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- The Great Wealth Transfer: Are You Ready
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Happy Labor Day weekend!
On this holiday, I'd like to share a pivotal moment that changed my perspective on the Great Wealth Transfer. In 2020, while I nearly died from Covid-19, two of my elderly partners - legendary family office patriarchs from our group of nine - sadly passed away.
As we emerged from our grief and began to settle their affairs, the magnitude of the assets to be distributed became clear. One of these friends, a former bircklayer who emigrated from Italy and built a billion dollar real estate empire had devoted his career building wealth to create opportunities for his family.
His estate was divided among his three children, all intelligent, Ivy League-educated professionals. But here's the twist – these smart, accomplished adults were completely lost when it came to personal wealth management. It was a wake-up call for all of us and my lightbulb moment -The Great Wealth Transfer.
Here’s the thing - it wasn’t their fault!
After all, even if you attend some of the best schools in the world, this isn’t really stuff that’s taught in the classroom – you’re just expected to pick it up on your own. Our great country, the richest in the world has one of the poorest records of financial education.
Looking at the data, something suddenly dawned on me…
This was not going to be an isolated incident. From that time, educating and preparing younger generations became the last chapters of my career and my mission.
And that's why we're launching the Noyack Wealth Club. Think of us as a financial literacy bootcamp for millennials and Gen Z; we're here to bridge the gap between old-school money advice and a values-driven approach and acting as a Personal Wealth Management Co-Pilot
Any questions? Text me - CJ - at 631-209-7633 and Ill be happy to answer your questions. And definitely ask me about goals-based investing.
I’ve been talking about the Great Wealth Transfer for years – check out my recent appearance on Yahoo Finance discussing the topic!
What is the Great Wealth Transfer?
In the United States, older generations still hold a substantial majority of the nation’s household wealth. Let’s look at the numbers:
$140 trillion
Estimate of the total household net worth in the United States.
$96.4 trillion
The amount of assets held by Baby Boomers and the Silent Generation combined.
31%
The total share of the wealth pie currently held by Millennials, Gen X, and Gen Z.
This would be one thing if older generations also made up the biggest chunk of the population – but this isn’t the case at all.
In fact, Boomers and the Silent Generation make up about a quarter of the US population, far below their share of wealth.
But this isn’t going to last forever…
And how could it?
If you’ll allow me to be blunt, nobody lives forever. As older generations pass away, they’re leaving all this wealth to their children.
When we talk about the Great Wealth Transfer, this is the phenomenon we’re referring to – the truly unprecedented volume of assets that’s expected to change hands over the next quarter century.
By 2045, nearly $40 trillion is expected to fall into the hands of Millennial and Gen Z investors.
Source: Merrill Lynch
Why the GWT Matters
By now, I hope you appreciate the numbers behind the Great Wealth Transfer (GWT).
But I still haven’t discussed why it actually matters – and why I care so much about it.
Reason #1: Younger investors are unprepared
The fact is, older generations have done a poor job of preparing their children to manage the wealth they’re about to inherit.
This is exemplified by the story I told about my friend’s sons – but the problem is much more widespread than you might think.
In the US, just 18% of people aged 18-34 can correctly answer basic questions on financial knowledge.
And when it comes to managing a big inheritance, some of the questions you need to answer are on topics that aren’t basic at all – like alternative investments, tax optimization strategies, and philanthropic endeavors.
As anyone familiar with the unfortunate fate of many lottery winners knows, a sudden windfall paired with a lack of financial education can be a poor mixture.
Reason #2: Younger investors have different goals
During the GWT, wealth isn’t going to just be changing hands – it’s also going to be changing asset classes.
Younger investors aren’t carbon copies of their parents.
While older generations tend to focus exclusively on the bottom line of financial performance, Millennial and Gen Z investors have different goals:
Building generational wealth for their families,
Making a positive impact on the world around them,
Or possibly even unlocking an early retirement.
Traditional financial companies are simply unprepared to help younger investors achieve these aims – they’re too focused on what clients wanted in the past.
These two reasons encapsulate the very reason that NOYACK exists…
As younger investors navigate the GWT, they need the knowledge and the tools to achieve the goals that truly matter to them.
Preparing for the GWT
We know that the GWT is coming, and we know that it will be truly impactful.
So, what steps can younger investors take today to prepare for a future inheritance?
#1: Have an estate conversation with parents
If you’re lucky enough to still have your parents in your life (or older relatives like grandparents), prioritize having an estate planning conversation with them.
It might seem like a morbid topic of discussion – but poorly planned estates can leave unnecessary and stressful headaches during what’s already likely to be a challenging time for your family.
#2: Define your long-term financial goals
Just because you might not have the assets to execute your financial goals right now doesn’t mean you shouldn’t plan for them.
If you receive an inheritance windfall, it can be challenging to know what your first steps should be. If you already know your goals in advance, however, you’ll be able to navigate the transition easier.
#3: Find the partners you want to work with
Similar to the idea of preparing a plan, you can also prepare your financial partners in advance as well.
It might seem premature to begin investing your assets or finding financial education resources before you have significant wealth to manage.
But the truth is, you don’t want to be scrambling to find trustworthy partners when you’re in the midst of navigating a large windfall.
Instead, find those partners in advance so you know where to turn when the time comes.
To prepare for the GWT, which area do you need more guidance on? |
📺 WHAT WE'RE WATCHING
This segment from Bloomberg features an interview with CEO of Ellevest Sallie Krawcheck discussing the gender component of the Great Wealth Transfer, with substantial assets passing from men to women.
👂 WHAT WE’RE LISTENING TO
This podcast from FINRA, a financial self-regulatory agency, looks at the financial attitudes of Gen Z investors and how they differ from their parents. Discussion includes the role of crypto, social media, and more.
📖 WHAT WE’RE READING
This report from consultancy firm Deloitte takes a detailed look at current wealth trends in the US. Topics include data on wealth holdings by generation, the volume of wealth expected to be inherited, and looking at how the financial services industry is preparing.
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