'Feminization of wealth'—Women set to inherit $9 trillion in 'horizontal wealth transfer’
Move over, trust fund babies. In a surprising twist in the much-discussed great wealth transfer, economists predict that women will inherit the lion's share of boomers' wealth.
According to a new UBS report, of the $84 trillion expected to change hands over the next few decades, a staggering $9 trillion will first pass to surviving spouses—predominantly women—long before reaching their children.
"Most people have a rather feudal idea of wealth going down through generations," said Paul Donovan, chief economist of UBS Global Wealth Management.
"But about 10% is likely to go sideways, to spouses or partners and not yet giving it to children, although it will shift over time."
Simple demographics drive most of this shift.
Women tend to outlive men, and many wives are younger than their husbands. As a result, female spouses often inherit substantial assets and may control this wealth for years before passing it on.
UBS predicts the largest horizontal wealth transfer will take place in the Americas, where over 43 million people aged 75 and older control $50 trillion in transferrable wealth.
On average, people are 85 when they transfer this wealth, giving surviving spouses years to manage these large sums.
A ripple effect across industries
The wealth management industry, long geared toward male clients, is already seeing this shift playing out. Donovan noted that 45% of UBS's wealthy clients are now women.
Luxury brands traditionally focused on male consumers are also adapting their strategies.
Jean-Christophe Babin, CEO of Bulgari, observed a growing trend toward more feminine and unisex watches, reflecting women's increasing economic power.
Philanthropy may also see a boost.
In recent years, there has been a surge in giving to women's and girls' causes, with high-profile donors like Melinda French Gates and MacKenzie Scott leading the charge.
In 2020 alone, giving to groups focused on women and girls grew 9% to over $8 billion, according to the Women's Philanthropy Institute.
The "feminization of wealth"
This wealth transfer is part of a broader trend often referred to as the "feminization of wealth." Women now make up over 11% of the world's millionaires, nearly double the share from just seven years ago.
A McKinsey report found women will control $30 trillion in baby boomer wealth by 2030.
The report also found that compared to five years ago, 30% more married women are making financial and investment decisions, and more women than ever are the family breadwinners.
The horizontal wealth transfer is not just about the initial inheritance.
The UBS report estimates that after the initial $9 trillion is passed to spouses, they will subsequently pass down over $8.4 trillion to the next generations, making them key decision-makers in the great wealth transfer.
"We will see a dramatic shift in ownership of wealth," Donovan says. "It is going to be quite significant in looking at who controls the resources that finance the global economy."