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Gen X, Not Boomers, Set to Inherit Trillions Over the Next Decade
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Happy Sunday everyone, and welcome to Benzinga’s financial advisor newsletter.
In today’s newsletter, we are covering a new report from Hearts & Wallets that reveals the next big inheritance wave isn’t going where received wisdom would have you think. There’s literally trillions of dollars to help manage here for advisors, if they know where to look.
So, let’s get into the Industry Chatter!
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INDUSTRY CHATTER
A new report from consumer research firm Hearts & Wallets reveals that Generation X stands to inherit trillions of dollars from the Silent Generation over the next 10 years, presenting significant opportunities and challenges for financial advisors.
Currently, the 65-74 age group holds the highest wealth at $22.4 trillion. In a decade, an estimated 23 million households will be 75 or older, with another 5.6 million reaching 85+. The nearly 16 million people aged 75+ today control about $15.5 trillion in assets.
Boomers and Millenials Will Miss Out
Laura Varas, CEO of Hearts & Wallets, emphasizes that this wealth transfer primarily involves the Silent Generation and Gen X, not Boomers and Millennials. She notes that inheritances, even modest ones, often prompt recipients to focus on their own financial planning.
The study found that those inheriting $500,000 or more are generally financially savvy, with 35% having taxable brokerage accounts and 60% considering themselves somewhat familiar with investing. These individuals are often open to advice but may have already dismissed unsatisfactory financial service providers.
Varas highlights the complexities of handling estates, drawing from personal experience. She stresses the need for improved advice and service in this area, citing instances of misguided recommendations and poor communication she encountered while managing family estates.
Financial advisors have significant opportunities to assist with inheritance and wealth transfers. The report shows that among U.S. households receiving inheritances, over half are under $100,000, 30% are between $100,000 and $500,000, and 14% are higher.
Start Building Relationships With Younger Family Members Now
Advisors working with older clients are encouraged to build relationships with younger family members. While Gen Xers may have existing financial relationships, they might be open to working with their parents' advisors if the service is exceptional. Varas notes that people now typically work with 8-13 financial services providers, up from 1-3 in the past.
As this massive wealth transfer unfolds, financial advisors who can navigate the complexities of estate planning and provide superior service stand to benefit from this generational shift in assets.
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MARKET RECAP
U.S. stocks once again reached all-time highs in the shortened trading week due to the Independence Day holiday, as the latest economic data bolstered investor confidence that the Federal Reserve may soon begin cutting interest rates.
The U.S. job market showed a better-than-expected increase in employment in June. Yet downward revisions for April and May, coupled with a slight, unexpected uptick in the unemployment rate and slower wage growth, indicate an overall cooling of conditions.
An additional warning the U.S. economy might be entering a cooling phase came from the latest Institute for Supply Management Services Purchasing Managers Index, which contracted in June and plunged to its lowest level since May 2020.
Technology and consumer discretionary stocks were the best-performing sectors of the week, driven by the "bad news is good news" narrative as higher rate-cut expectations fuel growth stocks.
The top seven tech stocks — Microsoft Corp., Apple Inc., NVIDIA Corp., Alphabet Inc., Amazon Inc., Meta Platforms Inc. and Tesla, Inc. — have reached a combined market cap of over $16 trillion. For Tesla, this has been the best week in terms of market performance since January 2023.
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THE WEEK AHEAD
Economic Data
Monday: May Consumer Credit, June Consumer Inflation Expectations
Tuesday: Fed Boardmembers Barr and Bowman give speeches
Wednesday: Crude Oil Inventories
Thursday: June Inflation reports
Friday: Producer Price Index reports
Earnings
Monday: Greenbrier Companies (GBX)
Wednesday: Pricesmart (PSMT), AZZ (AZZ)
Thursday: Delta Air Lines (DAL), Conagra Brands (CAG), PepsiCo (PEP)
Friday: JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C)
Click here for the full calendar of economic data and earnings reports.
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