We know an enormous transfer of wealth is on the horizon – but one group will be the first to reap the rewards of that transfer.
The Great Wealth Transfer
For the last year, the media has touted the concept of a “Great Wealth Transfer” that will see trillions of dollars passed down from the oldest generation of adults (baby boomers) to the youngest – Millennials and Gen Z.
Gen X On Top
However, a new study may have just burst the bubble of heirs under 40, suggesting that Gen Xers are set to inherit the largest amount of money from the great wealth transfer – at least for the near future.
Wealth-X Report
Wealth-X is a data and intelligence company offering insights and analysis of high-net-worth individuals around the globe. Like many other economic-adjacent organizations and institutions, it has written extensively on the Great Wealth Transfer.
$31 Trillion in 10 Years
The Wealth-X report states that approximately 1.2 million individuals will transfer a combined $31 trillion, largely to their children and other family members, in the next 10 years.
First in Line
Despite the prevailing discourse on the topic, which has largely focused on millennial and Gen Z inheritance, Wealth-X claims that Gen Xers (born between 1965 and 1980) will be “first in line” to benefit from the Great Wealth Transfer.
Most In Their Mid-to-Late 40s
“Much is often made in the media of millennial and Generation Z inheritors,” the report reads. “But, in fact, most heirs (excluding partners) are currently in their mid-to-late 40s.”
Average Ages
The average age of an individual set to inherit more than $5 million from their parents in North America is 46. Those from “ultra-rich” families who will inherit more than $30 million will be 47 years old on average.
How Old Are the Wealthy?
The average age of those who will pass on their wealth in the next decade is 75 with 25% over the age of 80.
Smaller Inheritance for Gen Z and Millennials
The report also pointed out that most of the money inherited by Gen Z and Millennials would come from Boomer grandparents, a markedly smaller inheritance than what they might get from their parents.
Family Wealth Transfer 2024
Global data provider and research consultancy Altrata also released a report, called Family Wealth Transfer 2024, which leveraged and expanded upon Wealth-X data, confirming that Gen Xers were set to inherit the most first.
4.4 Million People
Altrata focused on a staggering 4.4 million “high–net-worth” individuals who own anywhere between $5 and $30 million and hold a combined $88 trillion in wealth and are expected to pass on their wealth in their lifetime.
“A Staggering Level of Wealth”
“We expect that over a quarter of these individuals will seek to pass on their fortunes in the next decade to 2033, which will involve the transfer of a staggering level of wealth,” Altrata researchers wrote.
Higher Than America’s GDP
The researchers also emphasized the scale of the Great Wealth Transfer, which would be higher than the USA’s GDP, and the market capitalization of the world’s most valuable company.
10 Times the Value of Microsoft
“This is a colossal sum, greater than the gross domestic product of the US, (US$24.7 trillion in 2023), the world’s largest economy, and more than 10 times the market capitalization of US technology giant Microsoft, the world’s most valuable company,” they wrote.
A Shift in Perspective
These findings suggest that wealth management firms, real estate companies, and banking institutions may have to shift their purview. In recent years these brokers have been focusing on potential clients in their 20s and 30s, based on the accepted notion that they will inherit the largest amounts of money.
Gen X Clients Overlooked
However, reports from Wealth-X, Altrata, and others show that Gen X clients are being overlooked, despite inheriting the most wealth in the short term.
Family Members, Organizations, and Associates
Gen X inheritors will largely be partners and children of wealthy individuals. But some beneficiaries will also include nonprofit organizations, grandchildren, siblings, associates, and more.
Shifting Beliefs for the Wealthiest
The report by Altrata also pointed to the change in values and investment between wealth owners due to the difference in generational values and beliefs between Boomers, Gen X, and Millennials, as well as shifting political and environmental issues in the future.
Contrasting Family Dynamics
“Family dynamics will tend to be one of the biggest hurdles to overcome in the transition process, given often contrasting intergenerational worldviews, business outlooks, and legacy aspirations,” the report added.
“A Transfer of Values”
“More often than not, succession will not only involve the handover of family wealth but also a transfer of values,” it added.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.