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ATM fees are at a record high, a new survey finds. Here’s why.
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Getting cash from an ATM is growing increasingly expensive as fees reach record highs.
Americans are now paying an average of $4.86 for out-of-network ATM withdrawals, up 1.9% from $4.77 last year, according to a new survey from Bankrate.com. That’s the highest on record, according to the personal finance website, which starting tracking ATM fees 27 years ago.
“ATM fees are just one of those avenues that the bank can very freely continue to charge fees,” Bankrate financial analyst Stephen Kates told CBS MoneyWatch.
Those costs include charges from both ATM owners and banks. According to the survey, the average fee from cash machine providers is $3.22. Banks charge $1.64 on average, up 3.8% from 2024 — the highest since 2018. As a result, Americans in certain metro areas could see average combined fees of more than $5.
For its survey, Bankrate polled a total of 10 banks and financial institutions in 25 of the nation’s largest metro areas. Atlanta topped the list for highest ATM costs, with an average out-of-network fee of $5.37. Behind Atlanta are Phoenix and San Diego, where ATM charges average $5.35 and $5.31, respectively.
Boston and Seattle had the lowest average rates among the metro areas surveyed — $4.37 and $4.42, respectively.
What’s behind the rising charges?
The problem, said Kates, is that while there have been regulatory rumblings around curbing overdraft fees, resulting in voluntary caps by financial institutions, there are no limits on how much banks can charge for ATM withdrawals, giving them free rein to hike fees as much as they want. And since the charges apply to people outside the bank’s network, there’s no risk of it losing customers.
“It’s one of the ways for the bank to certainly make money, and it’s one of the ways to do so that doesn’t really hurt their own customers,” Kates said.
Higher fees also help ATM owners and banks make up for lost revenue as consumers gravitate away from using cash and toward digital payments, said Kates. Also, online banking has nearly eliminated the need for automated bank tellers. According to survey conducted by Morning Consult on behalf of the American Bankers Association last year, only 5% of customers relied on ATMs to manage their bank accounts.
To be sure, reliance on cash hasn’t disappeared altogether. The Federal Reserve Bank of Atlanta found that cash was still Americans’ primary form of payment as of October 2024 — whether for a trip to an old-school laundromat or a vexingly cash-only restaurant.
“Fewer and fewer people need to use cash for certain things, but there are some times when you have to have it,” said Kates.
How to avoid high ATM fees
Avoiding high ATM fees requires a bit of strategy and forethought, as you may not always be near a bank-affiliated ATM when you need to withdraw cash.
In such a situation, one option is to get cash back at a local store. Kates also encourages people to look at their banking app to see which ATMs are close to them.
If you need to withdraw cash on a regular basis, but live in an area where there aren’t any ATMs in-network, you may want to consider changing where you bank to accommodate your needs. Certain online financial services like Fidelity, for instance, reimburse customers for ATM fees — making them a more attractive option.
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SouthState Co. $SSB Stock Holdings Increased by Alliancebernstein L.P.
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Alliancebernstein L.P. increased its stake in shares of SouthState Co. (NASDAQ:SSB – Free Report) by 44.5% in the 1st quarter, HoldingsChannel.com reports. The firm owned 300,047 shares of the bank’s stock after buying an additional 92,342 shares during the quarter. Alliancebernstein L.P.’s holdings in SouthState were worth $27,850,000 as of its most recent SEC filing.
Other large investors have also recently added to or reduced their stakes in the company. Versant Capital Management Inc lifted its position in SouthState by 577.4% in the 1st quarter. Versant Capital Management Inc now owns 569 shares of the bank’s stock worth $53,000 after buying an additional 485 shares in the last quarter. MassMutual Private Wealth & Trust FSB increased its stake in shares of SouthState by 181.7% in the first quarter. MassMutual Private Wealth & Trust FSB now owns 586 shares of the bank’s stock worth $54,000 after acquiring an additional 378 shares during the last quarter. Summit Securities Group LLC increased its stake in shares of SouthState by 81.5% in the first quarter. Summit Securities Group LLC now owns 688 shares of the bank’s stock worth $64,000 after acquiring an additional 309 shares during the last quarter. Smartleaf Asset Management LLC raised its holdings in shares of SouthState by 1,103.4% during the first quarter. Smartleaf Asset Management LLC now owns 698 shares of the bank’s stock worth $64,000 after acquiring an additional 640 shares in the last quarter. Finally, BI Asset Management Fondsmaeglerselskab A S acquired a new stake in SouthState during the first quarter valued at $67,000. Institutional investors and hedge funds own 89.76% of the company’s stock.
Insider Buying and Selling at SouthState
In other news, Director G Stacy Smith purchased 2,500 shares of the firm’s stock in a transaction on Friday, August 1st. The stock was bought at an average cost of $92.30 per share, for a total transaction of $230,750.00. Following the completion of the acquisition, the director directly owned 39,546 shares of the company’s stock, valued at approximately $3,650,095.80. The trade was a 6.75% increase in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, insider Daniel E. Bockhorst sold 5,000 shares of SouthState stock in a transaction dated Friday, August 22nd. The stock was sold at an average price of $99.60, for a total value of $498,000.00. Following the completion of the transaction, the insider owned 31,785 shares in the company, valued at $3,165,786. The trade was a 13.59% decrease in their ownership of the stock. The disclosure for this sale can be found here. Insiders bought 8,338 shares of company stock worth $786,321 over the last ninety days. Company insiders own 1.70% of the company’s stock.
Analyst Ratings Changes
Several research analysts have weighed in on the company. Hovde Group upped their target price on SouthState from $97.00 to $105.00 and gave the stock a “market perform” rating in a research report on Friday, July 25th. Barclays increased their price objective on SouthState from $117.00 to $120.00 and gave the stock an “overweight” rating in a report on Monday, July 28th. Truist Financial assumed coverage on shares of SouthState in a research report on Tuesday, May 13th. They set a “buy” rating and a $106.00 price objective on the stock. Jefferies Financial Group started coverage on shares of SouthState in a research report on Wednesday, May 21st. They issued a “buy” rating and a $110.00 target price for the company. Finally, Citigroup restated a “buy” rating and set a $117.00 price target (up previously from $113.00) on shares of SouthState in a report on Monday, July 28th. Two analysts have rated the stock with a Strong Buy rating, eight have given a Buy rating and one has issued a Hold rating to the stock. According to MarketBeat.com, the company has a consensus rating of “Buy” and an average target price of $115.27.
View Our Latest Analysis on SouthState
SouthState Stock Down 1.2%
Shares of SouthState stock opened at $100.98 on Wednesday. The stock has a market capitalization of $10.22 billion, a P/E ratio of 14.51 and a beta of 0.74. The company has a quick ratio of 0.91, a current ratio of 0.91 and a debt-to-equity ratio of 0.07. The stock has a 50 day moving average price of $97.52 and a two-hundred day moving average price of $92.35. SouthState Co. has a 12-month low of $77.74 and a 12-month high of $114.26.
SouthState (NASDAQ:SSB – Get Free Report) last released its quarterly earnings results on Thursday, July 24th. The bank reported $2.30 EPS for the quarter, beating analysts’ consensus estimates of $1.98 by $0.32. SouthState had a net margin of 22.38% and a return on equity of 9.62%. The company had revenue of $840.50 million for the quarter, compared to analyst estimates of $645.12 million. During the same quarter last year, the firm posted $1.74 earnings per share. Equities analysts expect that SouthState Co. will post 8.12 earnings per share for the current year.
SouthState Increases Dividend
The company also recently announced a quarterly dividend, which was paid on Friday, August 15th. Shareholders of record on Friday, August 8th were given a dividend of $0.60 per share. The ex-dividend date of this dividend was Friday, August 8th. This represents a $2.40 dividend on an annualized basis and a yield of 2.4%. This is a positive change from SouthState’s previous quarterly dividend of $0.54. SouthState’s dividend payout ratio (DPR) is presently 35.77%.
About SouthState
SouthState Corporation operates as the bank holding company for SouthState Bank, National Association that provides a range of banking services and products to individuals and companies. It offers checking accounts, savings deposits, interest-bearing transaction accounts, certificates of deposits, money market accounts, and other time deposits, as well as bond accounting, asset/liability consulting related activities, and other clearing and corporate checking account services.
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ABMN Staff
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Startup Behind Goldman Sachs’ First ‘A.I. Employee’ Valued at $10B After Peter Thiel Funding
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Peter Thiel’s Founders Fund led Cognition’s latest $400 million funding round. Photo by Nordin Catic/Getty Images for The Cambridge Union Cognition AI, the San Francisco-based startup known for its A.I. software engineer Devin used by Goldman Sachs, has more than doubled its valuation to $10.2 billion after raising more than $400 million in a round led by Peter Thiel’s Founders Fund. The deal, announced yesterday (Sept. 8), also drew participation from existing backers including angel investor Elad Gil, Lux Capital, 8VC, Neo, Definition Capital and Swish VC. The fresh financing marks a stark increase from the $4 billion valuation Cognition received earlier this year.
Cognition was launched in 2023 by Scott Wu, Steven Hao and Walden Yang. Wu, the company’s CEO, previously co-founded Lunchbox, an A.I. networking platform. The founding team also includes alumni of Scale AI, Google DeepMind and self-driving software maker Waymo, as well as a number of elite coders who medaled at the International Olympiad in Informatics, a global programming competition.
Cognition’s flagship product is Devin, an A.I. software engineer. The company also made waves through acquisitions, most notably when it snapped up software firm Windsurf just days after Google hired away much of its leadership. While OpenAI had reportedly pursued Windsurf before complications with its partner Microsoft, Google in July struck a multibillion-dollar licensing deal for Windsurf’s technology and acqui-hired several top staffers. Cognition then acquired what remained of the company: its team, intellectual property and product.
Even before the Windsurf deal, Cognition’s annual recurring revenue (ARR) had climbed rapidly—from $1 million in September 2024 to $73 million by this June, Wu said in a press release. Since the acquisition, ARR has more than doubled. “We’ll continue to invest significantly in both Devin and Windsurf, and our customers are already seeing how powerful the combination is together,” Wu added, noting that clients include Goldman Sachs, Dell and Palantir.
Looking ahead, Cognition plans to expand the ways its users can leverage the combined power of Devin and Windsurf. “We’re looking forward to enabling engineers [to] manage an army of agents to build technology faster,” said Jeff Wang, Windsurf’s interim CEO since former leader Varun Mohan departed for Google, in a LinkedIn post. “It’s been quite an eventful last few months, and now it’s time to show what we’re made of.”
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Alexandra Tremayne-Pengelly
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The Labor Market Looks Broken—Is There a Fix Beyond Interest Rate Cuts?
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The weak August jobs report increases pressure on the Fed to cut interest rates this fall. Getty Images “The job market is done, busted.” That’s how Chris Rupkey, chief economist at FWDBonds, described the August jobs report released today (Sept. 5). The unemployment rate has climbed to its highest level since 2021, fueling fears that the U.S. may be tipping into recession for real.
The U.S. economy added just 22,000 jobs in August, far short of the 75,000 expected. The Bureau of Labor Statistics also revised June’s data to show a staggering loss of 13,000 jobs. Over the past three months, the economy has added only 29,000 jobs in total.
August’s payroll losses were particularly acute in professional and business services, the federal government and wholesale trade. But weakness was evident across sectors. “There have also been sustained losses over recent months in manufacturing, construction and mining, an indication that Trump’s blue-collar renaissance is clearly not happening,” Elise Gould, senior economist at the Economic Policy Institute, posted on Bluesky.
Analysts now widely expect the Federal Reserve to cut rates by 25 basis points at its Sept. 17 meeting, with further reductions likely in October and November. The pace of those cuts will depend on August’s inflation reading, due Sept. 11.
Oliver Allen, senior economist at Pantheon Macroeconomics, warned that the risk of layoffs is rising as employers lose confidence in the economy’s outlook. “So far, employers have not hired or fired much, but there are risks that layoffs could increase and would be an indication of a significant slowdown,” Allen told Observer. He estimates GDP growth at 1.7 percent this year, down from 2.8 percent in 2023. To prevent a deeper slowdown, he said the Fed must cut rates, and President Trump should ease tariff and immigration policies that have constrained the labor supply.
If the job market deteriorates sharply, Allen added, “there isn’t much the government could do right away and any policy changes would take time to pass, as we saw with the Big Beautiful Bill.”
A German-style fix?
Allen suggested one option would be adopting something akin to Germany’s Kurzarbeit program, which subsidizes wages to help employers retain workers. But he noted such a “social market economic agenda” is unlikely to appeal to the Trump administration, which would probably lean toward unemployment insurance rather than payroll subsidies.
Michael Englund, chief economist at Action Economics, said the U.S. labor market would have to weaken far more before Washington considered European-style subsidies or another round of pandemic-era programs like the Paycheck Protection Program.
“So far, we don’t see enough evidence to say the job market is signalling recession,” Englund told Observer. “Weekly jobless claims have been moving sideways, and retail sales and household income remain strong, supporting our soft-landing scenario.”
Englund also downplayed concerns about tariffs. “The tariffs’ bravado continues to look more like a negotiating strategy, and [the administration] has been reaching agreements with different countries,” he said. “The tariffs will bring billions of dollars in revenues, which will finance the Big Beautiful Bill’s tax cuts, so the net effect on inflation will be zero.”
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Ivan Castano
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Smart Tax Moves If You Have Multiple Income Streams | Entrepreneur
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Opinions expressed by Entrepreneur contributors are their own.
There’s a common debate about whether to diversify your income or stay specialized, although the statistics are factual. Nearly half of Americans have at least two revenue streams, and multimillionaires have at least seven. The reason is simple. Having multiple income streams equips you with options and provides you with financial stability.
Once you decide to have multiple revenue streams or you already have them, the most critical thing to keep in mind is taxes and remaining compliant. However, more crucial is to plan so you have plenty of time to define a strategy and save for tax payments. Never wait until the last moment.
Step 1: Treat each income stream like a business
Whether you earn a W-2 salary, work as a freelancer or contractor, consult, rent properties, or trade stocks and other assets, each activity follows its own set of tax rules.
You wouldn’t declare Airbnb earnings under your payroll, for example. First, you must set up the correct legal entity, such as a single-member LLC, S-Corp or C-Corp. Ticking the right boxes can significantly reduce your liability. A building contractor with multiple earning streams might benefit from switching from an LLC to an S-Corp, which could potentially save you up to $20,000 in taxes.
Related: What Is an LLC? Here’s How It Works.
If you own properties and rent them out, you will want to separate your expenses. It can boost deductions significantly. It is also a way to accelerate depreciation write-offs, allowing you to retain more cash now instead of waiting 20 years.
If you are selling one or several properties, you need to check out a 1031 to defer capital gains taxes by rolling your profits into a different investment.
Step 2: Pay taxes as if your life depended on it
This year, you cashed in on consulting, bonuses, stock options or a side gig. Think ahead, because you don’t want April to bring an unexpected tax bill that devastates your cash flow. That’s the reality for many who ignore quarterly taxes.
So, set aside 25 to 30% of every non-W-2 dollar. Track earnings, make quarterly payments and avoid penalties or fines or both. Vendors accept payments quarterly. You should treat IRS installments the same way.
Related: How Smart Entrepreneurs Turn Mid-Year Tax Reviews Into Long-Term Financial Wins
Step 3: Track your deductions all year round
Most people wait until March, then frantically search through their emails for receipts and invoices. Not a good idea. Start thinking about taxes in July, when you can make smart, sensible and timely moves. If you are a freelancer or contractor, you may deduct expenses such as your home office, internet bill and travel to meetings with clients, including business lunches.
Please don’t become the entrepreneur who misses a $3,000 gasoline deduction because they didn’t track their mileage to all those meetings and lunches. There’s no need to go to extremes, either, so don’t try to claim dog grooming or any other suspicious “business expense,” as it will raise red flags.
“The optimal tax strategy isn’t always about pushing every possible benefit to its limit — it’s often about creating a framework that allows for consistent, long-term, justifiable tax efficiency,” said George Dimov, CPA, who helps professionals navigate the complex tax and planning system.
It’s a good idea to maintain all your records in a spreadsheet or app to log expenses as they happen, and you’ll thank yourself when tax season arrives.
Related: Why Mid-Year Tax Reviews Are a Must for First-Time Entrepreneurs
Step 4: Expats, don’t miss these tax breaks
If you are a US citizen earning abroad, operating a business from Thailand, or consulting for clients in Europe, taxes can become overwhelming. Tax law has a provision that allows approximately $120,000 of foreign-earned income to be excluded from US taxes. Be sure to check this number annually, as the exact amount changes frequently.
The foreign tax credit can also save you from paying taxes twice if you are taxed overseas. However, you must report all relevant information, including foreign businesses, bank accounts and even small investments. There are fines of about $10,000 for failing to report a foreign bank account.
Research as much as you can about international taxes or consult an expert who knows the subject and can save you time, trouble, and money.
Related: 5 Tips for Finding the Tax Advisor Who Will Save You Millions
Bottom line: multiple streams call for multiple planning layers
More income streams mean more options, but also more tax complexity. Success lies in structure, timing, and ongoing management. Structure your entity to match your objectives. Pay quarterly. Plan mid-year. Track everything. However, taxes don’t have to be a nightmare.
There’s a common debate about whether to diversify your income or stay specialized, although the statistics are factual. Nearly half of Americans have at least two revenue streams, and multimillionaires have at least seven. The reason is simple. Having multiple income streams equips you with options and provides you with financial stability.
Once you decide to have multiple revenue streams or you already have them, the most critical thing to keep in mind is taxes and remaining compliant. However, more crucial is to plan so you have plenty of time to define a strategy and save for tax payments. Never wait until the last moment.
Step 1: Treat each income stream like a business
The rest of this article is locked.
Join Entrepreneur+ today for access.
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John Rampton
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Paris-Based Mistral AI Seeks $14B Valuation as Europe Charts Its Own A.I. Path
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CEO Arthur Mensch is steering Mistral away from the AGI hype and toward Europe’s A.I. sovereignty. Photo by Ludovic Marin/AFP via Getty Images Paris-based Mistral AI is on track for a new funding round that would value the A.I. startup at 12 billion euros ($14 billion), Bloomberg reports. The investment, expected to total around 2 billion euros ($2.3 billion), would solidify the company’s position at the center of Europe’s sovereign A.I. strategy and bring it closer to its goal of challenging dominant U.S. rivals.
Founded in 2023, Mistral has already raised some 1.1 billion euros ($1.3 billion) over the past two years. Its upcoming valuation would more than double the 5.8 billion euros ($6.8 billion) figure it reached last June following a 468 million euro ($550 million) round that drew backers such as Andreessen Horowitz, Salesforce and Nvidia.
Mistral did not respond to requests for comment from Observer.
For now, the startup still pales in size compared to its Silicon Valley competitors. Anthropic closed a round earlier this month at a staggering $183 billion valuation, while OpenAI is reportedly eyeing $500 billion. Still, Mistral is eager to compete. Its products include an A.I. assistant called “Le Chat,” designed for European customers and positioned as an alternative to OpenAI’s ChatGPT and Anthropic’s Claude chatbots.
Mistral was co-founded by Arthur Mensch, a former researcher at Google DeepMind, along with former Meta researchers Timothée Lacroix and Guillaume Lample. Mistral has tried to distinguish itself by emphasizing open access. It has released several open-source language models. Unlike American A.I. giants, Mistral has also rejected pursuing AGI. Mensch, who serves as CEO, has said his firm is more focused on ensuring U.S. startups don’t dominate how the technology shapes global culture.
Mistral is central to Europe’s A.I. playbook
Mistral is part of a broader surge in European A.I. investment. In 2024, venture capital rounds involving A.I. and machine learning companies based in Europe were estimated to have reached 13.2 billion euros ($15.5 billion), up 20 percent from 2023, according to data from Pitchbook.
Mistral is part of a broader surge in European A.I. investment. In 2024, venture capital rounds involving A.I. and machine learning companies across the continent were expected to reach 13.2 billion euros ($15.5 billion), a 20 percent increase from the year before, according to PitchBook.
As one of Europe’s leading startups, Mistral is central to the region’s goal of building an A.I. ecosystem independent of technology from America or China. Earlier this year, the company partnered with Nvidia to launch a European A.I. platform that will allow companies to develop applications and strengthen domestic infrastructure. French President Emmanuel Macron hailed the initiative as “a game changer, because it will increase our sovereignty and it will allow us to do much more.”
Mistral’s rapid ascent is tied to broader efforts to bolster A.I. across Europe and France. Its Nvidia partnership followed Macron’s announcement at Paris’ global A.I. summit in February, where he pledged more than 100 billion euros ($117 billion) to support France’s A.I. industry. European players must move quickly, Macron stressed at the time: “We are committed to going faster and faster.”
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Alexandra Tremayne-Pengelly
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U.S. Parents Charge Kids Interest on Loans. Here’s How Much. | Entrepreneur
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As young Americans struggle with high costs of living and salaries that haven’t kept pace with inflation, some of them rely on loans to make ends meet.
Nearly half (46%) of Gen Z between the ages of 18 and 27 depend on financial assistance from their family, according to a 2024 report from Bank of America.
What’s more, even though some parents are willing to help their kids out with cash, those loans don’t always come without strings attached — sometimes in the form of interest.
Related: Gen Z Is Turning to Side Hustles to Purchase ‘the Normal Stuff’ in ‘Suburban Middle-Class America’
Financial media company MarketBeat.com‘s new report, which surveyed more than 3,000 parents, found that an increasing number are charging their adult children interest on family loans.
“The Bank of Mom and Dad has always been generous, but even generosity comes with boundaries,” says Matt Paulson, founder of MarketBeat.com. “What’s striking is that while most parents don’t expect repayment — and certainly not at commercial interest rates — inflation and rising costs are starting to reshape how families think about money.”
The average interest rate charged by parents was 5.1%, according to the data. That’s still well below the costs their children might incur elsewhere: The average personal loan rate is 12.49% for customers with a 700 FICO score, $5,000 loan amount and three-year repayment term, per Bankrate.
Only 15% of parents would be comfortable with lending their kids $5,000 or more at one time, according to MarketBeat’s research.
Family loan repayment terms can also vary significantly by location. The top five toughest state lenders based on the interest rates parents charge were Nebraska (6.8%), Oregon (6.8%), Mississippi (6.5%), Georgia (6.4%) and Arkansas (6.3%), the report found.
Parents in Delaware and Maine tended to be the most lenient when it came to charging their children interest on loans, with 2% and 4% rates, respectively, according to the findings.
Many parents who expect repayment also have a fast-tracked timeline in mind. Twenty-one percent anticipated seeing their loan repaid in one month, 15% within one year and just 8% more than a year later, per the survey.
Although 59% of parents reported being happy to help their kids with money, 27% said they would only do it if necessary, and 4% admitted to feeling resentful.
In many cases, family loans don’t just provide financial support — they’re also “emotional transactions that test trust, responsibility and family dynamics,” Paulson notes.
As young Americans struggle with high costs of living and salaries that haven’t kept pace with inflation, some of them rely on loans to make ends meet.
Nearly half (46%) of Gen Z between the ages of 18 and 27 depend on financial assistance from their family, according to a 2024 report from Bank of America.
What’s more, even though some parents are willing to help their kids out with cash, those loans don’t always come without strings attached — sometimes in the form of interest.
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Amanda Breen
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Willis denies RBNZ cover-up; insists she pushed for transparency
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Willis questioned external legal advice the Reserve Bank received
Willis insisted on record being kept of meeting with Orr
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Your Entrepreneurial Elders’ Worries About Passing the Baton | Entrepreneur
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Opinions expressed by Entrepreneur contributors are their own.
Between now and 2048, an estimated $124 trillion in family assets will be passed from Generation X to millennials and Gen Z, the first mass transfer of its kind. This is a phenomenon so significant that it is named the Great Wealth Transfer, and it’s an event that began unfolding in the mid-2010s, catalyzed by the retirement of the Baby Boomer generation.
A market research firm called Cerulli and Associates estimated that out of the $124 trillion worth of assets that will be transferred, around $105 trillion will be inherited directly by heirs and $18 trillion will go to charity. Swiss banking giant UBS, in its 2024 wealth report, estimated that $83 trillion globally will be passed on within the next two decades, and that a large chunk of these assets will be held across the Asia Pacific region. A recent McKinsey report showed that the value of these assets circulating in this Eastern region could be worth $5.8 trillion by 2030.
As a fourth-generation heir of the Kowloon Motor Bus Company, Hong Kong’s oldest transportation company, I inherited my family’s wealth at a really young age due to premature deaths within my family. Despite this, I managed to carry the business forward as a director and figurehead, which I believe is rare since research has shown that as many as 90% of family wealth is often lost by the third generation. I am in a unique position to speak about this subject as a Baby Boomer looking to transfer to younger generations.
Among the concerns the older generation may have about the Great Wealth Transfer and how it will be orchestrated successfully across the coming years, here are what I consider to be three of the most salient points.
Related: 3 Ways to Prepare Yourself for the Great Wealth Transfer
1. Gauging millennial and Gen Z’s financial interest
Most family elders, especially in Asia, are highly concerned about how they would go about educating their children about the family assets and businesses. How willing would their heirs be to take over a business that has been continuing for more than a hundred years? This is a common concern due to the fact that some of the oldest companies in the world are currently held by families in the East.
This concern is compounded by the fact that Baby Boomers and Gen X have significantly different attitudes to money compared to their heirs, since these generations have been conditioned to aim for a “job for life,” with intense focus on accumulating savings for retirement. According to an article by the Financial Times, millennials (1981-1996) lack financial education, having the propensity to build up credit card debt, while Gen Z possess a short-term fiscal outlook compared to their elders.
2. Emotions can get in the way of discussions
There may be different types of emotions at play whenever the Great Wealth Transfer is mentioned in a family business. Older generations are generally more reluctant to discuss financial affairs more openly with younger generations, which can act as a barrier to effective communication. Moreover, younger generations may find it distressing to have discussions about inheriting wealth and business, as they often have connotations of death.
Younger generations can also have significantly differing views to their elders when it comes to running a company, with evidence showing that they are more socially aware of issues that affect the world, such as climate change, AI revolution and globalization, while some members of older generations may have a more conservative attitude, with a greater focus on wealth preservation and conservation. These differences can make discussions about business succession more heated and prone to disagreements and family conflicts. This is one of the main reasons families delay these important conversations from taking place, which could negatively affect a smooth transfer.
Related: Passing the Family Company to the Next Generation Is a Complicated Business
3. A rush to transfer wealth
An article written by the Guardian showed that the 2020 pandemic has accelerated the intergenerational wealth transfer due to unforeseen, untimely deaths. Many members of younger generations, especially in the UK, are beneficiaries of unexpected windfall, according to Treasury figures, which found that a record-breaking volume of inheritance tax was collected during 2021 and 2022: £6.1 billion.
Research from Capital Group also found that high-net-worth families are actually accelerating the transfer of wealth to their heirs, in a survey conducted with 600 individuals across Europe, Asia Pacific and the U.S. The report found that 65% of Gen X and millennial inheritors who participated in the research said they had regrets about how they used their inheritance money, with nearly two in five respondents wishing they had invested more of their assets after the transfer.
With these concerns percolating in older generations’ minds, it is only wise for family businesses to plan well ahead for the Great Wealth Transfer. Have those difficult conversations with your heirs early on so that unpredictable shifts will not shake up your family’s assets. And more importantly, it is important to ensure that the family wealth’s purpose is well-defined in this increasingly complex and volatile world, and for that, meaningful conversations between the generations need to continue. Family businesses can no longer rest on their laurels.
Between now and 2048, an estimated $124 trillion in family assets will be passed from Generation X to millennials and Gen Z, the first mass transfer of its kind. This is a phenomenon so significant that it is named the Great Wealth Transfer, and it’s an event that began unfolding in the mid-2010s, catalyzed by the retirement of the Baby Boomer generation.
A market research firm called Cerulli and Associates estimated that out of the $124 trillion worth of assets that will be transferred, around $105 trillion will be inherited directly by heirs and $18 trillion will go to charity. Swiss banking giant UBS, in its 2024 wealth report, estimated that $83 trillion globally will be passed on within the next two decades, and that a large chunk of these assets will be held across the Asia Pacific region. A recent McKinsey report showed that the value of these assets circulating in this Eastern region could be worth $5.8 trillion by 2030.
As a fourth-generation heir of the Kowloon Motor Bus Company, Hong Kong’s oldest transportation company, I inherited my family’s wealth at a really young age due to premature deaths within my family. Despite this, I managed to carry the business forward as a director and figurehead, which I believe is rare since research has shown that as many as 90% of family wealth is often lost by the third generation. I am in a unique position to speak about this subject as a Baby Boomer looking to transfer to younger generations.
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William Louey
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