Craig Keary, CEO of Selfwealth, said as the Baby Boomer generation looks to pass on wealth, the emerging generation of wealth makers will likely need guidance.
“More than $3.5 trillion in assets, or $175 billion per year, in wealth is set to be transferred before 2050 and movements in assets of this magnitude have the real potential to significantly impact both listed and unlisted markets,” Keary said.
“As the baby boomer generation looks to pass on wealth, the emerging generation of wealth makers will likely need guidance. Intergenerational wealth transfer isn’t just about preserving family legacies — it also plays a vital role in supporting long-term economic stability.”
Keary continued that if $175 billion, or the total amount expected to be transferred annually, were to be lost from the stock market each year, that would have real consequences for the Australian economy.
“It is often said that it only takes three generations to lose a fortune, and while this may or may not be the case, anybody that doesn’t understand financial markets and how they work, and the best strategies for investing their money, will struggle to retain their wealth,” Keary said.
Furthermore, Keary said that the generational divide has highlighted different approaches to finances and many younger generations may need significant guidance.
“Advisers can assist families by offering strategic advice to navigate the complexities of wealth transfer, which can often present emotional and financial challenges,” he said.
“Advisers help structure assets, set up trusts for estate planning, and ensure families maximise the wealth passed down through generations. They also guide families on the tax implications of different asset structures.”
Keary emphasised that part of this process would involve open and honest discussions about inheritance and building trust across all generations.
“It’s beneficial for families to address their preferred distribution of assets, particularly in cases of unequal inheritance, while the parents are still alive,” he said.
“Proactive communication helps surface and resolve potential conflicts and ensures a smoother transfer of wealth. It is much better to talk about this while you are still living than to leave a mess for your kids to fight through when you’re gone. You don’t want your legacy to be family dysfunction.”
He added that advisers can also play a key role in educating the next generation on financial literacy and investment, helping to prevent wealth erosion through poor financial decisions.
“This educational component is vital to avoiding the all-too-common scenario where wealth dissipates within a few generations due to lack of financial understanding,” Keary said.
