How can your team prepare for the Great Wealth Transfer?

Over the next two decades, the Great Wealth Transfer is set to significantly change the landscape of wealth ownership in the United States.

What is The Great Wealth Transfer?

Currently, about half of all wealth in the U.S. is held by baby boomers. As this generation moves on, a massive shift in demographics is expected as their wealth is inherited.

By 2030, American women are anticipated to control a substantial portion of the $30 trillion in financial assets that baby boomers will possess. Today,?women control a third of total US household financial assets, amounting to more than $10 trillion. This shift is primarily driven by two factors: spousal inheritance and generational inheritance.

Around two-thirds of baby boomer assets are held in joint households where the woman is not actively involved in financial decisions. Since women tend to be both younger than their spouses and outlive them, much of these assets will pass directly to them. Any wealth that is not inherited by a spouse will be passed down to younger generations. Gen X, with its?record-high share of single women, is poised to be the recipient of the largest portion of inheritances.

Consequently, women are set to take center stage in managing significant wealth. This marks a departure from the historical narrative where they played a secondary role in financial decision-making.

What does this mean for banks and trust companies?

Financial institutions have yet to catch up and adapt to women's needs. Many women feel underserved in the financial industry, perceiving it as built for men. In a survey conducted by Ellvest, only 38% of women said they had a financial advisor to help them plan and invest a windfall such as they might receive due to the Great Wealth Transfer.

The impending financial windfall from the Great Wealth Transfer presents an opportunity for banks, trust companies, and other financial institutions to bridge the gap and boost financial confidence among women.

How should your team prepare for the Great Wealth Transfer?

One area banks and trust companies would benefit from focusing on is estate planning. Given that women tend to live longer than men by nearly six years, and a growing number of women are opting for unmarried lifestyles, it's evident that in the near future, they will be taking the reins in devising estate plans and establishing trusts.

Financial institutions would do well to proactively tailor their services to the unique financial needs of women in estate planning to help them secure their financial legacies effectively. Women generally prefer to have professional financial advice more than men and are willing to pay more for it, which makes greater communication around accounts and policies an excellent starting point.

Banks and trust companies must reassess their strategies and readiness to meet the evolving needs of women. By creating value for the women they deserve and ensuring their teams are equipped to navigate this transition, financial institutions can position themselves for success in the era of wealth transfer.

Is your team ready to embrace the change and cater to the needs of the growing number of women receiving a financial windfall?

For more information on the Great Wealth Transfer and its impact on the industry, read our full blog here. We delve deeper into topics such as how women handle their wealth differently than men and how that directly affects the choices that banks and trust companies should be making to prepare.