complaining about their young recruits and I'm like how do you treat kids because in that kind of dynamic within the home you will see the consequence, you will see the through line of what's happened to work.

30:55Now, it doesn't mean you can't motivate young people. It doesn't mean that they won't work hard for you, but there are different levels and expectations around management, around path to mastery, around promotion, around entrepreneurialism, and around actually more transactional view, not less transactional view around the workplace. And at a time, remember when wages have stalled and don't buy you the things they bought our parents, houses, for example, and even paying off your student loan. So work now, I bet you people that we're talking to your clients, potentially running businesses where their employees are more likely to get on the housing ladder by being loyal to their parents than being loyal to their boss.

31:41That's very interesting. So work doesn't pay. It might pay if you're an entrepreneur, but does it pay for your employees in the way that it did for the previous generations? No. So combined with the fact that, you know, younger generations have had the access to the world's information in their pocket and the world's marketplace. So creating money online, building side hustles and building businesses, either as an entrepreneur or a solopreneur is now the additional way that people are thinking about work. It's not just about I go to my job, but what other additional streams of income can I buttress my income, my wages with?

32:21So you've articulated the problem really, really well. And it's one that we sort of hear referenced around. And it's not uncommon to hear people, especially millennial or boomer or Gen X sort of say, look, the younger generation are ungrateful. I think that always existed, that dynamic where people say the younger generation are... You can literally go back to ancient Greece and find evidence of older people complaining about young people being lazy and entitled. Like it's part of getting older that you find young people distasteful. So in your work with companies, right? Yeah. So what is the solution?

32:53What needs to shift? Like is it government policy? Is it the way people parent? Is it the way companies attract talent? Like what's the... So there's, right, what can we control? What can't we control? We can't control house prices. We can't really actually control taxes or wages as much as potentially we would like. Yeah. Or you can do your best on that front. And you can't control parenting except with your own kids. So what is it that is in within your control? And we run a whole program called the generational blueprint, helping companies basically address this. And it's not just between people assume it's just between, you know, older people and younger people.

33:28Actually, there's kind of three layers of generational tension going on within your company. I'm dead, sir. There's the juniors who are facing very different labor market, very different sort of technological shifts and also a real need for soft skills over anything else right now. You've got your middle managers who potentially are at the tense economic point of early parenthood potentially, more likely than any other group within that three to want to work from home, quite often in dual income households and are managing two careers and maybe two young children. they're at the pinch point of that build those building years and then you've got the generation above that the the c-suite the leaders who you know perhaps like being around uh young people to sort of show in a benevolent way that they're there for them but actually find it really hard to relate to them and so the key thing here and we run this program that helps really solve the issue that you're talking about is this is not about helping older people understand young people right if it was just that i would have i would i would have nailed it because i've been doing that for 10 years i very sort of i became very frustrated because actually the solution to this is on is what i call radical empathy right is stepping out of your time and not expecting a younger person to be able to pick up the phone because they never had a landline they never learned right you had your landline and that was the way you spoke to your friends and before that you had to speak to your friend's parents.

35:00So it's about, okay, this is my experience, but what was theirs? And I'm not going to assume it because actually I'm going to ask it. So what we do is basically run workshops for juniors and really help them not just understand their older workers, but help their older workers understand them. And what we do is we cascade that data and that information up to the middle management and help them manage both down the generational scale and a bit of radical empathy with younger workers, but also manage up. They are caught in the middle quite often of complaints going both ways, right? And then we cascade all that information up to the C-suite.

35:43So they have a really clear understanding of the different cohorts within their business. But critically, and this is the most important point, is what boundaries do and expectations do they need to set? Stop complaining about hoodies in the office or bad soft skills or lack of telephone etiquette. What are the things that are non-negotiable? Because one of the things that I see in UK businesses way too much, less so in US, I do a lot of work in the US, is we're too nice. We don't actually say what is the non-negotiable, what is the expectation, what are the boundaries here. And that sometimes needs to be said, reinforced and quite often taught.

36:26And these are the things that take time. And in remote hybrid workplaces are really difficult, but also in an AI data-driven workplace, you can't count them. These are the things that you don't count. You can't count someone teaching you how to use the telephone, right? So the mentorship that used to and the wisdom sharing that used to happen in workplaces does not happen to the same degree as it did number one because we're more remote potentially but it's also actually because we're totally driven by time and productivity we spend more on our inboxes than actually teaching on talking to each other and so that actual learning within the workplace which the learning is the radical empathy piece is dwindling and there's just a lot of complaining and stereotyping and it's about confronting that and that takes time we love ending on a solution liza this has been super we could talk to you all day but we do have to come to an end at some point thank you so much for joining us today um and i i've loved it yeah really fascinating thank you so much for sharing the insights i think we've all taken a huge amount away from it thank you Thanks so much.

37:42Thank you.