- Estimates suggest that between 2 and 3 trillion US dollars will be inherited globally in 2024.
- In Switzerland around 18 billion Swiss francs of assets managed by the banks will be inherited in 2024.
- Last year more billionaires were created around the world through inheritance than from running businesses. The importance of female heirs is increasing all the time.
Zurich, 8 May 2024. The looming inheritances of the baby boomer generation are the biggest transfer of wealth in global financial history, which will also have consequences for Swiss banks. An estimated 18 trillion US dollars will be inherited between now and the year 2030, which is roughly equivalent to the annual GDP of China. In 2024 itself, between 2 and 3 trillion US dollars is set to be inherited worldwide. More people became billionaires in 2023 through inheritance than were self-made.
The assurance and advisory firm EY estimates that in Switzerland the over-65 age cohort holds over 30% of its assets in financial institutions. Assuming mortality of a little over 4%, this would imply a transfer of wealth from today’s bank customers to their heirs of over 18 billion Swiss francs – year after year, with a rising trend.
Olaf Toepfer, founder and head of the EY Global Center for Wealth Management, says: “The expected wave of wealth transfer is now upon us. Due to the scale of assets about to be inherited it will be key for wealth managers to retain these client assets – replacing this business with new customers will be a huge challenge, particularly for established private banks. Taking a systematic and customer-centred approach to advising families will be essential.”
This cross-generational transfer of wealth is one of the topics discussed in the new EY Global Wealth Management Industry Report 2024. The most important points relating to inheritance are as follows:
- Supporting female heirs and the younger generation of heirs: It will be critical to thoroughly understand the needs and preferences of these important new groups and provide services that are both relevant and differentiate you from competitors.
- See the inheritance through the customer’s eyes: Dialogue with wealthy customers on succession planning is difficult; a good way to approach the issue and build up trust is to view it in terms of protecting and supporting the family in the long term and leaving a legacy.
- Empowering front office staff: Client advisors need specialised training and access to experts to proactively approach customers and build up new long-term relationships with heirs.
- Careful and patient implementation: A systematic and gradual approach is key to build up trust and create long-term customer value.
Alongside inheritance, the Global Wealth Management Industry Report 2024 discusses 19 other key concepts that will be strategically important for wealth management. Issues covered include advice-based affluent banking, the future of customer-centred investment advice and the potential uses of artificial intelligence in wealth management. The aim of the report is to provide answers to fundamental challenges that asset managers are facing now and will have to face in future.
