The team at Family Wealth Report would like to wish readers a Happy Thanksgiving tomorrow.

It is easy to become jaded by the endless references in industry conferences and reports to “intergenerational wealth transfer”, and understandably people are suspicious of clichés, but a new report leaves no doubt how vast the scale of this transfer is.

According to US-based research and analytics firm Cerulli Associates, 45 million US households are due to transfer a total of $68 trillion to heirs and charities over the course of the next 25 years. Of the households transferring wealth over that time, Baby Boomers’ transfers – unsurprisingly given the march of time – will take up 70 per cent of the total, or about $48 billion. 

The data comes from Cerulli’s report, US High-Net-Worth and Ultra-High-Net-Worth Markets 2018: Shifting Demographics of Private Wealth.

Cerulli defines a transfer of wealth as “any shift of assets that occurs from one household to an heir or charitable cause either while alive or after death”. 

The $68 trillion can be broken down into four methods of transfer: gifting to heirs inter vivos (while alive), bequeathing to heirs (at death), donating to charity inter vivos, or bequeathing to charity. Cerulli said it expects that a large majority of wealth will be transferred at death, nearly 93 per cent, and the rest will be donated to charity and gifted to heirs through inter vivos giving.

“This multigenerational shift in wealth will reshape the wealth management landscape over the next quarter century and will force firms to alter their existing business models and services,” Asher Cheses, an analyst at Cerulli, said.

These huge transfers explain why wealth managers are highly focused on providing advice and planning services and, arguably, driving the launch of new registered investment advisor businesses and similar business channels, as seen in recent years. The drive to tap efficiently into this huge wall of money may also explain some of the merger and acquisition activity in the sector (see here). 

“Multigenerational wealth planning can be costly and requires a well-thought-out process. The firms that are able develop a successful strategy to not only service the evolving needs of Baby Boomers, but also effectively engage the next generation of inheritors will likely retain the greatest share of assets in the coming years,” Cheses said.

Cerulli said that it has created its own ”Wealth Transfer Model”, based on central bank data and other statistics, so that it can show how large the future wealth sector will be, and break down holdings among different population groups.