The $84 trillion Great Wealth Transfer that is expected to occur in the next 10 years will have a significant impact on different generations. While millennials and Generation Z are often mentioned as the main beneficiaries of this transfer, a new study suggests that Generation X may actually reap the largest windfalls in the near future.
According to Wealth-X, the average age of individuals in North America set to inherit fortunes of $5 million or more is 46.1 years old, placing them squarely within the Generation X demographic. Additionally, the study reveals that those expected to receive the most substantial inheritances, from parents worth $30 million or more, have an average age of 47.6. This challenges the common notion that millennials and Gen Z will receive the largest inheritances.
The findings shed light on the untapped potential of Generation X as inheritors, which has been largely overlooked in discussions about generational wealth transfer. The focus of many wealth management firms and private banks has been on millennials and Gen Z, but with the significant wealth being passed down to Generation X, it is important for these institutions to broaden their target audience.
The report suggests that wealth management firms, luxury companies, and real estate firms should start considering Generation X as potential clients. While much attention has been given to younger generations, Generation X is poised to be first in line to inherit from their wealthy parents. This presents a valuable opportunity for businesses to cater to the unique needs and preferences of this demographic.
It is worth noting that inheritances will be highly concentrated among the ultra-wealthy. Over the next decade, 1.2 million individuals worth $5 million or more will pass down a staggering $31 trillion in wealth. Of this amount, nearly two-thirds will come from those with a net worth of $30 million or more. This means that approximately $20 trillion will be passed down by just 155,000 people in the upper echelons of wealth.
Furthermore, the report highlights that inheritors will have different values and priorities compared to previous generations. Wealth managers, luxury firms, and philanthropies need to adapt to these changing preferences. The next generation of investors, influenced by technology, are more focused on the environment, social justice, and have a global mindset.
The report suggests that new technologies, the clean-energy transition, and impact investing will be key areas of focus for these heirs. This may not necessarily align with the existing business structures or legacy plans of the families transferring their fortunes. Therefore, it is crucial for businesses to understand and cater to the evolving interests and ambitions of inheritors.
In conclusion, while millennials and Generation Z have often been seen as the primary beneficiaries of the Great Wealth Transfer, Generation X is set to receive the largest windfalls in the near term. Wealth management firms, luxury companies, and real estate firms should take note of this potential market and adapt their strategies accordingly. With inheritances expected to be highly concentrated among the ultra-wealthy, it is important for businesses to understand and meet the changing values and priorities of the next generation of investors.
