Inheriting a chunk of change from dad or gramma may sound great—especially for younger generations struggling with inflation and student, medical, or other debt. But a windfall brings its own stresses in how to manage the money for maximum effect. And most Americans don’t know what they will do if or when it happens, according to a new survey by Citizens (aka Citizens Bank).
The Great Wealth Transfer
It’s not surprising that a company offering banking and wealth management services releases a report indicating why those services could be helpful. But the survey of 1,500 U.S. adults (from February 16 to March 1), provides interesting insights on how Americans are reckoning with the “great wealth transfer,” mainly from Boomers to Millennials and Gen Z. And it highlights some challenges for Citizens’ business.
The report features the oft-cited 2021 Cerulli Associates paper estimating that $84 trillion will be passed down over the next two decades. The final figure may be less, Worth found, as factors such as high end-of-life medical care may diminish what’s left for inheritances. But the amount will be substantial, nonetheless, and could come soon.
In the survey, 55% of Millennials and 41% of Gen Zers said they expect to inherit money within the next five years. (The figure was 31% of Americans as a whole.) While they know it’s coming, they aren’t necessarily ready. Seventy-two percent of all respondents said that they aren’t confident in their ability to manage a windfall.
Where to Get Advice
Enthusiasm for professional advisors to help with this may be waning. In the survey, 83% of individuals and 79% of business owners said they don’t think financial advisors or bankers have their financial goals in mind. (To find the better providers, Worth has just concluded a quantitative evaluation to identify the top 300 registered investment advisor firms in the U.S.) Most Americans would still seek professional financial guidance, per the survey, but the willingness drops off by generation, with Boomers at 79%, Gen Xers at 67%, Millennials at 61%, and Gen Zers at 59%. (Of course, it’s also possible that younger people haven’t started thinking about this as much.)
Meanwhile, alternate forms of financial advice are on the rise, with 51% of survey takers saying they have already turned to social media for guidance, and 61% saying they would try an AI-powered robo advisor.
Wherever they get their advice, what goals would inheritors like guidance on? A slight majority said they would want to put their money towards financially responsible goals, such as investing (60%) or paying off debt (51%). However, around a quarter would “travel the world” or buy a vacation home.
