Ernst & Young (EY), one of the Big Four accounting firms, has declared that the world is currently experiencing the greatest transfer of wealth in history. According to EY’s Global Wealth Management Industry Report, it is estimated that baby boomers will pass down approximately $3 trillion in assets to their descendants this year. This massive wealth transfer is expected to continue until the beginning of the next decade.

EY predicts that between $2 trillion and $3 trillion will be inherited from wealthy donors in 2024 alone, with billions of dollars changing hands in various markets this year. In fact, in 2023, more billionaires were created through inheritance rather than entrepreneurship. This transfer of wealth from baby boomers is not only the largest ever seen, but it will also have a significant impact on female and next-generation inheritors. By 2030, it is estimated that wealthy donors will pass down an astonishing $18 trillion, equivalent to China’s annual GDP, to their beneficiaries.

However, EY’s estimation of $18 trillion is much lower than estimates from other firms. Knight Frank, a global real estate consultancy firm, believes that baby boomers will pass down $90 trillion to millennials in the next two decades, while other estimates range between $53 trillion and $84 trillion.

Amid this unprecedented movement of assets, EY warns that the beneficiaries are not adequately prepared to manage their newfound wealth. They lack the necessary knowledge, experience, and network to handle such substantial assets. While most wealthy donors are male, over 70 years old, and have benefited from favorable markets for decades, the inheritors have diverse needs, values, and banking relationships that are often underserved. Female beneficiaries are typically the first to receive the wealth, and they often have less experience in managing wealth. This client segment has historically been underserved compared to their male counterparts. Younger generations also have different goals and characteristics, including the internationalization of wealthy families, non-traditional family structures, lower financial literacy, and unique investment beliefs.

In conclusion, the world is witnessing an unparalleled transfer of wealth, with trillions of dollars being passed down from baby boomers to their families. However, it is crucial for the beneficiaries to acquire the necessary skills and support to effectively manage this wealth.