The $124 Trillion Wealth Transfer And What It Means for Financial Advisors

Are you familiar with the “Great Wealth Transfer”?

As a financial advisor, I am sure you are. But in short, the Great Wealth Transfer refers to the Baby Boomers and Silent Generation transferring the bulk of their wealth to younger family members – such as Millennials and Generation X.

Now, this isn’t exactly a new process with one generation passing down wealth to the next.

But what makes this time interesting is the sheer magnitude of that wealth being passed down. . .

Understanding the Scale of the Wealth Transfer

Key Numbers You Need to Know:

• $156 trillion – Total assets held by Americans today.
• 50% – Share of assets controlled by Baby Boomers.
• $84 trillion – Total wealth expected to be transferred by 2043.
• $72.6 trillion – Amount going directly to heirs.
• $11.9 trillion – Set for charitable donations.

See, the baby boom generation (1946-64) came about during a time of post-WWII economic prosperity.

And with asset prices destroyed from the great depression – the boomers were able to build wealth primarily through investments in real estate and the stock market.

• To put this into perspective, since 1964, the S&P 500 has risen roughly sevenfold since 1965 (not even including re-invested dividends) – and the median home price has increased 22-fold.

Now, while this has significant repercussions for the economy – which I believe has been disregarded by the media - let’s just focus here on why this all matters for a financial advisor like you.

According to Cerulli and Associates projections, this nearing "great wealth transfer" will see approximately $84 in assets inherited by beneficiaries around 2043. And of this amount, $72.6 trillion is earmarked for direct heirs, with $11.9 trillion slated for charitable causes - occurring through gifts and charitable donations during the donors' lifetimes - and through bequests after their passing.