The $84 trillion Great Wealth Transfer set to occur in the next decade is poised to have a significant impact on the financial landscape. While millennials and Generation Z are often the focus when discussing inheritances from baby boomers, a new study reveals that it is Generation X that may actually receive the largest windfalls in the near future. The average age of individuals in North America expected to inherit fortunes exceeding $5 million is 46.1 years old, highlighting the imminent transfer of wealth that Generation X will experience.
Despite being sandwiched between baby boomers and millennials, Generation X has often been overlooked in discussions surrounding young inheritors. With a defined age range of 44 to 59, this generation stands to inherit substantial sums from their parents, many of whom are worth $30 million or more. While wealth management firms have been primarily focused on attracting younger clients, the study suggests that there is untapped potential in targeting Generation X as the primary recipients of the Great Wealth Transfer.
In the next decade, a total of $31 trillion in wealth will be passed down by 1.2 million individuals worth $5 million or more. The distribution of this wealth transfer is expected to be highly concentrated at the top, with nearly two-thirds coming from the ultra-wealthy, defined as those with assets exceeding $30 million. The super-wealthy, individuals worth $100 million or more, will play a significant role in passing down assets, accounting for a substantial portion of the $31 trillion total being transferred.
Adapting to Changing Values
As inheritors from Generation X, millennials, and Generation Z begin to receive their assets, it is crucial for wealth managers, luxury firms, and philanthropies to understand and adapt to the changing values and priorities of these new clients. Unlike previous generations, these inheritors may have different preferences when it comes to managing their wealth and making financial decisions. By recognizing and catering to these shifting priorities, financial institutions can better serve the evolving needs of the next generation of wealthy individuals.
Generation X is positioned to be a significant beneficiary of the Great Wealth Transfer, receiving substantial windfalls from their parents in the coming years. As wealth management firms and other financial institutions pivot their focus towards attracting younger clients, they should not overlook the potential of Generation X as the primary recipients of the trillions of dollars set to be passed down. By understanding the unique needs and values of these inheritors, financial institutions can better position themselves to cater to the changing landscape of wealth management in the future.