Big Four accounting firm Ernst & Young (EY) said the largest transfer of wealth in human history is underway, with trillions of dollars of assets transferred this year.
In its Global Wealth Management Industry Report, EY Estimate Baby boomers will pass on up to $3 trillion in wealth to their relatives this year.
EY expects the “tsunami” of wealth transfers from baby boomers to their families to continue into the new decade.
“It is estimated that $2 trillion to $3 trillion will be inherited from wealthy donors during 2024. In many markets, tens or even hundreds of billions will be inherited from wealthy donors. [of dollars] This year, the person in charge will change. In 2023, more billionaires will be created through inheritance than through entrepreneurship.
The baby boomer generation’s wealth inheritance is not only the largest wealth transfer in world history; It will also bring about changes for women and the next generation of successors. Wealthy donors will hand over a staggering $18 trillion to beneficiaries by 2030, roughly equivalent to China’s annual GDP. ”
The company’s $18 trillion wealth transfer is significantly lower than estimates published by other companies. Global real estate consultancy Knight Frank believes baby boomers will inherit $90 trillion to millennials over the next 20 years, but estimates that figure to be between $53 trillion and $84 trillion. There are some people.
Amid an “unprecedented” movement of assets, EY warns that beneficiaries are not equipped with the knowledge, experience and networks needed to manage their newfound assets.
“Although no two clients are the same, many wealthy donors do share a common characteristic: Most are men over 70 years old, have benefited from decades of favorable markets, and have been We have built relationships with wealth managers across the globe.
In contrast, heirs’ needs and values, as well as their banking relationships, are much more diverse and underserved.
The first beneficiaries are often women and are often less involved in asset management. This is a customer segment whose requirements and preferences have traditionally been less well met than those of male customers. Younger generations also usually have very different goals than older donors. This includes factors such as the internationalization of wealthy families, the decline in traditional family structures, lower financial literacy, and more idiosyncratic investment beliefs. ”
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