5 minute read
Are you familiar with the “Great Wealth Transfer”?
As a financial advisor, I am sure you are. But in short, the Great Wealth Transfer refers to the Baby Boomers and Silent Generation transferring the bulk of their wealth to younger family members – such as Millennials and Generation X.
Now, this isn’t exactly a new process with one generation passing down wealth to the next.
But what makes this time interesting is the sheer magnitude of that wealth being passed down. . .
Understanding the Scale of the Wealth Transfer
Key Numbers You Need to Know:
- $156 trillion – Total assets held by Americans today.
- 50% – Share of assets controlled by Baby Boomers.
- $84 trillion – Total wealth expected to be transferred by 2043.
- $72.6 trillion – Amount going directly to heirs.
- $11.9 trillion – Set for charitable donations.
See, the baby boom generation (1946-64) came about during a time of post-WWII economic prosperity.
And with asset prices destroyed from the great depression – the boomers were able to build wealth primarily through investments in real estate and the stock market.
- To put this into perspective, since 1964, the S&P 500 has risen roughly sevenfold since 1965 (not even including re-invested dividends) – and the median home price has increased 22-fold.
Now, while this has significant repercussions for the economy – which I believe has been disregarded by the media - let’s just focus here on why this all matters for a financial advisor like you.
According to Cerulli and Associates projections, this nearing "great wealth transfer" will see approximately $84 trillion in assets inherited by beneficiaries around 2043. And of this amount, $72.6 trillion is earmarked for direct heirs, with $11.9 trillion slated for charitable causes - occurring through gifts and charitable donations during the donors' lifetimes - and through bequests after their passing.
The implications of all this extend beyond individual families - but impact philanthropic endeavors, inheritance laws, and the broader economic landscape.
In fact, this transfer of wealth is expected to influence investment decisions, business ventures, and the funding of charitable initiatives - potentially reshaping industries and society in the process.
But, most importantly, such a hefty transfer of wealth across generations stands as one of the most pivotal factors facing the high-net-worth (HNW) and ultra-high-net-worth (UHNW) segments.
Further, it may prove critical for financial advisors to establish connections with the younger generations to keep assets under management (AUM).
The Wealth Shift and Women: A $30 Trillion Opportunity
A key demographic shift in the Great Wealth Transfer is the rise of women as financial decision-makers.
By 2030, women will control $30 trillion in assets - nearly the size of the U.S. GDP.
Why? Well, women statistically outlive men. Today, in two-thirds of affluent households, men handle financial decisions. However, when they pass, their wives inherit control of assets first.
“Statistically and historically, women outlive men,” says4 Nora Garvey, senior vice president and regional trust advisor at U.S. Bank Wealth Management. “If a woman [is married to a man] and outlives her spouse, the transfer may go directly to her when he passes. In that instance, she's in control of how the assets are managed and then transferred to the next generation.”
How This Changes Financial Advisory:
- Women prioritize financial security over high-risk investments.
- They prefer long-term advisory relationships and personalized wealth management.
- Many women seek financial education and estate planning guidance.
If you’re not prepared to serve female clients, you risk losing assets to competitors who are.
Beware of getting left behind on this trend.
How Financial Advisors Can Prepare for the Great Wealth Transfer
Here are Some Strategies to Retain AUM & Attract Next-Gen Investors:
- Build Strong Relationships Early – Engage with clients' heirs now to establish trust before the transfer.
- Offer Digital Solutions – Incorporate robo-advisory services & fintech tools to attract tech-savvy investors.
- Become an Estate Planning Expert – Master strategies like Grantor Trusts, SLATs, and Strategic Gifting to maximize tax efficiency.
- Focus on Women Investors – Develop specialized services to cater to the growing number of female wealth holders.
The Bottom Line: The Great Wealth Transfer isn’t a future event - it’s already happening.
Financial advisors who adapt, modernize, and build multigenerational trust will thrive in this new era of wealth management.
Are you ready to better position your practice for the next financial era? Contact our Business Development Team at (858) 964 – 0500 to discuss how you can retain assets and serve the next generation of investors.
Sources:
1. https://www.thestreet.com/dictionary/great-wealth-transfer
3. https://www.washingtonpost.com/business/2024/01/16/women-economic-power-demographic-shifts/
Disclosures:
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance. All examples are hypothetical and are for illustrative purposes only.
Information contained in the materials included is believed to be from reliable sources, but no representations or guarantees are made as to the accuracy or completeness of information. This document is provided for information purposes only and should not be considered as investment advice.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA / SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc.
Trust services offered through Dunham Trust Company, an affiliated Nevada Trust Company.