Why the Great Wealth Transfer Needs Behavioural Insight.
The largest transfer of wealth in human history is underway. Over the coming decades, trillions in assets will pass to younger generations in what’s been dubbed the Great Wealth Transfer. But while the financial headlines tend to focus on the numbers, the true complexity of inheritance lies not in the money itself, but in the human behaviour surrounding it.
Inheritance is rarely just a financial event. It’s a handover of identity, responsibility, unfinished conversations, and family expectations. It’s also, more often than not, a moment of emotional strain—grief, uncertainty, even guilt—combined with a sudden shift in financial identity. And that makes it fertile ground for behavioural pitfalls.
Why inheritance is so psychologically complicated
From a behavioural finance perspective, inheritance is one of the most challenging financial transitions a person can experience. It arrives without warning (even when expected), carries emotional weight, and demands decisions at a time when people are least equipped to make them.
According to recent research by Capital Group, one-third of inheritors say they regret not investing more, and 60% wish they had used their inheritance differently. These data are not mistakes of logic or calculation. They are the result of behavioural biases—Status Quo Bias, Endowment Effect, and Decision Paralysis—amplified by emotional upheaval.
Some inheritors sit on cash, afraid of making the wrong move. Others hold on to inherited portfolios or property that no longer suit their needs, simply because they feel it would be wrong to change something passed down. In both cases, inherited wealth is being managed in a way that prioritises emotional comfort over long-term outcomes.
A crisis of clarity, not intent
Regret also plays a powerful role. Many inheritors experience Decision Paralysis, leaving wealth idle. Regret Aversion makes people avoid choices that could later feel like mistakes. And Status Quo Bias encourages clinging to what has been received—even if it no longer makes sense. These traps can turn opportunity into frustration unless recognised and addressed.
Communication is another major fault line. Capital Group’s research found that while 88% of wealth holders believe they’ve communicated their plans, only 38% of heirs feel satisfied with how things were handled. Saying something once is not the same as being understood—particularly in emotionally charged areas like death and money.
Biases such as Optimism Bias, Avoidance, and discomfort with conflict lead families to postpone or dilute conversations that should be clear and explicit. The result is a gap between what the giver intends and what the receiver hears. And these gaps widen when families don’t recognise that money carries emotional weight. Without a framework to make these assumptions visible, miscommunication is inevitable.
The King Lear problem and other complications
Many people assume that they can shape what happens to their wealth after they’re gone. But as Shakespeare recognised, passing on assets does not mean passing on control. Once the wealth is out of your hands, so is the ability to influence how it’s used. Without behavioural anchors in place—shared values, open conversations, and pre-commitment mechanisms—legacy risks becoming a story told with missing pages.
Tools like a Family Constitution can help. Similar in concept to the Investing Constitutions we advocate for individuals, and which are developed further as a practical tool in our online course The Art of Behavioural Investing, a Family Constitution captures shared principles, behavioural preferences, and practical agreements about how wealth should be handled across generations. It’s not about dictating outcomes, but about aligning expectations in advance to reduce future regret and resentment. Documenting agreements also helps avoid one of the most human tendencies of all: faulty memory. People recall the same conversations very differently over time. Writing things down doesn’t just formalise decisions—it protects relationships.
Inheritance is also complicated by the fact that wealth today is often passed on much later in life. By the time inheritances arrive, children may already be financially independent, so assets sometimes skip a generation and go directly to grandchildren. That adds a third set of perspectives to the conversation, compounding communication challenges across the family.
Another layer comes from the demographics of longevity. Because women on average are younger than their male partners, and tend to outlive them, much wealth is first passed to surviving spouses—most often wives. Many women in older cohorts were less involved in family finances during their lives, leaving them with lower confidence when suddenly responsible for substantial assets. As we outlined in Of Sex and Suitability, this creates multiple challenges: communication gaps, low cash deployment, emotional attachment to assets, and a tendency to preserve rather than use wealth to meet their own needs. Yet it is never true of all women, and reinforces the importance of understanding each person’s individual Financial Personality rather than assuming group characteristics.
Why younger inheritors behave differently
Many younger inheritors, raised on digital platforms and social media, bypass traditional financial advice entirely. They turn to finfluencers, peers, and online communities—not out of ignorance, but because these sources feel more accessible, emotionally resonant, and aligned with their identity.
This doesn’t mean they are reckless with money. But it does mean that wealth managers and advisers must adapt their approach. They must meet inheritors where they are, with messaging that feels personal and emotionally relevant. Behavioural finance can help by providing emotionally intelligent framing, personalisation, and nudges that make advice feel less like instruction and more like support.
Interestingly, data from Capital Group’s 2025 survey of high-net-worth and ultra-high-net-worth individuals suggest that younger inheritors are less likely to invest through a sustainability lens than those slightly older, despite a more progressive public image. This highlights a deeper point: behavioural preferences do not always track neatly with demographic stereotypes. Real insight comes from understanding individuals, not from assumptions about their background.
Profiling people, not just portfolios
This is why understanding individual Financial Personality is so important. At Oxford Risk, we’ve profiled tens of thousands of investors across key behavioural dimensions—Risk Tolerance, Composure, Confidence, Impulsivity, and more. These are the traits that shape how someone reacts to a windfall, not when they were born.
For example, someone with low Financial Confidence and high Composure may need more guidance and reassurance, but will likely stay the course once a plan is in place. Someone with high Confidence but low Composure may act decisively, but could panic in market downturns. Knowing which is which helps tailor advice that sticks.
The same applies to those who inherit property or portfolios. An individual’s Familiarity Preference can affect how they respond to inherited assets, especially those with strong emotional associations. Others may show high Spending Reluctance, strong Liquidity Preference, or Impulsivity—each requiring very different types of support.
Behavioural data from Oxford Risk show that traits like Composure and Liquidity Preference strongly influence how comfortable people feel deploying inherited wealth. Many who inherit large cash balances struggle to move it into productive investments, not because they lack knowledge, but because they lack emotional comfort. Similarly, heirs who inherit illiquid assets may either cling to them out of familiarity, or sell too quickly without considering the long-term value.
And that’s the point. The job of behavioural finance is not to make people behave better. It’s to help them behave more like themselves—but in ways that serve their long-term goals, not undermine them.
From regret to readiness
Ultimately, the Great Wealth Transfer is not just about who gets the money, but who they become because of it. Inheritance is an emotionally loaded transition—one that families and advisers must approach with empathy, clarity, and behavioural awareness.
To avoid regret, families need to talk early, openly, and often. To avoid paralysis, inheritors need simple, actionable pathways for decision-making. And to make the most of inherited wealth, advisers must understand not just what people have, but who they are.
Because financial legacy is not about passing on assets—it’s about passing on identity, values, and stories, and helping the next generation put them to good use. For those inheriting significant wealth and seeking practical tools to navigate the emotional and financial journey, our online course The Art of Behavioural Investing offers a deeper dive into these ideas.
