The financial advice industry is well into its second decade (at least) of waiting with bated breath for the so-called Great Wealth Transfer.
At this point, every advisor knows the drill: As the baby boomers age, trillions of dollars are primed to be in motion to younger generations, representing a great opportunity (or warning, depending on how you look at it) for advisors. Get younger clients or get lost.
None of this information is incorrect, and the Great Wealth Transfer is indeed underway, but a recent study by UBS highlights that it may not necessarily be the uninterrupted downward flow that the elevator pitch would have advisors believe.
According to UBS’ 2024 Global Wealth Report, roughly $83.5 trillion of wealth will be transferred within the next 20 to 25 years, ultimately ending up with younger generations. However, since many couples feature at least a small age gap, and women, on average, outlive men worldwide, irrespective of region, intra-generational (horizontal) wealth transfer often precedes inter-generational (vertical) transfer. The study estimates that such spouse-to-spouse transfers will represent a not-insignificant bump in the road, to the tune of some $9 trillion, particularly for advisors counting on younger clients receiving windfalls in the immediate future.
Though the 20- to 25-year timeline for vertical transfer still holds, the next 10 years, in particular, are the prime point for these, perhaps overlooked horizontal transfers. According to the study, people over the age of 75 hold nearly one-fifth of the world’s overall wealth, and the average life expectancy for 75-year-olds ranges between 82 and 86 years across most of the world. As such, the study highlights the next 7 to 11 years as the period when most of these intragenerational transfers will occur, with the average transfer occurring at age 84.
Crucially, most of this horizontally transferred wealth will end up in the hands of women—UBS estimates that women will be responsible for passing on more than 10% of that overall $83.5 trillion amount. So, in the rush to create a younger book of business, don’t count out your clients’ spouses, particularly the women (spouse or otherwise), as they’ll likely remain big sources of AUM for the foreseeable future.
Advisors should probably temper their excitement about that “younger” generation a bit as well—according to the UBS study, the average inheritor is age 59, not exactly a whippersnapper.