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Posthaste: The 'great horizontal wealth transfer' is coming — and it could change a lot Back to video

They call it the great horizontal wealth transfer.

A huge stockpile of wealth held by baby boomers — likely the largest and richest generation since the Second World War — will be passed on in the fairly near future.

And a big chunk of it will go to women, representing a seismic shift in wealth ownership.

The latest UBS Global Wealth Report estimates US$83 trillion will be passed on over the next 20 to 25 years, with much of it transferred within the next decade.

“It is often overlooked that before being transferred from one generation to another, wealth is frequently passed on within the same generation between spouses,” said the report.

As male baby boomers die they tend to bequeath their assets to their wives, who are often younger and tend to live longer, the report said.

UBS, which coined the phrase the “horizontal wealth transfer,” estimates that US$9 trillion of that wealth will pass from husbands to wives, before children inherit. The biggest horizontal transfer will happen in the Americas.

The shift that has flown largely under the radar has the potential to shake up the world of wealth management, investing and philanthropy, experts say.

Up until now wealth management has been dominated by men, says McKinsey & Company. Not only are most financial advisers men, their customers making the decisions are far more likely to be men than women.

“In two-thirds of affluent households in the United States, men are the key financial decision makers. But this is about to change,” said its report. 

McKinsey estimates that by the end of the decade, women in the United States will control most of the baby boomers’ “unprecedented” US$30 trillion in assets — a wealth transfer nearly as big as America’s yearly gross domestic product.

In Canada by 2028, women will control $4 trillion in assets, nearly double what they control now, according to RBC Wealth Management.

Demographics are the big driver in the shift. About 70 per cent of the affluent-household investable assets in the U.S. are controlled by baby boomers, and about two-thirds of these are joint households “(where a female is present but not actively involved in financial decisions),” said McKinsey.

When men pass their assets to their spouses, the shift to women as the financial decision makers represents a “critical inflection point for the financial-services industry,” said the report. Within a year of their spouse’s death, 70 per cent of women switch to a new financial institution.

Along with this demographic shift, younger woman are becoming more “financially savvy.” At the turn of the decade, 30 per cent more married women were making financial and investment decisions, according to its research on affluent consumers.

“After years of playing second fiddle to men, women are poised to take centre stage,” said McKinsey.

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Go Canada! Foreigners are snapping up our bonds at a record pace — well, almost.

Non-residents bought $110 billion of Canadian bonds in the first five months of this year, the second largest tally on record, “only trailing the once-in-a-generation debt issuance binge of 2020,” said National Bank of Canada economists Warren Lovely and Taylor Schleich.

In the 12 months leading up to May, foreigners picked up more Government of Canada bonds than all domestic investors combined, putting the share of foreign ownership near a record at 36 per cent.

“Of course, exposure to foreign investors is not without risk, but the broader and deeper non-resident interest increasingly on display seems to us a vital source of secondary bond market liquidity,” said the economists.

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Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you wondering how to make ends meet? Drop us a line with your contact info and the gist of your problem and we’ll try to find some experts to help you out, while writing a Family Finance story about it (we’ll keep your name out of it, of course). If you have a simpler question, the crack team at FP Answers, led by Julie Cazzin, can give it a shot.

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Today’s Posthaste was written by Pamela Heaven, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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