UBS Investor Watch: Investors are unprepared for the largest transfer of wealth in history

Over the next 20 years, the world will experience the greatest transfer of wealth in history with $84 trillion expected to pass down to younger generations in the US alone. UBS’s latest Investor Watch report, which surveyed 4,500 investors in 14 markets with at least $1 million in investable assets, found that around 40% of investors globally have not formalized an inheritance plan, due to the complexity of dividing their inheritance fairly. Fifty percent of investors surveyed have not shared where assets are held, how they intend to divide them, or how much they are worth.

Navigating a wealth transfer can be a complicated and emotional issue. Two-thirds of investors struggle with how to share their wealth in a way they consider fair, particularly if it means dividing assets unequally among heirs. Investors who chose to favor some of their heirs over others are clear about why, with 80% giving more to heirs they have closer relationships with. Others cite what their heirs’ financial needs are and how much responsibility they have in taking care of their benefactor as they age.

“While investors overwhelmingly want the inheritance process to go smoothly, inadequate inheritance planning can be costly and could lead to unresolved family conflict,” said Iqbal Khan, President Global Wealth Management and President Europe, Middle East, and Africa at UBS. “Every family has different values and should be supported by a team of professionals who can help them develop a personalized strategy to preserve what is most important to them.”

For heirs, having conversations about wealth is also difficult but discussing inheritance plans too late may create challenges:

• A third admit to having unresolved issues and conflicts with other heirs.
• Nearly half said one of the biggest barriers to open communication was the fear of appearing selfish.
• Among investors who have received an inheritance, four in 10 wish they had been more open with their parents beforehand.
• For those who served as executors, 64% said carrying out their parents or relatives last wishes was difficult.

Different family dynamics can complicate inheritance plans. Families that include stepchildren face even greater struggles dividing assets. Eighty-seven percent of blended families struggle with dividing assets fairly, compared to 62% of non-blended families. Investors without children are more likely to leave a higher proportion of their wealth to charitable causes (40%), compared to investors with children (30%).

Business owners face additional complications when addressing the wealth transfer—particularly since the business is often the most valuable asset and difficult to pass on. Six in 10 business owners struggle to divide assets fairly. Around half (47%) hope to leave their business to family, but many have no estate plan and have not discussed their intentions with heirs or set expectations about business transition plans.

The majority of investors and heirs agree that the best form of action is ongoing and purposeful communication, and around half of all investors surveyed expressed interest in including a professional to help facilitate wealth transfer discussions.