The financial advice industry is in its second decade (at least) of waiting with baited breath for the so-called Great Wealth Transfer.
At this point, every advisor knows the drill: As baby boomers age, trillions of dollars are expected to be on the move to younger generations, representing a huge opportunity (or warning, depending on how you look at it) for advisors. Get new customers or lose them.
None of this information is incorrect, and the Great Wealth Transfer is indeed underway, but a recent study by UBS points out that it may not necessarily be the steady downward spiral that advisers would have us believe. of the elevator.
According to UBS Global Wealth Report 2024, approximately $83.5 trillion in wealth will be transferred within the next 20 to 25 years, ultimately ending up in younger generations. However, since many couples have at least a small age gap, and women, on average, live longer than men around the world, regardless of region, intragenerational (horizontal) transfer of wealth often precedes intergenerational (vertical) transfer. The study estimates that such spouse-to-spouse transfers will represent a not-insignificant roadblock, to the tune of about $9 trillion, especially for advisers who expect younger clients to take windfalls in the near future.
Although the 20- to 25-year timeline for vertical transfer still continues, the next 10 years, in particular, are the tipping point for these, perhaps overlooked, horizontal transfers. According to the study, people over 75 hold nearly a fifth of the world's total wealth, and the average life expectancy for 75-year-olds ranges between 82 and 86 years in most of the world. As such, the study highlights the next 7 to 11 years as the period when most of these intergenerational transfers will occur, with the average transfer occurring at age 84.
More importantly, most of this horizontally transferred wealth will end up in the hands of women – UBS estimates that women will be responsible for transferring more than 10% of that total of $83.5 trillion. So in the rush to build a newer book of business, don't count out your clients' spouses, especially wives (spouses or otherwise), as they are likely to remain large sources of AUM for the foreseeable future.
Advisers should probably temper their excitement about that “younger” generation a bit—according to the UBS study, the average heir is age 59, not exactly a stunner.