The Next Generation of Women: An Opportunity from the Great Wealth Transfer

Written by Aaditi Bhandari (W’27); Edited by Elli Jin (C’ 27)

The “Great wealth transfer” is looming just around the corner! The great wealth transfer refers to the concept of boomers or older generations passing on their wealth to the younger generations. It is expected that by 2045, $84 trillion in wealth will be transferred across the generations. A lot of the wealth will be transferred to women as the gender gap within workspaces reduces. How will this impact our future? 

Women gaining access and control to wealth should drastically transform financial portfolios across the nation. Research suggests that women tend to allocate a greater amount of their capital towards non profit organizations and impact based firms. This trend implies that there should be a significant increase in impact based investing over the next twenty years as the wealth continuously transfers. This should bring reforms to the structure of social development as more non profit and social impact firms gain access to capital funds. 

The great wealth transfer may also lead to greater integration of sustainability into financial portfolios. As awareness regarding Environmental Social Governance also grows which involves integrating sustainability into the corporate workplace, specifically within impact based investing, there should be an increase in climate based investing conducted by women. This change could help address and alleviate the global climate issues. 

There are still several concerns over transferring significant wealth to women. Women are considered to be more risk averse than men with their investments. This characteristic could lead to less financial resources and capital for startups or smaller scale businesses. Thus, potential for growth, new technological developments, and the social impact as previously anticipated could be reduced. Although this characteristic is highly dependent on the individual's personality, this is a growing fear of several analysts and economists. 

To ensure that women continue to make meaningful contributions to the economy while supporting all levels of businesses, financial advising services need to be increased. Advisors and analysts need to promote how risk based investments can strategically be made and how they can lead to returns. Through proper education and awareness, the great wealth transfer can revolutionize how an economy supports its citizens. It could create vast social reforms and lead to a more prosperous and equitable future.