General Wealth Transfer: Trends and Obstacles

Goals

To identify the following information relating to generational wealth: what trends are impacting generational lifestyle financial priorities , what obstacles are impacting peoples future wealth management , what trends are impacting generational wealth transfer , and what is impacting generational family business values.

Early Findings

Future Wealth Management: Obstacles

  • According to an article by AARP International, over the next 25 years, Boomers will pass on $48 trillion in assets to their heirs and charities, and the biggest beneficiary will be Generation X. This will present challenges for financial advisers and wealth managers due to the different needs of the two generations.
  • Forbes states that there is a concern about whether the generational beneficiaries that inherit the wealth transferred to them are suited and educated enough to handle the wealth that they receive. It further states that according to a 2018 report by TIAA Institute, only 11% of millennials display a high level of financial literacy while 28% are at a very level. Gen X-ers also struggle in terms of spending and saving.
  • An article from Truelytics states that wealth management firms that rely on the strength of their relationship with baby boomers to retain the management of wealth transferred to younger generations will be disappointed since only 29% of younger investors kept their parents' adviser once they have received their inheritance and both parents have died.

Generational Wealth Transfer: Trends

  • AARP cites the findings from a report from Cerulli Associates which states that Boomers are shifting from accumulating assets to spending on retirement and focusing on passing along their wealth.
  • Forbes has cited a 2018 study conducted by bankrate.com which has found that millennials are less willing to invest in the market and that this could lead to a long term wealth shift into other areas. The article further states that experts are conflicted about where the large sum of money received by the heirs and beneficiaries will end up since it will be largely dependent on the condition of the stock market at the time, as well as tax laws and real estate laws.

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