Investor services provider IQ-EQ, in collaboration with Barton Consulting and Wealth-X, has released its The Great Global Wealth Transfer report – an analysis of the world’s wealthiest to establish how and when this transfer will take place and the impact it will have on family offices.
The research considers all individuals across the world worth more than $5m and concludes that more than 500,000 people will be transferring wealth over the next decade. This equates to more than $15trn – higher than China’s annual GDP.
Regionally, 41% of this wealth will be transferred from the Americas, 32% from EMEA and 27.5% from Asia-Pacific.
Among ultra-high-net-worth individuals with more than $100m net worth, 62% are over the age of 75. This suggests that within the world’s wealthiest families, the wealth transfer is likely to begin happening within the next five years.
Given the modern complexities surrounding families and their assets, the sooner the transfer of wealth happens, the higher the possibility for problems or issues to arise without the right infrastructure in place.
Steve Sokic, Group Head of Private Wealth at IQ-EQ, commented: “Over the next decade we expect to see huge changes in asset allocation as the different investment preferences between generations is fully realised.
"We’re already seeing a transition towards private equity and venture capital investments, particularly in up-and-coming sectors such as technology.
"Preferences towards impact investing and ESG criteria are also expected to continue in an upward trend as sustainable investing becomes a priority for the younger generation, particularly in Europe and North America.
“However, these individuals have complex arrangements in terms of business ownership, assets and geographic exposure – without the right structure and planning in place, the outcome could be a failed transfer that could result in disappearance of a family’s wealth.”
The report also examines five trends that will emerge from the wealth transfer:
• The continued growth and evolution of family offices
• The increased globalisation of wealthy families
• Changing interest levels in certain assets and investments
• Increased use of technology within family offices
• The impact of Covid-19
The Great Global Wealth Transfer report is available to download here