The concept of “the horizontal wealth transfer” is gaining traction as reports suggest that up to $9 trillion will be passed along to spouses and partners in the coming years. This transfer of wealth is expected to reshape the dynamics of wealth management, investing, and luxury spending. While the traditional idea of wealth passing down through generations persists, about 10% of it is likely to move sideways to spouses or partners before being inherited by children.
One of the major shifts that this horizontal wealth transfer brings about is the increased role of women in wealth management. With surviving spouses, who are mostly women due to life expectancy variations, expected to hold onto inheritances for an average of four years, women are becoming key decision-makers in the great wealth transfer. This trend is contributing to the “feminization of wealth,” as women’s incomes and wealth rise, making them a growing share of high net-worth investors and consumers.
As women take center stage in wealth management, the industry is seeing significant changes. Reports suggest that 45% of UBS’s wealth clients are now women, indicating a shift in the clientele demographics. With more women making financial and investment decisions and becoming family breadwinners, the traditional dominance of male clients and advisors in the wealth management industry is being challenged.
Analysts predict that by 2030, women are expected to control the majority of the $30 trillion in baby boomer wealth, further solidifying their presence in the wealth management sphere. This changing landscape is reflected in luxury brands adapting to cater to women’s preferences, with women’s watches becoming one of the fastest-growing segments in the luxury watch market. The trend is shifting towards more feminine and unisex products, reflecting the increasing power and independence of women in purchasing decisions.
In addition to wealth management and luxury spending, philanthropy is also expected to benefit from the horizontal wealth transfer. Giving to organizations focused on women and girls has seen a significant increase, with philanthropists like Melinda French Gates and MacKenzie Scott pledging substantial amounts to causes supporting women and girls. This shift in ownership of wealth towards women is likely to have a lasting impact on philanthropy and social causes.
The horizontal wealth transfer is not just a financial transaction but a transformational change in the wealth management landscape. With women playing an increasingly significant role in wealth transfer, investment decisions, and philanthropy, the future of wealth management is set to be more diverse, inclusive, and reflective of changing societal norms. Adapting to these shifts will be crucial for businesses in the financial and luxury sectors looking to thrive in the evolving wealth management landscape.