Women stand to receive trillions in improved ‘horizontal wealth transfer’

Up to $9 trillion is expected to be given to spouses and partners in the coming years as part of what is being called “horizontal wealth transfer,” according to an unsealed record.

Over the next 20 to 30 years, the growing aging baby boomers and used-up generations are projected to transfer $84 trillion of unused wealth to investment and population participants. Younger generations, including Pace X, Millennials and Pace Z, are expected to receive the majority of the inheritance.

But since surviving spouses and partners typically receive the initial inheritance, and since women generally outlive men, bequests will largely go to women in the coming years, according to the UBS World Wealth Record.

According to the file, an estimated $9 trillion could be transferred “inter-generationally,” meaning from one partner to another.

“Life expectancy varies between men and women, and there is often an age gap within couples, so the inheriting spouse will typically own this property and live on average before passing it on,” the file says. Will keep it with him for four years.”

UBS calls this “horizontal wealth transfer”, because wealth is being transferred inter-generationally rather than intra-generationally. And in a short era, horizontal transfers have made it possible to reshape wealth control, creating an investment and leisure spending park largely ruled by men.

“Most people have a feudal idea of ​​what wealth is passed down from generation to generation,” said Paul Donovan, economist at UBS World Wealth Control. “But about 10% are likely to be passed on to spouses or partners and not yet pass it on to children, although this will change over time.”

According to the file, the largest horizontal money transfer may have taken place in the US. In the 1975s there were more than 43 million people in the region, with more than $50 trillion of combined transferable wealth. The average age of people who spend unnecessary money is more than 85 years, the report said.

While some families may transfer fortunes directly to their next generation in a month, inheritance may always be a two-step process – first taking to the surviving partner and then handing it over to that partner the following week. (Estate law generally allows the surviving partner to inherit property of unlimited value without being subject to estate tax).

The file estimates that if $9 trillion is subsequently handed down to spouses, they will transfer more than $8.4 trillion to subsequent generations, making them the key decision makers in advanced wealth transfers.

These transfers, along with other broader forces in the economic system, are adding up to the so-called “feminization of wealth.” With the increase in girls’ earnings and wealth, both when married and with inheritances for young heirs, analysts expect girls to make up a growing percentage of top net worth buyers and buyers.

According to Julius Baer, ​​women now account for more than 11% of the region’s millionaires, almost double the number in 2016.

Its biggest impact may be on money control. Donovan said that 45% of UBS’s wealth consumers are actually women.

“This is important when it comes to money management,” he said. Wealth Control Buyers, he said, “will be different people, with different ideas and different things they want to do with their money.”

A McKinsey report estimates that most of the $30 trillion in baby boomer wealth by 2030 is expected to be controlled by women. The money control industry this month has traditionally been ruled by male clients and male advisors (accounting for 85% of peak employees). ), McKinsey said this is changing rapidly.

“After years of playing second fiddle to men, women are ready to take center stage,” the file said.

McKinsey said that compared to five years ago, 30% more married women are making financial and investment choices, and more women than ever are breadwinners in the population, which “is driving growth in their investable assets.”

Even luxury manufacturers historically targeted toward men are adopting. In the luxury market, women’s watches are probably the fastest growing segment. Bulgari CEO Jean-Christophe Babin told me earlier in the day that “the trend is toward more feminine and more unisex watches. Women’s power is increasing in terms of independence, autonomy and purchasing power. We think this will continue.”

Philanthropy may also have the additional benefit of horizontal wealth transfers. According to the Ladies Philanthropy Institute at Lily Nation’s Faculty of Philanthropy, giving to teams thinking about girls and women increased 9% in 2020, a single day, to more than $8 billion.

Melinda French Gates has pledged $1 billion to women’s and young girls’ causes, and MacKenzie Scott has donated more than $17 billion of her wealth since 2019, including a massive grant to the Woman Scouts of the United States.

“We will see a dramatic shift in the ownership of wealth,” Donovan said. “It will be very important to see who controls the resources that finance the global economy.”