News

Great wealth transfer will lead to financial choices

Hundreds of billions of euros in wealth are set to change hands over the coming decades. In its report Passing wealth to future generations, the Dutch Authority for the Financial Markets (AFM) highlights the potential implications of this wealth transfer for consumers in the housing market, savers and investors, and users of financial advice. This development presents opportunities for wealth accumulation but may also lead to new risks for consumers and increasing inequality within generations. It is therefore important that market participants, government and consumers start preparing in good time.

In short

More wealth is set to shift between generations
Changing financial choices and consumer risks
Inheritances strengthen people’s housing market position
Investment fraud is a looming threat

More wealth is set to shift between generations

The Netherlands is on the cusp of a wave of inheritances and lifetime gifts. The current generation of older people hold substantial wealth, partly due to housing equity accumulated over their lifetime. Over the coming decades, an increasing share of this wealth will be transferred to future generations. While this will create new financial opportunities for consumers, it is also likely to reshape demand for financial products and services.

Changing financial choices and consumer risks

Wealth that has long been concentrated among older generations will be redistributed to future generations, with different life stages, needs and financial preferences. This may affect the way consumers save, invest, make housing choices and use services such as financial advice. It is therefore important that financial service providers offer products and services that meet consumers’ needs and support them in making informed financial decisions.

Inheritances strengthen people’s housing market position

A significant proportion of the wealth transferred is linked to owner-occupied housing. Heirs often use the proceeds from an inherited home to purchase a larger home, renovate their existing property or make it more sustainable. In this way, an inheritance can strengthen a household’s position in the housing market or facilitate access to it. At the same time, this widens the gap between households that do and do not inherit housing wealth. As a result, there is a risk of further increases in wealth disparity and inequality of opportunity within generations.

Investment fraud is a looming threat

People who suddenly come into possession of substantial wealth can be an attractive target for fraudsters. Heirs often face complex financial decisions and may find themselves in an emotionally vulnerable situation, making them more susceptible to deception. This is particularly true in the case of investment fraud, where high returns are promised without a legitimate investment offering. Good consumer education, appropriate financial services and alertness to signs of fraud are therefore important in helping to protect consumers.