In the next two to three decades, it is estimated that aging baby boomers and older generations will pass down a staggering $84 trillion in wealth to charity and family members. This phenomenon, termed the “horizontal wealth transfer,” is set to redistribute up to $9 trillion between spouses and partners. The UBS Global Wealth Report highlights that due to demographic factors, women are expected to be the primary recipients of these inheritances. With women typically outliving men and being the surviving partners, they are poised to inherit significant amounts of wealth in the coming years.
One of the key aspects of the horizontal wealth transfer is the movement of wealth intra-generationally rather than intergenerationally. As per the report, an estimated $9 trillion will be transferred between spouses, with the inheriting partner holding onto this wealth for an average of four years before passing it on. This shift in wealth dynamics has the potential to reshape the landscape of wealth management, investing, and luxury spending, which has historically been dominated by men.
The Americas are projected to witness the largest horizontal wealth transfers, with over 43 million individuals aged 75 and above holding more than $50 trillion in combined wealth. The report notes that the average age of individuals passing down wealth is over 85, emphasizing the substantial wealth being transferred within this region. While some families may directly pass fortunes to the next generation, the process often involves a two-step mechanism, starting with the surviving spouse inheriting the wealth.
With the increasing feminization of wealth, women are expected to play a more prominent role in wealth management and investment decisions. Analysts predict that women will constitute a growing share of high-net-worth investors and consumers, with women currently making up over 11% of the world’s millionaires. As women’s incomes and wealth continue to rise, they are becoming key decision-makers in the great wealth transfer, holding substantial influence over the management and distribution of inherited wealth.
The McKinsey report anticipates that women will control a substantial portion of the $30 trillion in baby boomer wealth by 2030, signifying a significant shift in wealth ownership and management. The report highlights how women are increasingly taking charge of financial and investment decisions, with more women serving as the primary breadwinners in their families. This shift has led to a transformation within the wealth management industry, with a larger proportion of clients now being women who bring unique perspectives and preferences to wealth management practices.
Historically male-dominated luxury brands are also adapting to cater to the evolving needs of female consumers. Women’s watches have emerged as one of the fastest-growing segments in the luxury watch market, reflecting the growing purchasing power and influence of women. Luxury brands are recognizing the increasing independence and autonomy of women, shifting towards creating more feminine and unisex products to appeal to this burgeoning consumer segment.
The horizontal wealth transfer presents significant philanthropic opportunities, particularly in supporting causes focused on women and girls. Philanthropic contributions towards such initiatives grew by 9% in 2020, with notable pledges from prominent female philanthropists like Melinda French Gates and MacKenzie Scott. The redistribution of wealth through charitable giving has the potential to drive social change and empower women and girls, fostering a more equitable and inclusive society.
The horizontal wealth transfer is ushering in a new era of wealth distribution and management, with women playing an increasingly central role in shaping the future of inheritance and investments. As women’s financial autonomy and influence continue to rise, the wealth management industry, luxury brands, and philanthropic organizations are adapting to meet the evolving needs and preferences of female consumers and investors. The feminization of wealth represents a fundamental shift in traditional wealth dynamics, paving the way for greater gender equality and empowerment in the realm of finance and philanthropy.