Wealthy ‘Silver Spenders’ are now driving investment opportunities

The over-50s demographic in the U.K. is experiencing a surge in wealth and spending power, leading to various investment opportunities across different sectors, according to experts.

This age group, known as the “Grey Pound” or “Silver Spenders,” is gaining more control over their assets. With increased wealth and discretionary income, a significant portion of this population is being referred to as the new “idle rich.”

Dan Coatsworth, head of markets at AJ Bell, emphasized the growing influence of the over-50s demographic in the consumer space.

“Those who are still working may have reached a high point in their career, paid off their mortgage, and now have ample disposable income. They have worked hard for many years and feel they deserve to indulge in spending,” Coatsworth shared with CNBC.

“Those in retirement may belong to the generation that benefited from generous defined benefit pension schemes and receive a substantial sum to support a lavish lifestyle,” he added.

Coatsworth also noted that this group aims to safeguard as much of their wealth as possible from taxes, leading them to seek advice on tax planning, investments, and overall financial strategies.

Alyx Wood, co-founder and chief investment officer at Kernow Asset Management, pointed out a clear distinction between winners and losers within this demographic.

While daily life remains challenging for many, there are individuals who are excelling in growing their assets through compounding, Wood explained.

This affluent segment is developing a taste for luxury goods they had not considered before, along with a preference for upscale wealth management and insurance services.

These consumers are increasingly interested in engaging with content, storytelling, and purpose beyond traditional passive returns, Wood added.

Wood highlighted companies like insurance group Hiscox and privately-owned wealth managers Evelyn Partners as potential beneficiaries as older consumers gravitate towards premium wealth management and insurance products.

“Banks are looking to re-enter the wealth management sector,” Wood mentioned, citing the interest in Evelyn Partners from NatWest Group and Barclays as private equity firms Permira and Warburg Pincus seek to divest. “We can expect to see more of these developments.”

Wood, a contrarian stock selector focusing on U.K. equities, recently showcased a significant position in Saga plc at the Sohn London investment conference, partly betting on the strength of the “Silver Pound.”

He projected that individuals in their “Saga years,” referencing the travel and insurance brand catering to over-50s, will drive around 60% of all consumer spending in the U.K. by 2030.

Saga, comprising roughly 10% of Kernow’s portfolio, is deemed undervalued, with Wood predicting a potential share price surge of over 400% in the coming years.

Wood mentioned that Pets At Home, the London-listed retailer specializing in pet products, could face short-term challenges but ultimately benefit from older consumers spending more on their pets and less on their children.

“Experiences and material goods will be top priorities for them, such as vacations, fine dining, luxury cars, home improvements, beauty products, and wellness,” Coatsworth commented on the demographic. “The opportunities are endless.”

Coatsworth also highlighted the healthcare sector as a potential beneficiary, with an aging population leading to increased demand for medical services and treatments.

“Private care facilities, retirement communities, and real estate investors with medical tenants are among the beneficiaries of this trend,” Coatsworth explained in an email to CNBC.