Ernst & Young (EY), one of the Big Four accounting firms, has declared that the world is witnessing the largest transfer of wealth in history. According to EY’s Global Wealth Management Industry Report, baby boomers are expected to pass down up to $3 trillion in assets to their descendants this year. This “tidal wave” of wealth transfer is projected to continue until the next decade.

EY estimates that between $2 trillion and $3 trillion will be inherited from affluent donors in 2024, with billions of dollars changing hands in many markets this year. In fact, more billionaires were created through inheritance in 2023 than through entrepreneurship. This transfer of wealth from baby boomers is not only significant in terms of assets, but it will also have a transformative impact on female and next-generation inheritors. By 2030, wealthy donors are expected to pass a staggering $18 trillion to beneficiaries, which is roughly equivalent to China’s annual GDP.

However, EY’s estimation of $18 trillion is considerably lower than estimates released by other firms. Knight Frank, a global real estate consultancy firm, believes that baby boomers will transfer $90 trillion to millennials over the next two decades, while other estimates range from $53 trillion to $84 trillion.

Amid this unprecedented movement of assets, EY warns that the beneficiaries may lack the necessary knowledge, experience, and network to manage their newfound wealth. The report highlights that most wealthy donors are male, over 70 years old, and have benefited from favorable markets and longstanding relationships with wealth managers. In contrast, the needs and values of inheritors, especially female beneficiaries, are more diverse and underserved. Younger generations also have different goals and face unique challenges, such as the internationalization of wealthy families, non-traditional family structures, lower financial literacy, and idiosyncratic investment beliefs.

In conclusion, the transfer of wealth from baby boomers is an unprecedented phenomenon that will shape the future of the global economy. However, it is crucial to address the knowledge and support gaps among beneficiaries to ensure the responsible management of this wealth.