How Might the Great Wealth Transfer Change Society?

As $84 trillion in assets move from Baby Boomers to younger generations, we could see a greater emphasis on financial technology and investing based on values.

Multiple generations of a family hold hands and walk through a field.
(Image credit: Getty Images)

The largest wealth transfer in history is underway as the Baby Boomer generation transfers assets of $84 trillion into the hands of younger generations — typically, Millennials and Gen Zers.

As the Boomers do this via wills, trusts, property purchases and gifts, the question becomes: How will the Great Wealth Transfer reshape the future of financial and cultural activity? Let’s talk about three of the primary areas that will be affected — capital infusions, family conversations and paradigm shifts.

Capital infusions

The assets Millennials and Gen Zers are inheriting from their Boomer parents (or grandparents) act as a capital infusion. With newfound money in their pockets, the younger generations stand to spend and invest this money in ways that deviate from generations past. How so?

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Millennials and Gen Zers are showing the world that they are focused on values when it comes to spending and investing their money. They are conscientious consumers who tend to spend on goods and services that are socially responsible, according to an AFLAC survey.

For example, newer generations of consumers are opting for organic, locally sourced produce or fair-trade products over conventional produce and products. These spending habits will ultimately shape the economy and culture, because spending habits and culture are inherently interlinked.

Similarly, the next generation of investors is opting to deploy capital into the entrepreneurial ecosystem by investing in their own entrepreneurial endeavors and/or those of others. Inherited capital could provide the financial security needed to take a risk, roll the dice and pursue an entrepreneurial idea.

An infusion of capital could also support the increasingly vibrant start-up and innovation ecosystem. There’s no denying that we’re traversing into an increasingly dynamic economic and investment landscape, one that Millennials and Gen Zers are eager to shape — with values in mind.

Family conversations

Such a vast transfer of wealth requires rich, intergenerational conversations to align value and values. Open, thoughtful and vulnerable conversation is necessary for families to unpack the rights and responsibilities that come with inheriting massive resources.

Parents (or grandparents) might discuss how they acquired their assets, how their assets are structured, plus their wishes and fears related to what happens to those assets after they’re gone. Family conversations can revolve around when to best transfer financial wealth, either during the older generations’ lifetime or upon their demise. These discussion topics are dynamic, but dynamic doesn’t have to mean difficult. In fact, talking about wealth transfer is a great opportunity to strengthen family ties, ensuring a strong family legacy extends from one generation to the next.

These family conversations also provide an opportunity to blend traditional perspectives with fresh perspectives.

Paradigm shifts

This monumental transfer of financial wealth is contributing to our evolving society and a new wealth paradigm. The next generation is clearly focused on spending and investing in ways that deviate from prior generations. For example, Millennials are redefining wealth creation based on technological advancements and societal shifts. These tech-savvy inheritors are acquiring investment information, knowledge and acumen through digital means and using what they learn to make their financial decisions.

Cultural issues and values also influence their financial decisions. As more capital lands in the hands of future generations, these shifts will become more pronounced.

Whether you are the direct recipient in the Great Wealth Transfer, or not, this shifting of assets has the potential to impact you, your business and those around you. The largest wealth transfer in history is providing us with a unique opportunity to reshape the financial and cultural landscape.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Jennifer Wines, JD, CPWA®
Founder, Invisible Wealth

Recently named one of the Top 100 Women of the Future, Jennifer is a certified Private Wealth Advisor who founded Invisible Wealth, which provides strategic, future-forward, consultancy services. Jennifer has worked at some of the top Private Wealth Management institutions in the world, namely Goldman Sachs, JPMorgan and Fidelity. She earned her Juris Doctor from Suffolk University Law School in Boston and her Certified Private Wealth Advisor designation from Booth Business School in Chicago. While at Fidelity, she developed a proof of concept and prototype for an enterprise solution, which was advanced into incubation.