As trillions of dollars are set to pass from older generations to their heirs, a significant shift in how wealth is managed and invested is taking place. The heirs of wealthy families are taking a more active role in reshaping the future of family offices, moving away from traditional investments towards more innovative, value-based ventures. This shift is being driven by the preferences of younger generations, including millennials and Generation X, who are increasingly focused on combining profit with societal progress.

The Scale of the Wealth Transfer

According to a report by Cerulli Associates, over $100 trillion is projected to be transferred from older generations to their heirs in the United States by 2048. Millennials (ages 27 to 42) and Generation X (ages 43 to 58) are expected to inherit around $85 trillion during this period, while Generation Z and younger generations are set to inherit over $15 trillion.

This wealth transfer is particularly pronounced among high-net-worth (HNW) and ultra-high-net-worth (UHNW) families, who account for about 2% of U.S. households but are expected to contribute over 50% of the wealth transferred, totaling approximately $62 trillion.

Shifting Priorities: Profit with Purpose

Unlike the baby boomers who prioritized financial gain, younger generations are increasingly driven by the desire to create a positive impact on society. Martin Roll, a family business expert at McKinsey & Company, explained that younger heirs are less motivated by wealth accumulation and more interested in addressing global challenges, such as climate change, diversity, health, and geopolitical conflicts. This shift is reflected in the growing interest in sustainability and environmental, social, and governance (ESG) investing.

Nirbhay Handa, CEO of the global migration platform Multipolitan, pointed out that millennials and Gen X are particularly drawn to companies that align with their values. For example, many are more inclined to invest in sustainable businesses like Oatly and Beyond Meat, rather than traditional fossil fuel or oil and gas industries.

Family Offices Become Centers of Innovation

This change in investment priorities has led to a transformation in how family offices operate. Traditionally seen as passive entities that managed family wealth, family offices are now becoming "centers of innovation." Handa noted that younger generations are actively investing in technology and startups, particularly those in climate tech, edtech, renewable energy, and other sectors that can drive societal change.

Moreover, family offices are increasingly making direct investments in private companies, deviating from the traditional model of passive portfolio management. This diversification reflects a broader shift, as younger family members explore investments beyond the family’s traditional industries.

Why Is the Great Wealth Transfer Happening Now?

The scale of the Great Wealth Transfer can be traced back to the post-World War II economic boom. The rise of the Western economies, particularly in the U.S. and Europe, created a period of unprecedented wealth creation, particularly during the 1950s and 1960s. This wealth, built from new industries and the economic expansion of the post-war era, is now being passed on to the next generation.

Roll explains that it is this senior generation—the builders of the wealth and industries after World War II—that is now passing on its legacy to younger generations. This transfer of wealth, including business stakes, is bringing about a major generational shift in how wealth is managed and invested.

A New Era of Engagement and Impact

As the great wealth transfer unfolds, Handa believes this massive shift in financial power is reshaping how wealth will be used in the future. “This era is about vitality and vibrancy,” he said, emphasizing that it’s also about democratization, aspiration, and accessibility. Legacy institutions will need to adapt to the changing preferences of younger generations who want to use their wealth to address some of the world’s most pressing issues, including climate change, social inequality, and education.

Ultimately, as younger generations inherit and re-invest this wealth, Roll believes it will be put to work in ways that benefit society at large. Whether through technological innovation or addressing the world’s major challenges, the next generation of wealth holders is poised to make a lasting impact.