The Great Wealth Transfer is usually presented as a story about inheritance and spending. Baby boomers control an extraordinary amount of wealth, younger generations are expected to inherit much of it, and the natural conclusion is that trillions of dollars will eventually find their way into homes, cars, travel and consumption.

I think investors may be focusing on the wrong part of the transaction.

Visa estimates that baby boomers hold roughly $93 trillion of assets and that, after retirement spending, liabilities, taxes and other deductions, around $36 trillion could eventually reach Gen X and millennial households. The number that interests me most is what happens next. Visa estimates roughly $28 trillion of that inheritance could remain saved or invested, while around $8 trillion may flow into additional consumer spending.

No forecast covering the next two decades will be exactly right, and other estimates of the Great Wealth Transfer are larger. For example, Cerulli Associates projects $124 trillion of transfers through 2048, including older generations, spouses and charitable giving. I would not spend too much time arguing over which headline number ultimately proves closest.

The investment question is simpler. What happens when tens of trillions of dollars remain invested but the person controlling them changes? That makes the Great Wealth Transfer less of a spending boom than an ownership transition across the financial system.

Why Markets May Feel The Wealth Transfer More Than Consumers

There will clearly be a consumer effect. Parents are already helping children with home purchases, paying for major expenses and transferring wealth before death. Housing, travel, autos and some areas of discretionary spending should benefit.

But the overall effect may be smaller than the headline wealth figures suggest. Visa estimates the additional inheritance-related spending could add only about 0.1 percentage point a year to real consumer spending growth through 2046.

Part of the explanation is who receives the payment. Visa estimates that nearly three-quarters of inheritance recipients already have household wealth above the median. People who already own homes, retirement accounts and financial assets are less likely to consume every additional dollar they receive.

That is where the investment story becomes more compelling to........

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