Navigating the Great Wealth Transfer: Reshaping Wealth Management

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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.

Episode Transcript

Lindsey Helman (00:04):
Hello and welcome to Financial
Perspectives, a CFA Society SanFrancisco podcast where we
interview and discuss trendswith leaders from across the
investment and finance industry.
This month, our host, tanyaSuba-Tang, membership Director
with CFA Society San Francisco,had the pleasure of speaking
with Dr Sylvia Kwan, chiefExecutive Officer and Chief
Investment Officer at Ellevest.

(00:26):
Listen in as they break downthe great wealth transfer and
its profound implications forthe investment industry.

Tanya Suba-Tang (00:40):
So I want to address our listeners before we
get started today, because thisis not just a very momentous but
very exciting episode for me.
So for many of you who's beenlistening to our podcast since
season one, you might know whoour guest is.
And for those that don't know,sylvia was actually my very
first guest in this podcast, soI am so thrilled to have her

(01:03):
back.
So, sylvia, welcome to our newand improved podcast, financial
Perspective.
Thank you so much for joiningme today.

Sylvia Kwan, PHD, CFA, CA (01:11):
Thank you, tanya.
It's so great to be here and itis hard to believe where we
started.
I think it was during thepandemic, right?
Yeah, so I'm so excited to behere.
Thank you so much for having meon the podcast again.

Tanya Suba-Tang (01:24):
Yeah, I mean, it's such a pleasure and we
speak not just through thepodcast, but we speak outside of
this too, so it's always veryexciting to have a great friend
come back on and share yourexpertise and insight.
And yeah, that was back inseason one and we are now in
season five.
Can you believe it?
Insane Congratulations, thankyou.
So obviously, you are the CEOand CIO of Ellevest, and March

(01:50):
is a very important time becauseit is commencing international
women's.
So what today's conversation Iwant to talk about is the great
wealth transfer.
So when we talk about chips andinvestment and finance industry
, many do talk about what thatgreat wealth transfer is and, to
set the background of ourconversation, I'd love for you
to briefly explain what thatmeans, and not only that, but

(02:12):
what does that mean to you asthe CIO and CEO of Ellevest?

Sylvia Kwan, PHD, CFA, CAIA (02:16):
At Ellevest, we're very excited
about the great wealth transfer.
So the great wealth transferrefers to the ongoing transfer
of accumulated wealth from,basically, one generation to the
next, and in our case it wouldbe from the baby boomer
generation down to the next fewgenerations.
I believe that what many missabout the great wealth transfer

(02:40):
is a lot of those funds will begoing first to women as
surviving spouses and then tothe next generation.
Actually, I recently saw areport just a couple of days ago
that Cerulli Associatesestimates that $124 trillion is
expected to change hands by 2048.

(03:00):
I had seen previous numberslike around $84 million, so this
is the first time I've seen 124trillion.
Wow.
The same report really showedthat women will benefit
disproportionately and areestimated to inherit about 70%
of that wealth over the next 25years.
So about 54 trillion will go tosurviving spouses, of which 95%

(03:24):
women, because women, as we know, generally live longer than men
, and another 47 trillion willgo to women in younger
generations.
So clearly, both of thosefigures, and certainly together,
are amounts that well surpassthe US GDP.
So for Ellevest, we feel, sinceour focus is very much on

(03:44):
helping women build and managewealth, we are already seeing
beneficiaries of the GreatWealth Transfer coming to us,
and so we're very excitedbecause we believe we are very
well positioned to serve thesewomen.
In many cases, these women willbe managing their money
independently for the very firsttime.

(04:05):
For many women, especially inthe older generations, they have
delegated all of the financesand the investing to their
husbands, for example, and thiswill be the first time that they
will be managing it on theirown.
And so we stand here ready tohelp those women really navigate
, perhaps for the very firsttime, how best to manage their

(04:25):
finances and invest.
So we're very excited aboutthis opportunity that's coming
to this industry.

Tanya Suba-Tang (04:31):
And in your experience, comparatively
speaking, how are thesebeneficiaries investing
differently and are theygravitating toward a specific
type of investment?

Sylvia Kwan, PHD, CFA, CAIA (04:40):
Yes , I believe both women and the
younger generations do viewinvesting a bit differently than
the current older generation.
So first, speaking about women,what we heard from women is
women really see investing as ameans to achieving financial
goals.
So it's not just about beatingthe market, beating the S&P 500.

(05:03):
It's really how am I investingthat money and how is that
investment going to help meaccomplish my financial goals,
whether that's a legacy, charity, children or a comfortable
retirement, Both women andyounger generations also want to
be more intentional.
And we see that not just ininvesting, but certainly from

(05:23):
spending their money, who theydecide to support with respect
to businesses.
But it is quickly flowing intoinvesting and so obviously they
want financial returns.
We all, of of course, wantthose.
But they also want theirinvestments to better align with
their personal values and, tothe extent possible, they want
those investing dollars to beable to also generate positive

(05:44):
social and environmental impact,so they want to support climate
solutions, for example, oraffordable housing and things
like that.
So they're very, veryinterested in kind of this area
of impact investing.
I'm also seeing you asked aboutwhether they are gravitating
towards a specific type ofinvestment, and I've seen a lot
of studies showing that youngergenerations are feeling less

(06:08):
confident about the traditional60-40 portfolio that has worked
so well, I would say, for thebaby boomer generation, and so
they're very interested inalternatives, investments
outside of the 60-40.
And we see them definitelyembracing more private
investments.
Younger generations areobviously also more technology

(06:28):
savvy.
They grew up with technology,much more comfortable with
digital investing platforms, andwe're seeing certainly a high
growth in those kinds ofplatforms, not just for
traditional investing but alsofor investing directly into
alternative type of investing,and so I think the younger
generations are very comfortable.
Many of them aredo-it-yourselfers and they have

(06:51):
today, through technology, theopportunity to invest in a very
different way than the earliergeneration.

Tanya Suba-Tang (06:58):
So obviously great business practice for
firms and companies to alwaysadapt to industry shifts.
What do you think firms andcompanies can do now to prepare
and set themselves up forsuccess as we enter this new era
?

Sylvia Kwan, PHD, CFA, CA (07:10):
Since I just talked about technology,
I think definitely one of thethings firms should do is really
get more tech savvy.
And so the old you knowtradition of you know having
clients come to the office, youknow, every quarter to go
through portfolio reviews, thatmay not work as well for the
younger generation.
They're busy, they're used to,you know, zoom calls, for

(07:30):
example, or they're used toseeing things on their phone or
their tablet and may not kind ofneed as much of that in-person
contact and may not value it asmuch.
So I think having reallytop-notch technology will be
important to this generation andI think, as I thought about the
younger generations inparticular, I believe that

(07:53):
personalization is going to bereally important.
And so when I think about allthe personalization that we have
, all of us have, you know fromyou know customized clothing to,
you know all kinds of, you knowshoes, et cetera, I mean you
can order, you know shoes withcertain colors and styles and
sizes, and you know there's alot of things, especially

(08:14):
through technology, that hasmade personalization possible at
scale.
And so I think that will bleed,and has bled certainly into
investing as well, and we see alot of firms offering direct
index portfolios, for example,that can be very personalized to
a client's financialcircumstances and preferences

(08:36):
and even leading into alignmentwith their values.
And so I think, more and morepersonalization, as opposed to
having a set of model portfoliosand kind of trying to slot
everybody into one of 10, Ithink this generation will very
much value something that feelsmore personalized to them.
And then the third.

(08:57):
I guess the last couple ofpoints I would make on this is
ones that I'd mentioned before.
I think firms need to lookbeyond stocks and bonds, given
the interest in this generationand kind of their growing lack
of confidence at a 60-40 isgoing to get them there.
So I think firms really need tostart embracing, if they
haven't already, alternatives asbeing part of a well

(09:20):
diversified portfolio.
And then, lastly, really lookingat and you know how can you to
the extent there are clients whoreally want to align their
investments with their values,you know how can I create a
portfolio that that helps themachieve that?

Tanya Suba-Tang (09:35):
Wow, that was a wealth of insights.
Thank you for sharing all that.
Now, before we say goodbye, I'dlove to hear your investment
outlook over the next decade.
But also, in the spirit ofInternational Women's Month, do
you have any advice or guidanceyou can share with our female
listeners?

Sylvia Kwan, PHD, CFA, C (09:49):
That's a really loaded question there,
tanya

Tanya Suba-Tang (09:53):
I like to end it with a bang.

Sylvia Kwan, PHD, CFA, CAIA (09:54):
Yes , exactly.
Wow, I mean, we have had so muchvolatility in action in the
last weeks, months, couple ofmonths, and when you said the
next decade, I was like, wow,you know, I can barely keep up
with all the news that is kindof coming out, you know, on a
daily basis and, you know,getting a little whiplash here.
So, definitely, thinking aboutthe next decade actually, I

(10:18):
think is is puts things intoperspective in some sense,
because that then causes me tozoom out Because, you know,
obviously I mean puts thingsinto perspective in some sense,
because that then causes me tozoom out, because, obviously,
investing, hopefully for most ofus, is really a long-term
endeavor, and so it is verydifficult, of course, as humans,
to tune out some of the noiseand to think of what's happening

(10:39):
now is not permanent.
So I rarely make in fact, Inever make predictions, because
predictions are nearlyimpossible.
But, that being said, I know,and I think people will agree,
that we are certainly in forplenty of volatility, at least
in the short term to come.
My advice, though, and when Ithink about some of the

(11:01):
differences that I see betweenhow women approach investing and
how men approach investing and,just, I would say, even life in
general.
Women are great planners ingeneral I'm speaking very
generally here and so I thinkthat bodes well for long-term
investing.
If you and it's not just womenbut make sure you have a plan
for your investments, preferablya long-term plan, and then

(11:23):
stick to it.
That has really proven tocontribute to long-term success
and so you're not kind ofbuffeted by all of the
short-term news and the noisethat's going on.
As long as your portfolio iswell diversified, not only
across stocks and bonds, butperhaps select alternatives as
well, that kind of help offsetthe risk of stocks and bonds, it
will be much easier to stick tothat plan.

(11:45):
So, number one have a plan.
Number two stick to it

Tanya Suba-Tang (11:48):
Great advice, and that advice is not just for
investment, right, it could comeacross in many different facets
,

Sylvia Kwan, PHD, CF (11:55):
absolutely .

Tanya Suba-Tang (11:57):
But, sylvia, always, always a pleasure to
have You.
always love our conversationand sharing your insight from
this.
So thank you so much forjoining me today.

Sylvia Kwan, PHD, CFA, CA (12:06):
Thank you, tanya.

Lindsey Helman (12:14):
Thank you to this month's guest, Dr Sylvia
Kwan, for sharing her insightsinto navigating the great wealth
transfer.
Join us next time for anotherFinancial Perspectives episode
airing on the last Tuesday ofthe month.
We love hearing from ourlisteners and want to hear what
you thought of this episode andany topics you'd like for us to
cover.
Send us a message using thelink at the top of each episode

(12:34):
description or email us atpodcast.
org.
Thank you for being a dedicatedlistener.

(12:56):
This podcast is produced by CFASociety San Francisco, a
not-for-profit professionalassociation providing
professional learning and careerresources to over 13,000
investment industryprofessionals worldwide.
To learn more about CFA SocietySan Francisco, visit our
website at cfa-sf.
org or connect with us onLinkedIn.