The Great Wealth Transfer

The Great Wealth Transfer: What It Means for Families & Investors

Quick Summary

The Great Wealth Transfer is a once in a generation shift in who holds Australia’s wealth, reportedly transferring over $3.5 trillion in wealth to younger generations. This article investigates how it is redefining not just individual family fortunes, but also our housing market, investment landscape and broader Australian economy.

Table Of Contents

• When & Why Is This Happening?
• Who Stands To Benefit & Who Might Miss Out?
• Superannuation & It’s Growing Role In Wealth Transfer
• What This Means For Investors & The Economy
• The Housing Divide & Social Implications
• Where Does Superannuation Fit In?
• Looking Ahead: Risks & Opportunities
• Final Thoughts
• Frequently Asked Questions (FAQ)

If you’ve been reading the financial news lately, you’ve probably heard whispers, or perhaps loud headlines about something called The Great Wealth Transfer. It’s not just a buzzword, it’s a reality unfolding right now across Australia.

As financial planners here at Manly Financial Services, we are seeing this shift play out in real time. Over the next two decades, it’s estimated that Baby Boomers will pass down somewhere in the range of $3.5 trillion in assets to younger generations and that figure is believed to be conservative.

It’s a transfer of wealth that will redefine not just individual family fortunes, but also reshape our housing market, investment landscape, and even the broader Australian economy.

When & Why Is This Happening?

The timing isn’t coincidental. Many Baby Boomers are now in their late seventies and early eighties, a time of life when wealth transition becomes front of mind. Some are looking to simplify their estates, others to provide for children and grandchildren sooner rather than later.

There’s also a very human element to this. After decades of hard work, Boomers want to see their wealth help the next generation buy homes, start businesses, or invest for their own futures, not just sit dormant until the inevitable.

Institutions like AMP and the Productivity Commission predict this wealth transfer will accelerate through the 2030s, peaking as Boomers reach later stages of retirement. Some reports suggest that by 2050, over $3.5 trillion will have shifted hands.

Who Stands To Benefit & Who Might Miss Out?

The most obvious beneficiaries are Gen X and Millennials, with Gen Z also standing to inherit significant sums down the track. However, this isn’t just about receiving a windfall. It’s about how prepared or unprepared, these generations are to manage sudden wealth responsibly.

At present, Baby Boomers hold the lion’s share of Australia’s wealth, not just in cash or shares but especially in property. Housing makes up more than half of our nation’s household wealth, which explains why property prices feel perpetually out of reach for younger buyers without family assistance.

Many Millennials and even some Gen Xers struggle to match the homeownership rates their parents enjoyed. Without inheritances or financial help from Mum and Dad, they’re often locked out. This is where the “Bank of Mum and Dad” comes in, an increasingly common solution to an increasingly challenging property market. In fact, recent studies show that parental financial assistance now supports nearly 60% of first-home buyers in certain cities, compared to just 3% a decade ago.

This is no small contribution. In some Sydney suburbs for example, inheritances and early financial gifts are acting as home deposits worth $2 million or more. The numbers are staggering when you start to look closely.

Superannuation & It’s Growing Role In Wealth Transfer

It’s not just property that’s moving between generations. Superannuation is playing a big part too, though perhaps not in the way many expected.

Rather than drawing down on their super in retirement, many Boomers are preserving or even growing these balances. Why? Often, it’s because their primary wealth sits in real estate, which reduces the need to touch their super. Combined with inheritances passed between spouses, these balances are being maintained at healthy levels well into old age.

This creates opportunities and challenges for younger generations. On one hand, Millennials and Gen Z are contributing at higher super guarantee rates and stand to benefit from long-term compounding. On the other, their current balances are dwarfed by those of their parents and grandparents, making them reliant on inheritance to level the playing field in the near term.

What This Means For Investors & The Economy

From an investor’s perspective, this mass transfer of wealth is already influencing financial markets. As younger generations come into money, either through inheritance or earlier gifting, they’re bringing fresh capital into play. This isn’t just buying homes, it’s also fuelling demand for shares, managed funds and increasingly, ethical or impact investments aligned with younger values.

Of course, not all this wealth will be invested wisely. History shows that 70% of wealth is lost by the second generation and 90% by the third. That’s a sobering statistic and one that underscores the importance of sound financial advice and education.

Our team at Manly Financial Services are already seeing these shifts in wealth transfer and now work closely with families. Previously, the relationship was often solely with the parents, but we are increasingly working with the next generation, helping them understand the responsibilities and risks that come with sudden wealth.

There’s also the broader economic impact to consider. A surge in liquidity from inheritance tends to push up asset prices, especially in real estate. This is great news if you’re already in the market, but can exacerbate the wealth gap if you’re not. Younger generations with family support may find it easier to climb the ladder, while others are left further behind.

The Housing Divide & Social Implications

Housing remains the most emotionally charged aspect of this conversation. Boomers have ridden a wave of property value growth that younger Australians may never replicate. The result, homeownership feels more like a privilege tied to inheritance than something achievable through income alone.

This dynamic is shaping policy debates around affordability, housing supply, and even wealth taxes. Some suggest Australia may eventually look to inheritance taxes to address these imbalances, though no government seems brave enough to tackle that just yet.

Still, the consequences are real. If large swathes of property wealth remain locked within families, passed down rather than dispersed, we risk deepening generational divides.

Where Does Superannuation Fit In?

Superannuation may eventually act as a partial equaliser, thanks to compulsory contributions and improved financial literacy. However, for Millennials and Gen Z, super balances today are still modest compared to Boomers, sitting around $260,000 for Millennials and even less for Gen Z. Compare that to Boomers’ averages of over $600,000, and you can see the gap is stark.

That said, these younger generations are better positioned to benefit from long-term super growth, assuming they stick the course, avoid early withdrawals, and continue contributing.

Looking Ahead: Risks & Opportunities

What does this all mean moving forward? From a planning perspective, there’s both opportunity and risk. The opportunity lies in harnessing these wealth transfers for positive outcomes, investment, education, philanthropy and business growth. The risk? Poor decisions, short-term thinking, and falling into the 70% trap where inherited wealth vanishes within a generation.

As advisers, we’re urging clients to think holistically. Estate planning isn’t just about writing a will. It’s about understanding tax implications, using trusts where appropriate, planning for aged care and ensuring wealth flows smoothly to where it’s intended. It’s also about preparing heirs with the knowledge and mindset to handle wealth responsibly.

Final Thoughts

The Great Wealth Transfer is well underway. For some, it represents a lifeline, for others, a challenge to maintain what’s been built. For all of us in financial services, it’s a call to action.

At Manly Financial Services, we’re helping families prepare, not just financially, but emotionally for what’s to come. Whether you’re looking to pass on wealth, receive it, or make sure it’s put to good use, now is the time to have those conversations.

We’re here to ensure this historic shift becomes a positive legacy, not a missed opportunity.

Frequently Asked Questions (FAQ)

Important Disclaimer: The information provided in this article is general in nature and does not constitute financial advice. Please consult with a qualified financial advisor to discuss your individual circumstances before making any decisions.

References:

• AMP: The Great Wealth Transfer
• KPMG: Intergenerational Wealth Insights
• Productivity Commission: Wealth Transfers and Their Economic Effects (2021)
• Firstlinks: Australians Unprepared for $3.5tn Transfer
• Morningstar: The Wealth Transfer and Generational Divide
• News.com.au: Boomers vs. Millennials Wealth Divide
• Grant Thornton: Preparing the Next Generation