The Great Wealth Transfer and ESG Investing
Imagine tens of trillions of dollars changing hands as one generation passes wealth to the next. That scenario is no longer hypothetical. It is already unfolding across the United States. As Baby Boomers (born 1946 through 1964) begin to transfer their assets to their children and grandchildren, economists are tracking what is now commonly referred to as the “Great Wealth Transfer.” This transition is expected to move around $84 trillion from older Americans to younger heirs by the mid-2040s¹. It represents one of the largest financial shifts in modern history.
But it is not just about money changing hands. It is also changing how that money is being used. Younger generations are stepping into new financial roles with different priorities. In particular, many Millennials and members of Gen Z are choosing to invest in ways that align with their environmental, social, and ethical values. As a result, ESG (Environmental, Social, and Governance) investing is becoming a central strategy for how this new wealth is deployed.
About This Article
As trillions of dollars are transferred between generations during the Great Wealth Transfer, the investing landscape continues to evolve. In this article, we explore:
Different Generations, Different Values in Investing – How Baby Boomers, Gen X, Millennials, and Gen Z view money and purpose differently.
ESG Investing’s Rise in Recent Years – Why environmental, social, and governance factors are becoming core to portfolio decisions.
Implications for Financial Planning and the Industry – How advisors and firms are adapting to a values-driven investor base.
Navigating Inheritance with Longwave Financial’s ESG Focus – Our approach to aligning inherited wealth with meaningful, responsible investing.
Different Generations, Different Values in Investing
Millennials and Gen Zers are shaping a new investment culture. Unlike many of their parents and grandparents, they place strong emphasis on what companies stand for, not just what they earn. These younger investors have grown up during a time of increased climate awareness, social movements, and corporate transparency. They are more likely to ask questions about how a company treats its workers, what kind of environmental impact it has, or how diverse its leadership team is. According to one study, 82 percent of investors ages 21 to 43 consider a company’s ESG record when making investment decisions, compared to just 35 percent of investors over 44². This generational divide signals a lasting change in market behavior.
These shifts go beyond personal values. Many younger investors view ESG criteria as essential tools for long-term risk management. They see environmental damage, labor disputes, or governance scandals as real financial threats. In their view, sustainable investing is not only more responsible; it may also be smarter over time. This mindset is reflected in portfolio preferences. Instead of defaulting to traditional large-cap stocks or fossil fuel-heavy sectors, they are seeking funds with clear ESG mandates, including renewable energy, community lending, fair trade, and inclusive workplaces. Some are even exploring shareholder activism or direct impact investing to push for social change from within. This new investor mindset is creating long-term momentum in favor of ESG priorities across asset classes.
ESG Investing’s Rise in Recent Years
Fueled by this demand, ESG investing has moved from the margins to the mainstream. Over the past decade, it has grown rapidly across all levels of financial services. Asset managers now offer an expanding menu of ESG-oriented mutual funds, ETFs, and even separately managed accounts. There are funds focused on climate solutions, water stewardship, gender equity, circular economies, and dozens of other targeted issues. Between 2018 and 2022, U.S. sustainable investment funds quadrupled in size, reaching approximately $358 billion³. Globally, ESG funds now manage several trillion dollars.
This growth has also prompted innovation. Financial firms are developing new ESG scoring models, integrating artificial intelligence, and improving disclosure frameworks. Even large institutional investors, including pension funds and university endowments, include ESG mandates in their strategies. The market is responding with an increasing variety of options that allow investors to align their capital with their conscience.
It is now easier than ever for people to invest in companies and sectors that reflect their values. From green bonds that fund renewable infrastructure to exchange-traded funds tracking ethical indexes, ESG strategies are available to a wider range of investors. This accessibility means younger generations inheriting wealth do not need to choose between financial performance and personal conviction. They can pursue both, and many are doing just that.
Implications for Financial Planning and the Industry
The wealth transfer now underway is transforming not just investment portfolios but the financial services industry itself. Advisors and planners are realizing that values-based investing is not a trend. It is a new client expectation. This is especially important when considering the high advisor turnover that occurs during generational handoffs. Research shows that more than 70 percent of heirs change or fire their financial advisor after inheriting family assets⁴. Often, the reason is simple: the advisor never engaged with the next generation or failed to understand their evolving priorities.
In response, financial professionals are rethinking how they build relationships. More advisors are working to include children and grandchildren in planning conversations earlier. They are asking deeper questions about legacy, purpose, and community impact. The standard financial plan is evolving. It now includes strategies for ESG investing, sustainable philanthropy, and intergenerational wealth goals. Planning for tax efficiency and retirement remains important, but it is being balanced with conversations about how money can support education access, affordable housing, racial equity, or climate resilience.
For younger investors, this is an opportunity to shape the next chapter of their family’s financial story. They are not just inheriting money; they are inheriting the power to guide what that money supports in the world. Financial advisors who recognize this shift and offer meaningful ESG solutions are more likely to retain clients through this transition and beyond.
Navigating Inheritance with Longwave Financials’ ESG Focus
At Longwave Financial, we specialize in helping individuals and families align their financial plans with their values. We understand that the Great Wealth Transfer is about more than receiving an inheritance. It is about making intentional choices with new financial responsibility. Our approach to ESG investing reflects that belief. We help you explore investment options that support clean energy, local economies, and ethical corporate practices, all while staying grounded in your long-term financial goals.
Our team works closely with you to identify what matters most. Whether your priorities include environmental sustainability, social impact, or inclusive governance, we can create a portfolio strategy to reflect those commitments. We do not just recommend a few ESG funds and move on. We build a plan that incorporates those values into every stage of wealth building, preservation, and legacy planning. That includes charitable giving strategies, ESG-aligned retirement planning, and family conversations about values and vision.
As this historic wealth transfer continues, we believe investors have an opportunity to do more than just grow their assets. They can use this moment to create lasting impact. At Longwave Financial, we are committed to helping you make that happen. By combining experienced financial planning with forward-looking ESG insights, we offer guidance that is both practical and purposeful. Your inheritance is more than a financial gift. It is a chance to shape the world you want to live in, and we are here to help you do it thoughtfully.
Ready to align your wealth with your values? Contact our team to start planning your legacy today.
FAQs
What is the Great Wealth Transfer?
The Great Wealth Transfer means the significant shift of assets from the Baby Boomer generation to younger generations, primarily Millennials and Gen Z, over the next few decades. It represents one of the largest intergenerational transfers in history and is expected to reshape investment trends and priorities.
How much wealth is expected to change hands in the coming decades?
Estimates suggest that $68 to $84 trillion will pass from Baby Boomers to heirs and charitable causes by 2045, with much of this wealth influencing the future of financial markets, philanthropy, and socially responsible investing.
Why are younger generations more interested in ESG investing?
Millennials and Gen Z tend to prioritize environmental sustainability, social responsibility, and corporate governance when making financial decisions. This values-driven approach often leads them toward ESG investments, which align more closely with their social and environmental concerns.
How does ESG investing differ from traditional investing?
While traditional investing focuses primarily on financial performance, ESG investing evaluates companies based on environmental impact, social responsibility, and governance practices in addition to profitability. This approach can generate competitive returns while promoting long-term sustainability.
What role does ESG play in inheritance and estate planning?
For families prioritizing impact, ESG strategies can be integrated into trusts, foundations, and investment portfolios to reflect shared values. This means that inherited wealth supports both financial growth and positive societal change over generations.
How can I align inherited wealth with my personal values?
Start by defining your values and long-term goals, then work with a financial advisor experienced in ESG strategies. They can recommend funds, equities, and bonds that match both your ethical priorities and your desired financial outcomes.
Are ESG investments as profitable as traditional investments?
Many studies show ESG investments can perform as well as, or even better than, traditional portfolios, especially over the long term. However, performance varies depending on market conditions and the specific investment strategy.
What should families discuss before transferring wealth?
Open conversations about values, financial literacy, and investment philosophy help create alignment across generations. Discussing ESG principles can clarify how wealth should be used to achieve both financial and societal goals.
How can Longwave help with ESG-focused financial planning?
Longwave offers guidance on building investment portfolios that align with both personal values and market opportunities. Our expertise in ESG strategies can help families manage the Great Wealth Transfer with a focus on long-term impact and sustainable returns.
Sources:
¹ Talmon Joseph Smith, “The Biggest Wealth Transfer in History Is Here, With Familiar (Rich) Winners,” The New York Times. May 14, 2023.
² Merrill Lynch / Bank of America Private Bank “Bank of America Private Bank Study of Wealthy Americans,” 2024.
³ Investopedia. “Environmental, Social, and Governance (ESG) Criteria,” 2022.
⁴ Cerulli Associates, “Aging Boomers Bring Intergenerational Planning to the Forefront” 2021.