New Zealanders are being warned that they need to know what to do with wealth they may be about to inherit from their parents.
It is estimated that $1.6 trillion is going to be passed down to younger generations from Baby Boomers over the next 30 years.
But commercial property fund manager PMG Funds general manager of investor relationships Matt McHardy said he was concerned that some people might not have sufficient knowledge to manage the money they were set to receive.
Well thank God for fund managers then.
“Boomers are probably the luckiest generation… they’re going to live longer, more active, healthier lives.
“They also lived through a period of time where population growth around the world was immense and demand for products and services has been immense with it so they’ve created a lot of assets and they’re going to hold on to them longer but ultimately there’s that questions around to whom are they left.”
He said people should not wait to have a conversation with family about it.
“There are things you can do as a perhaps patiently waiting recipient of some of that wealth without wishing anyone away… you should ideally have a conversation before you get to that point where they’re not here or not capable of having that conservation in a rational way… sitting down with your kids, grandkids, whomever is going to inherit the money and say this is what we’re going to leave roughly, this is the way we want to split it and let’s have a conversation about how it was built, how long and hard that was, so you guys don’t get it and squander it.”
Hear that, boomers? Don’t let your kids squander your hard-earned wealth. That’s your job!
He said the older generation could also help by introducing the family to people such as their investment advisers or other advisers who would be able to provide assistance.
“Real humans, not AI. They might cost a bit here and there, but when you’re talking about inheriting tens or hundreds of millions of dollars, to go and see an adviser is totally worth their weight in gold and certainly help.”
Um, yeah, sure, whatever.
[…]He said there was increasing focus across the board on improving financial literacy of the younger generations.
“The major issue is if you don’t, what will happen is, there’s this silent generation and the boomers that have done really well creating these assets. And then you give it to the next generation. They’re probably okay, possibly.
“But it’s the one after that where you get sort of two degrees removed from the original source. And that’s where the real risk is. And for people that know and understand this world, they also know how to leverage it and how to amplify their wealth.
“And so we end up taking or receiving more of it in years to come. And then those that don’t, squander it and then they wonder how they went wrong. So you get this growing imbalance where less of the population over time has more of the money.”
Um, it’s actually a known fact that most wealth doesn’t last more than three generations.
“That leads to obviously massive social issues that we don’t really want to have to be solving for on an ongoing basis. We need to educate people to stop that or prevent that from happening.”
As I’ve written about before, between boomers with the attitude ‘Muh kids are gonna learn to stand on their own two feet’ and those that find any inheritance they intended to give to their kids being eaten up by ever increasing health costs, the ‘Great Wealth Transfer’ ain’t going to happen.
Add in that most boomer wealth is tied up in property, so even if the ‘Great Wealth Transfer’ did happen, it’s not likely to even be a fraction close to $1.6 trillion dollars due to property prices crashing. Sorry kids.
But anyway, if I were a cynic I would call this a lame attempt by a fund manager to drum up more business.
Source: https://www.rnz.co.nz/news/business/573807/baby-boomers-set-to-pass-on-1-point-6-trillion-of-wealth
