By 2030, over $30 trillion in assets will move to surviving successors, as a part of what the retirement planning industry has dubbed “the great wealth transfer.” A new study aims to help financial professionals better understand the sizable wealth shift.
Commissioned by Equitable and conducted by The Wall Street Journal’s Intelligence unit, the study analyzes findings from 500 retail investors between the ages of 35 to 64 and who are anticipated to receive an inheritance of over $100,000.
According to the study, Millennials are likely to be the biggest beneficiaries, with 57% of this generation expected to collect $1 million or more in inheritance and 26% anticipated to inherit over $3 million. Surviving spouses, who largely encompass pre-retiree women, will also control most of the assets transferred within the following decade, findings show.
While Millennials and pre-retiree women are expected to receive the bulk of the assets, nearly half of all respondents (47%) to the study say they plan on receiving over $1 million via inheritance or primary benefit.
Overall, men have higher expectations for these large inheritances than women, with 57% responding that they expect to receive more than $1 million, finds the report. Contrarily, 34% of pre-retiree women expect to receive over $1 million. These inheritances are largely anticipated to arrive through wills (62%) and trusts (44%).
Like past affluent generations, 67% of respondents have already developed a written financial plan, with set strategies on investments, retirement, budget or cash flow management, estate, insurance, and taxes. However, Equitable reports that these plans have “not all benefited from the advice of an FA [financial advisor],” as only 32% of respondents have collaborated with an advisor on their plan. Pre-retiree women (41%), along with Gen X respondents, were likelier than other groups to craft their financial course of action with an advisor. Millennials were likely to craft a plan by themselves.
This presents an opportunity for retirement plan advisors wanting to build stronger relationships with investors while developing their practice, Equitable adds. Eighty percent of respondents say they trust the advice and decisions of financial advisors, and 75% believe it is critical to use advisors to inform investment decisions and advice.
“Our research shows that large sums of wealth will change hands at historic levels, and the recipients are likely to look for a financial professional they can trust for support and guidance,” said Nick Lane, president of Equitable, in a statement. “Financial professionals who can get ahead of this curve by deepening relationships with the entire family will not only be in a better position to serve their clients, but also future-proof their practices as this transfer of wealth unfolds.”
SEE ALSO:
U.S. Millionaire Ranks Swell by 500,000
Generations to Experience Wealth Transfer Differently
Wealthy Millennials Shifting Away from Financial Advisors
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
