Navigating the Great Wealth Transfer: Reshaping Wealth Management

The Great Wealth Transfer will move $124 trillion by 2048, according to recent data from Cerulli Associates. But the most revolutionary aspect? Women will inherit approximately 70% of this unprecedented wealth transfer.

Sylvia Kwan, PhD, CFA, CAIA - CEO and CIO of Ellevest - breaks down this seismic shift during our conversation, revealing that $54 trillion will go to surviving spouses (95% of whom are women) while another $46 trillion flows to younger generations. For many women, particularly those from older generations who delegated financial management to partners, this represents their first opportunity to independently control substantial assets.

What makes this transition particularly fascinating is how differently these beneficiaries approach investing. Women typically view investing as a means to achieving specific financial goals rather than simply beating market benchmarks. Both women and younger generations seek investments that align with personal values and generate positive social and environmental impact alongside financial returns. There's also growing skepticism about the traditional 60-40 portfolio, with younger investors gravitating toward alternative investments, private markets, and technology-enabled platforms that offer greater personalization and control.

Financial firms hoping to thrive during this transition must adapt accordingly. Beyond upgrading technology infrastructure to meet digital-first expectations, companies need to develop highly personalized offerings, expand beyond conventional stock-bond allocations, and create frameworks that help clients align investments with personal values. As Sylvia wisely advises, regardless of market conditions, success still comes down to fundamentals: create a well-diversified long-term plan and stick with it through inevitable volatility. Ready to prepare for this unprecedented wealth transfer? Listen now to gain invaluable insights that could reshape your approach to wealth management.

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This podcast is produced by CFA Society San Francisco, a not-for-profit professional association, providing professional learning and career resources to over 13,000 investment industry professionals worldwide. To learn more about CFA Society San Francisco, visit our website or connect with us on LinkedIn.

The information contained in this podcast does not constitute financial or investment advice. Please consult your own financial advisor for information concerning your specific situation.

Chapters

• 0:00 Introduction to Financial Perspectives
• 0:40 Welcoming Dr. Sylvia Kwan
• 1:36 Explaining the Great Wealth Transfer
• 4:40 New Investment Patterns and Preferences
• 7:13 How Firms Can Prepare for Success
• 10:14 Investment Outlook and Advice for Women
• 12:14 Episode Closing and Contact Information

Transcript

Lindsey Helman: 0:04

Hello and welcome to Financial Perspectives, a CFA Society San Francisco podcast where we interview and discuss trends with leaders from across the investment and finance industry. This month, our host, tanya Suba-Tang, membership Director with CFA Society San Francisco, had the pleasure of speaking with Dr Sylvia Kwan, chief Executive Officer and Chief Investment Officer at Ellevest. Listen in as they break down the great wealth transfer and its profound implications for the investment industry.

Tanya Suba-Tang: 0:40

So I want to address our listeners before we get started today, because this is not just a very momentous but very exciting episode for me. So for many of you who's been listening to our podcast since season one, you might know who our guest is. And for those that don't know, sylvia was actually my very first guest in this podcast, so I am so thrilled to have her back. So, sylvia, welcome to our new and improved podcast, financial Perspective. Thank you so much for joining me today.

Sylvia Kwan, PHD, CFA, CAIA: 1:11

Thank you, tanya. It's so great to be here and it is hard to believe where we started. I think it was during the pandemic, right? Yeah, so I'm so excited to be here. Thank you so much for having me on the podcast again.

Tanya Suba-Tang: 1:24

Yeah, I mean, it's such a pleasure and we speak not just through the podcast, but we speak outside of this too, so it's always very exciting to have a great friend come back on and share your expertise and insight. And yeah, that was back in season one and we are now in season five. Can you believe it? Insane Congratulations, thank you.

Tanya Suba-Tang: 1:43

So obviously, you are the CEO and CIO of Ellevest, and March is a very important time because it is commencing international women's. So what today's conversation I want to talk about is the great wealth transfer. So when we talk about chips and investment and finance industry, many do talk about what that great wealth transfer is and, to set the background of our conversation, I'd love for you to briefly explain what that means, and not only that, but what does that mean to you as the CIO and CEO of Ellevest?

Sylvia Kwan, PHD, CFA, CAIA: 2:16

At Ellevest, we're very excited about the great wealth transfer. So the great wealth transfer refers to the ongoing transfer of accumulated wealth from, basically, one generation to the next, and in our case it would be from the baby boomer generation down to the next few generations. I believe that what many miss about the great wealth transfer is a lot of those funds will be going first to women as surviving spouses and then to the next generation. Actually, I recently saw a report just a couple of days ago that Cerulli Associates estimates that $124 trillion is expected to change hands by 2048. I had seen previous numbers like around $84 million, so this is the first time I've seen 124 trillion. Wow.

Sylvia Kwan, PHD, CFA, CAIA: 3:08

The same report really showed that women will benefit disproportionately and are estimated to inherit about 70% of that wealth over the next 25 years.

Sylvia Kwan, PHD, CFA, CAIA: 3:19

So about 54 trillion will go to surviving spouses, of which 95% women, because women, as we know, generally live longer than men, and another 47 trillion will go to women in younger generations. So clearly, both of those figures, and certainly together, are amounts that well surpass the US GDP. So for Ellevest, we feel, since our focus is very much on helping women build and manage wealth, we are already seeing beneficiaries of the Great Wealth Transfer coming to us, and so we're very excited because we believe we are very well positioned to serve these women. In many cases, these women will be managing their money independently for the very first time. For many women, especially in the older generations, they have delegated all of the finances and the investing to their husbands, for example, and this will be the first time that they will be managing it on their own. And so we stand here ready to help those women really navigate, perhaps for the very first time, how best to manage their finances and invest. So we're very excited about this opportunity that's coming to this industry.

Tanya Suba-Tang: 4:31

And in your experience, comparatively speaking, how are these beneficiaries investing differently and are they gravitating toward a specific type of investment?

Sylvia Kwan, PHD, CFA, CAIA: 4:40

Yes, I believe both women and the younger generations do view investing a bit differently than the current older generation. So first, speaking about women, what we heard from women is women really see investing as a means to achieving financial goals. So it's not just about beating the market, beating the S&P 500. It's really how am I investing that money and how is that investment going to help me accomplish my financial goals, whether that's a legacy, charity, children or a comfortable retirement, Both women and younger generations also want to be more intentional.

Sylvia Kwan, PHD, CFA, CAIA: 5:19

And we see that not just in investing, but certainly from spending their money, who they decide to support with respect to businesses. But it is quickly flowing into investing and so obviously they want financial returns. We all, of of course, want those. But they also want their investments to better align with their personal values and, to the extent possible, they want those investing dollars to be able to also generate positive social and environmental impact, so they want to support climate solutions, for example, or affordable housing and things like that. So they're very, very interested in kind of this area of impact investing.

Sylvia Kwan, PHD, CFA, CAIA: 5:57

I'm also seeing you asked about whether they are gravitating towards a specific type of investment, and I've seen a lot of studies showing that younger generations are feeling less confident about the traditional 60-40 portfolio that has worked so well, I would say, for the baby boomer generation, and so they're very interested in alternatives, investments outside of the 60-40. And we see them definitely embracing more private investments. Younger generations are obviously also more technology savvy. They grew up with technology, much more comfortable with digital investing platforms, and we're seeing certainly a high growth in those kinds of platforms, not just for traditional investing but also for investing directly into alternative type of investing, and so I think the younger generations are very comfortable. Many of them are do-it-yourselfers and they have today, through technology, the opportunity to invest in a very different way than the earlier generation.

Tanya Suba-Tang: 6:58

So obviously great business practice for firms and companies to always adapt to industry shifts. What do you think firms and companies can do now to prepare and set themselves up for success as we enter this new era?

Sylvia Kwan, PHD, CFA, CAIA: 7:10

Since I just talked about technology, I think definitely one of the things firms should do is really get more tech savvy. And so the old you know tradition of you know having clients come to the office, you know, every quarter to go through portfolio reviews, that may not work as well for the younger generation. They're busy, they're used to, you know, zoom calls, for example, or they're used to seeing things on their phone or their tablet and may not kind of need as much of that in-person contact and may not value it as much. So I think having really top-notch technology will be important to this generation and I think, as I thought about the younger generations in particular, I believe that personalization is going to be really important.

Sylvia Kwan, PHD, CFA, CAIA: 7:55

And so when I think about all the personalization that we have, all of us have, you know from you know customized clothing to, you know all kinds of, you know shoes, et cetera, I mean you can order, you know shoes with certain colors and styles and sizes, and you know there's a lot of things, especially through technology, that has made personalization possible at scale.

Sylvia Kwan, PHD, CFA, CAIA: 8:20

And so I think that will bleed, and has bled certainly into investing as well, and we see a lot of firms offering direct index portfolios, for example, that can be very personalized to a client's financial circumstances and preferences and even leading into alignment with their values. And so I think, more and more personalization, as opposed to having a set of model portfolios and kind of trying to slot everybody into one of 10, I think this generation will very much value something that feels more personalized to them. And then the third. I guess the last couple of points I would make on this is ones that I'd mentioned before. I think firms need to look beyond stocks and bonds, given the interest in this generation and kind of their growing lack of confidence at a 60-40 is going to get them there. So I think firms really need to start embracing, if they haven't already, alternatives as being part of a well diversified portfolio.

Sylvia Kwan, PHD, CFA, CAIA: 9:22

And then, lastly, really looking at and you know how can you to the extent there are clients who really want to align their investments with their values, you know how can I create a portfolio that that helps them achieve that?

Tanya Suba-Tang: 9:35

Wow, that was a wealth of insights. Thank you for sharing all that. Now, before we say goodbye, I'd love to hear your investment outlook over the next decade. But also, in the spirit of International Women's Month, do you have any advice or guidance you can share with our female listeners?

Sylvia Kwan, PHD, CFA, CAIA: 9:49

That's a really loaded question there, tanya

Tanya Suba-Tang: 9:53

I like to end it with a bang.

Sylvia Kwan, PHD, CFA, CAIA: 9:54

Yes, exactly.

Sylvia Kwan, PHD, CFA, CAIA: 9:56

Wow, I mean, we have had so much volatility in action in the last weeks, months, couple of months, and when you said the next decade, I was like, wow, you know, I can barely keep up with all the news that is kind of coming out, you know, on a daily basis and, you know, getting a little whiplash here. So, definitely, thinking about the next decade actually, I think is is puts things into perspective in some sense, because that then causes me to zoom out Because, you know, obviously I mean puts things into perspective in some sense, because that then causes me to zoom out, because, obviously, investing, hopefully for most of us, is really a long-term endeavor, and so it is very difficult, of course, as humans, to tune out some of the noise and to think of what's happening now is not permanent. So I rarely make in fact, I never make predictions, because predictions are nearly impossible. But, that being said, I know, and I think people will agree, that we are certainly in for plenty of volatility, at least in the short term to come.

Sylvia Kwan, PHD, CFA, CAIA: 10:58

My advice, though, and when I think about some of the differences that I see between how women approach investing and how men approach investing and, just, I would say, even life in general. Women are great planners in general I'm speaking very generally here and so I think that bodes well for long-term investing. If you and it's not just women but make sure you have a plan for your investments, preferably a long-term plan, and then stick to it. That has really proven to contribute to long-term success and so you're not kind of buffeted by all of the short-term news and the noise that's going on. As long as your portfolio is well diversified, not only across stocks and bonds, but perhaps select alternatives as well, that kind of help offset the risk of stocks and bonds, it will be much easier to stick to that plan. So, number one have a plan.

Sylvia Kwan, PHD, CFA, CAIA: 11:47

Number two stick to it

Tanya Suba-Tang: 11:48

Great advice, and that advice is not just for investment, right, it could come across in many different facets,

Sylvia Kwan, PHD, CFA, CAIA: 11:55

absolutely.

Tanya Suba-Tang: 11:57

But, sylvia, always, always a pleasure to have You. always love our conversation and sharing your insight from this. So thank you so much for joining me today.

Sylvia Kwan, PHD, CFA, CAIA: 12:06

Thank you, tanya.

Lindsey Helman: 12:14

Thank you to this month's guest, Dr Sylvia Kwan, for sharing her insights into navigating the great wealth transfer. Join us next time for another Financial Perspectives episode airing on the last Tuesday of the month.

Lindsey Helman: 12:26

We love hearing from our listeners and want to hear what you thought of this episode and any topics you'd like for us to cover. Send us a message using the link at the top of each episode description or email us at podcast. org. Thank you for being a dedicated listener.

Lindsey Helman: 12:56

This podcast is produced by CFA Society San Francisco, a not-for-profit professional association providing professional learning and career resources to over 13,000 investment industry professionals worldwide. To learn more about CFA Society San Francisco, visit our website at cfa-sf. org or connect with us on LinkedIn.