Gen X Emerges as Prime Target for Wealth Managers Amid $124 Trillion Transfer
Nearly $124 trillion in wealth will be transferred between now and 2048, with Generation X projected to inherit the greatest portion of assets in the next 10 years, according to the latest Cerulli Associates research.
Over the next decade, Gen X households are expected to receive nearly $1.4 trillion, on average, annually as part of the Great Wealth Transfer from baby boomers, currently ages 59 to 77 years old.
Additionally, women stand to inherit substantial sums, baby boomer and older generation women are expected to receive $40 trillion in horizontal transfers as they outlive their husbands, and younger women are anticipated to receive $47 trillion of the wealth to be transferred intergenerationally.
Although Cerulli acknowledges that their above estimates are subject to change due to factors such as inflation, outsized growth and demographic change, many believe Gen X represents the greatest opportunity for the advisory, investment, and retirement industries, as strategists and stakeholders look beyond baby boomers.
“Gen X households have faced much more financial and career upheaval early in their financial journeys than had been expected. In fact, no generation lost a greater percentage of its net worth between 2007 and 2010 than Gen X households – their median net worth falling 38%, from $63,000 to $39,000,” says Chayce Horton, senior analyst.
“With stunted market growth from 2000 to 2010, many Gen X households lack a sense of comfort with their future retirement,” Horton added.
Those who expect to receive substantial wealth will receive it at a pivotal time. These households are in their “sandwich generation” years, financially tied to their children while also worried about responsibility for parental care. To navigate this situation effectively and stay aligned with their financial goals, Gen X investors must openly discuss money with their parents, according to Cerulli. For Gen X inheritors from ultrawealthy parents, the importance to advisers of establishing a connection early is critical, as these households rapidly are approaching the time to seek out formal advisory relationships.
“There is no shortage of areas for which Gen X households could find an adviser helpful – from mortgage refinancing to retirement or estate planning – especially if there is an inheritance on the horizon,” said Horton.
Cerulli data finds a significant uptake in advice consumption and reliance on adviser assistance as investors move into their 50s.
“As Gen X is set to inherit more assets than any other generation in the next decade, these households represent the most immediate opportunity for wealth managers, and those who are not already positioned to gain traction with them will need to catch up,” Horton concluded.
Headquartered in Boston, Cerulli Associates is an international research and consulting firm that provides financial institutions with guidance in strategic positioning and new business.
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