Thirty trillion dollars. “Trillion.” With a “t.” That is the estimated amount that so-called millennials will inherit from their baby-boomer parents over the next few decades. It is the largest transfer of wealth, possibly in human history. By the way, who are these people? Seriously. The fact is most people are entirely unprepared financially for retirement! Clearly these are not the kids of the millions of baby boomers who will be reliant upon social security to make ends meet. But I digress.Wealth managers today focus a lot of energy targeting the baby boomers themselves, especially to help them protect whatever wealth they have amassed, to sustain their lifestyle after retirement. It is a very large market. But apparently the wealth that is going to be transferred to millennials will be an even larger market, and investment advisors are beginning to position themselves to capture the opportunity. In the clip below, one such advisor talks about a program his firm offers called Backpacks to Briefcases. It pairs millennial clients with their contemporaries in the wealth management game, whom they may better be able to relate.
Financial literacy is woefully lacking in our education system, even among the well-off, so this is a great idea. The fortunate ones who will be coming into enormous sums of money will need the training that many of their parents didn’t receive in order that they may make wise decisions about managing, spending and donating their windfall.
You don’t have to inherit a large fortune for sound money management to be relevant to you. Any amount of money you have earned or inherited should be handled properly. True, we are more likely to blow through money that we have been given rather than money that we have earned on our own. But no matter the circumstance, sound financial practices matter. For example: a guy in his mid-20’s inherits the proceeds of a large life insurance policy, pension and 401K upon his mother’s passing, totaling several hundred thousand dollars. He uses his windfall to live the large – traveling, partying, and everything else. Fast forward five years, the money is gone and he’s worse off than he was before. True story. There is an expression one of my friend taught me: “It’s not what you make (have), it’s what you keep.”