The dynamics of wealth transfer are set to undergo a significant transformation in the coming years, with an estimated $84 trillion being passed down from aging baby boomers and older generations to their heirs. This phenomenon, dubbed the “horizontal wealth transfer,” is expected to reallocate up to $9 trillion among spouses and partners, reshaping the landscape of wealth management and investing.
One of the key aspects of the horizontal wealth transfer is the increasing prominence of women as inheritors of wealth. Due to the fact that women typically outlive men and are often the recipients of initial inheritances, a significant portion of the $9 trillion expected to be transferred between spouses will eventually be passed on to women. This trend, combined with broader economic forces, is contributing to what some are calling the “feminization of wealth.”
As women’s incomes and wealth continue to rise, the wealth management industry is experiencing a shift towards a more gender-balanced clientele. Reports indicate that women now make up over 11% of the world’s millionaires, and are expected to control a substantial portion of the $30 trillion in baby boomer wealth by 2030. Wealth management firms are adapting to this change, with an increasing number of women becoming key decision makers in the management of significant assets.
The Impact on the Luxury Market
The changing demographics of wealth ownership are also influencing the luxury market, traditionally dominated by male consumers. Luxury brands are adapting to cater to the growing purchasing power of women, with women’s watches emerging as one of the fastest-growing segments. As women gain more independence and autonomy in their financial decisions, luxury brands are recognizing the need to appeal to this expanding market segment.
Alongside the shift in wealth ownership, philanthropy is also experiencing a transformation driven by the horizontal wealth transfer. Giving to causes focused on women and girls has increased significantly, with notable contributions from female philanthropists like Melinda French Gates and MacKenzie Scott. The redistribution of wealth is expected to have a positive impact on philanthropic efforts aimed at promoting gender equality and empowerment.
The horizontal wealth transfer represents a significant reordering of economic power, with vast sums of wealth being reallocated among spouses and partners. As women take on a more prominent role in wealth management, investing, and philanthropy, the traditional dynamics of the financial world are evolving. The future of wealth lies in the hands of a more diverse and inclusive group of decision-makers, reshaping the way we perceive and manage wealth for generations to come.