Over the next three decades, more than $70 trillion will be transferred from the Silent Generation and baby boomers to Gen Xers, millennials, and Gen Z. A recent study by ComparisonAdviser highlights the growing need for financial advisors in light of this transfer of wealth. The study explores the implications of the Great Wealth Transfer, including who stands to benefit the most. It also examines the potential challenges that families, both wealthy individuals and their heirs, may encounter before and during the wealth transfer process. You can access the article by clicking on this link.
Despite its name, the Great Wealth Transfer won’t automatically solve financial problems or make everyone wealthy. The study emphasizes that the event is likely to benefit only the children of parents who have wealth to pass on after their passing. Additionally, the article explains that without proper planning by both wealthy parents and their heirs, the full benefits of an inheritance may not be realized. The study outlines the challenges that may arise when there is no plan in place for the transfer of wealth:
- Family conflicts and misunderstandings due to unclear communication of wishes or perceptions of unfair treatment.
- Reduction of wealth prior to passing away due to healthcare expenses, living costs, or excessive spending.
- Exposing one’s estate to taxes because funds were not gifted or placed in a trust beforehand.
“Based on the insights we received from financial experts, lack of planning before one’s passing can cause financial conflict among families because a person’s wishes may not be met or their retirement may diminish before they’re able to pass it on,” says Sean Canonica, Senior Finance Writer at ComparisonAdviser and the author of the study. “In terms of the beneficiary, it’s equally as important for them to seek assistance from a financial advisor to ensure they retain and, ideally, grow their windfall for years to come,” continues Canonica.
The study concludes that, with proper planning and the assistance of a financial advisor, families can ensure that their wealth passes down to future generations without issue. According to Canonica, “With the help of a financial advisor, anyone with money to pass down can ensure they’re on the right track. And, with the Great Wealth Transfer getting underway and set to continue for the next couple of decades, it’s never a bad time to prepare.”
