A version of this article first appeared with Robert Frank in CNBC’s Inside Wealth newsletter, a weekly guide for high-net-worth investors and consumers. Sign up to receive future editions, straight to your inbox More than $100 trillion in family wealth is expected to be transferred as part of the largest wealth transfer in U.S. history, according to a new report. With personal wealth doubling in the past 12 years and more wealth concentrated at the top, especially among aging baby boomers, the financial cascade is expected to accelerate in the coming years. According to a report by Cerulli Associates, an estimated $124 trillion will be sent to family members and charities by 2048. A total of $18 trillion will go to charity and $106 trillion to families and heirs. Much of this will come from the wealthy: About $62 trillion will be sent from the richest 2% of Americans, or those with a net worth of more than $5 million. While the largest transfers are still a decade or two away, reports say an estimated $2.5 trillion a year is currently being sent to the next generation and spouses. Annual storm revenue will increase to $3 trillion annually by 2030 and $4 trillion annually in 2036, eventually increasing to $5 trillion annually. “It’s already happening,” said Chase Horton, senior analyst for wealth management at Cerulli. With more women, millennials and Gen Zers set to join the ranks of the newly wealthy, the face of American wealth is set to undergo one of the most radical changes in decades, with huge implications for wealth management, luxury, collecting and philanthropy. Women will gain an increasing share of wealth in the coming years. According to Cerulli, $54 trillion will go to spouses, the majority of whom are women. This “horizontal transfer,” where one spouse inherits wealth before passing it on to the younger generation, will be particularly prominent in the next decade. In terms of demographics, Generation X is likely to be the biggest beneficiary over the next decade. Gen X is expected to inherit $14 trillion by 2034 and $39 trillion by 2048. Put another way, $2.5 trillion is being passed down each year, with about $1 trillion going to Gen Xers. Millennials will pick up the baton of inheritance around 2038, expected to inherit $46 trillion over the next 25 years. Gen Z is next in line, with an expected $15 trillion handed over during the same timeframe. Estimating inherited wealth, especially over decades, is as much an art as a science. Current trends in asset values, bequests, charitable giving and the life expectancy and spending rates of the wealthy may vary. Whether the Great Wealth Transfer will be as lucrative for heirs (and for the wealth planning industry) as advertised remains to be seen. So far, speculations and predictions are only increasing. Cerulli’s previous estimate for Great Wealth Transfers in 2021, predicted a total drop of $84 trillion over 25 years. About 50% of the increase in estimates was driven by three powerful economic forces: inflation, rising asset prices and rising asset concentration. For his estimates Cerulli used the Federal Reserve’s Survey of Consumer Finances, the most comprehensive federal data on the financial health and wealth of American households. It then takes typical savings rates, retirement spending, equity, bond and real estate assumptions and applies expectations on life expectancy, tax and giving and wealth transfer patterns to create a forecast. Horton says that $84 trillion adjusted for inflation would be $100 trillion today. Asset prices have also risen since Cerulli’s last assessment, with equities up 27% and real estate up 39%. Because wealth in the U.S. is so concentrated at the top, most of the post-pandemic gains have gone to the wealthy. According to the report, the share of wealth of individuals worth $10 million or more increased from 40% in 2020 to 44% in 2023. At the same time, the wealth of people aged 60 and over increased to 54%. 61% in 2020 to 2023. “High-net-worth families are more likely to be successful at the end of their lives,” Horton said. Although it spanned 25 years, the Great Wealth Transfer would create tectonic shifts in the wealth economy. In the short term, wealth management firms, family offices, trust and estate attorneys, and other advisors to the wealthy will be hyper-focused on planning and structuring the most efficient and effective ways to transfer wealth. Educating the next generation will also be important. “The first step is preparing existing clients,” says Horton. In the long term, the wealth management industry, luxury brands and nonprofits will have to adapt to an entirely different client base – shifting from older male wealth creators to more female and next-generation clients. “The second step is to build an advisory practice beyond the core client, to spouses, significant others, children and business partners that can sustainably engage with these stakeholders,” Horton said. “And eventually bring them in as active clients.” To adapt to the new client base, firms serving wealthy clients will need to hire more women and younger advisers to better reflect and relate to new clients, Horton said. “It’s reflecting consultative practice with the client,” Horton says.
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A version of this article first appeared with Robert Frank in CNBC’s Inside Wealth newsletter, a weekly guide for high-net-worth investors and consumers. sign up Get future editions, straight to your inbox.
More than $100 trillion in family wealth is expected to be transferred as part of the largest wealth transfer in U.S. history, according to a new report.
