Cerulli's updated projection shows a 46% increase in the Great Wealth Transfer (GWT) from 2021!
This article heavily references findings from Cerulli Associates
There are many statistics and articles about the GWT, and for good reason! These transfers could drive which firms realize growth and those who stagnate or shrink. Wealth management firms need to be poised to retain their current assets and win the assets that inevitably will be up for grabs.1
The GWT estimate is now $123.7 trillion, which is roughly 72% of total assets in the US.
In this post, we compiled the top statistics and insights on this potential massive opportunity so firms have ideas on how they might be able to capitalize.
First – age. What age group is passing on the money and to whom will it go?
Unsurprisingly, Baby Boomers (ages 60-78 as of 2024) are expected to transfer the most wealth, totaling $79 trillion.
Millennials (ages 28-43 as of 2024) are set to receive the largest share through intergenerational wealth transfer, amounting to $45.6 trillion, while Generation X ages 44-59 as of 2024) is expected to inherit $39 trillion.
For illustrative purposes only. Based on data from Cerulli1
This is especially notable when considering only 55% of millennials are very satisfied with their advisor compared to 70% of baby boomers,2 according to Orion’s research. The younger generation’s dissatisfaction with their advisors is a risk that wealth management firms could be mitigating.
However, don’t count Gen X out. Gen X is anticipated to inherit ~$9T from 2021-2030 as compared to ~$5T for Millennials. This suggests that the time to focus on Gen X is right now!
With younger generations receiving large sums, Wealth Management firms may want to consider tactics to get young investors to their firm. In just the next five years, $13T is expected to be passed on at a rate of roughly 10,000 individuals a day.
Second – gender. Is one gender set to receive more of the wealth?
Given that women tend to outlive their husbands, Cerulli forecasts that nearly $40 trillion in wealth will initially be transferred to widowed female spouses in the Baby Boomer and older generations from 2024 to 2048. Of this amount, $21 trillion is expected to move between spouses currently classified as high-net-worth (HNW is 5M+ in assets).
This presents yet another potential risk and opportunity for advisory firms. 70% of women switch their wealth relationship to a new financial institution within a year of their spouse’s death.3
Third – affluency. High-net-worth and ultra-high-net-worth households will make up more than half of the GWT but only make up 2% of all households.1
In 2021, Cerulli estimated that 42% of wealth transfers would originate from high-net-worth (HNW) households. This year's projection shows that over 50%, or $62 trillion, will be transferred from HNW households over the next 25 years.
However, the affluent (500K-$2m in assets) and mass affluent ($2m-$5m in assets) markets still present a large opportunity. According to Cerulli, these two markets represent about 16% of households and have a lower average age.
These consumers likely have a need for an advisor and have complicated financial profiles. They may need help with estate planning, asset preservation, alternative investments and private equity.
Fourth – timing. When will this all happen?
The Great Wealth Transfer has already started! These updated projections represent an even greater need for firms to move quickly to win over the investors that are acquiring the wealth.
For illustrative purposes only. Based on data from Cerulli1
What should your firm do about it?
With $85 trillion poised to be passed down to younger generations, firms that can build relationships and meet the needs of these younger investors can be well-positioned for success.
There’s no silver bullet to attract and convert people from these identified populations. However, we listed 5 key areas your firm could excel in to take advantage of this market shift.