The Great Wealth Transfer

Acronyms, they are everywhere. Depending on your life stage, profession, or hobbies, you may view one set of letters as having a completely different meaning to that of your son or daughter for example. Our LOL (lots of love) is not their LOL (Laugh out loud), and your POS (point of sale) is in stark contrast to their POS (Parent over shoulder). By now you are likely to have heard of at least one of these modern acronyms, YOLO (You only live once), TBH (To be honest) and SMH (Shaking my head), but are you familiar with GWT? For some it means ‘Go with that’, if you are in I.T. it may only mean ‘Google Webmaster Tool’ to you, but the acronym that will jostle its way to the top of the pile in the coming years will be the ‘Great Wealth Transfer’.

What is The Great Wealth Transfer?

It is a financial journalist coined term that refers to the upcoming transfer of wealth from Baby boomers, those born between 1944 and 1964, to the younger generation and the demographic and financial shift in society that this will bring about over the coming two decades. This will encompass all asset types and the fortunate heirs may find themselves ill-equipped to govern such fortunes.

There are a number of elements to consider whether you are a baby boomer, a Generation X’er (born 1965 to 1979) or beyond, but here are two worth focusing on. The first is whether you are confident in relinquishing your wealth to the next generation? Secondly, what is the relationship of Millennials and Gen Z recipients with money?

Passing the Baton

While access to information has never been easier, the propensity to become overwhelmed has also never been greater. You have had many conversations about financial values to be held towards wealth but feel unease about whether your heir(s) will be as balanced as you have been over the prior decades. This is where a professional Financial Planner can alleviate any concerns. By having a fully developed plan for you that includes Inheritance tax and succession planning scenarios and approaches, ones that can be attended by your heirs, this passes the baton of financial education smoothly from one generation to the next and instils proven financial behaviours that previously would have been alien.

When you consider the present-day relationship that Millennials and Gen Z have with money, one of immediate accessibility through digital platforms, there is a clear need to educate in the area of length of time invested and not sudden value increases/decreases. A Schroders Global Investor Study in 2016 confirmed this when they surveyed 20,000 investors and found that Millennials had disproportionate and unrealistic investment expectations, desiring a higher investment return in a shorter period than older investors surveyed in the same study.

The attitudes of the younger generation has also changed in terms of what to invest in, with reports showing an heightened desire to focus on Impact and ESG investing over that of their parents. Unfortunately, quite a number also want to “invest”, if that is the word, in Bitcoin and such like. As these are relatively new investment areas meaningful data on investment returns over the long term has yet to be established and these expectations need to be managed also.

Intergenerational thinking

“We all die. The goal isn’t to live forever, but to leave behind something that will.” These are the words of author Chuck Palahniuk and they perfectly summarise how we should view our accumulated wealth over our lifetime and also many of our decisions in life in general.

Your acronyms are different, your return on investment expectations and even fund choice will differ but your decision to engage with a professional Financial Planner doesn’t need to be.

At Aspire Wealth Management we don’t only advise clients on how to grow their own wealth, we advise our clients’ children also and carefully plan ahead for your own Great Wealth Transfer from family to family that will take place in each of their lifetimes.

Call Aspire Wealth Management on 01- 8455827 today or schedule a call back or Zoom meeting on us through our website www.aspire-wealth.com to financially plan for this event in more detail.