Billionaire Wealth Shift Inheritance: Billionaires minted in the latest year accumulated more wealth through inheritance than entrepreneurship for the first time since UBS started tracking the fortunes of the worlds richest almost a decade ago.
And billionaire heirs are more likely than their parents to focus on the major opportunities and challenges facing the global economy, investing in sectors such as clean energy and artificial intelligence, the Swiss lender said in a report Thursday.
The great wealth transfer is gaining significant momentum as many billionaire entrepreneurs age, Benjamin Cavalli, who oversees strategic clients in the global wealth management unit at UBS, told reporters. This is a theme we expect to see more of over the next 20 years as more than 1,000 billionaires pass an estimated $5.2 trillion to their children.
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UBS (UBS), which counts half the worlds billionaires as clients, found that $150.8 billion was inherited by 53 heirs over the 12 months to April, exceeding the $140.7 billion accumulated by 84 new self-made billionaires over that period.
Overall, the number of billionaires globally climbed 7% to 2,544. Their combined wealth rose 9% to $12 trillion, before taking inflation into account.
That total remains below a peak of $13.4 trillion reached in 2021, when the global billionaire community grew to 2,686 individuals following a post-pandemic rally in assets such as stocks and property.
The reports findings also reflect the subdued state of the IPO market through 2022 and early 2023, which limited the opportunities for entrepreneurs to list their businesses, increasing their wealth.
For the first time, Europe led the growth in billionaire wealth as a post-pandemic shopping splurge lifted the profits and share prices of leading luxury goods companies, based in France, benefiting the billionaire families behind them, the report said.
That includes LVMH chairman Bernard Arnault and his five children. Arnault is the worlds third-richest man, with a net worth of $167 billion, according to the Bloomberg Billionaires Index. Arnaults wealth eclipsed that of Teslas Elon Musk and Amazons Jeff Bezos who hold the number one and two spots respectively late last year.
While technology and healthcare billionaires have accumulated the greatest wealth over the past decade, the report highlighted early signs of improving fortunes for industrials billionaires, which include the likes of Indias Gautam Adani, behind the multinational conglomerate Adani Group, and Mukesh Ambani of Reliance Industries. This may continue amid government incentives in several countries to promote the energy transition and higher defense spending, the report said.
The staggering transfer of wealth to younger generations presents a huge opportunity for UBS, but also poses considerable risks, according to Cavalli.
You can either be on the winning or receiving side of it, or lose substantial assets in time to come if you do not know the potential beneficiaries, he said.
Typically, younger clients prefer to have a different banker to their parents, although not necessarily a younger banker, Cavalli said, pointing out that many heirs are themselves over 50. The changing of the guard could also have an impact on charitable giving, with less than a third of inheriting generations seeing philanthropic goals as one of their main objectives, compared with two-thirds of first-generation billionaires, according to the UBS report.
Heirs lean more toward impact investing that is, socially or environmentally beneficial investing over classic grant-giving philanthropy, Cavalli said. The patriarchs in the past have been well-known for writing checks to causes they personally have an affinity and a passion for.
Billionaire investor Charlie Munger, who died Tuesday at the age of 99, was known for his charitable giving. For example, in October he donated Berkshire Hathaway shares worth $40 million at the time to the Henry E. Huntington Library and Art Gallery, according to a regulatory filing.
Our Reader’s Queries
Does most wealth come from inheritance?
In 2023, a study by UBS revealed that new billionaires’ wealth was mostly inherited, surpassing self-made wealth for the first time in nine editions. The report predicts that over the next 20 to 30 years, more than 1,000 billionaires will pass on a staggering $5.2 trillion in wealth to their heirs. This highlights the growing trend of inherited wealth and the importance of estate planning for the ultra-rich.
Who are the richest inherited billionaires?
The world is home to a number of billionaires who inherited their fortunes. Among them are John Mars, with a net worth of $54.7 billion from Mars; Alain Wertheimer and Gerard Wertheimer, both with a net worth of $45.1 billion from Chanel; and Klaus-Michael Kühne, with a net worth of $42 billion from Kühne + Nagel. These individuals have managed to maintain and grow their inherited wealth, making them some of the richest people in the world.
What is considered a large inheritance in America?
Receiving a large inheritance means getting a substantial amount of money that exceeds your usual yearly income. The actual amount varies from one person to another, but typically, inheriting $100,000 or more is considered a significant sum. It’s crucial to handle this money prudently to achieve your financial objectives.
Are the majority of millionaires today rich because they inherited their money?
According to a recent Wealth-X study, 68% of individuals with a net worth of $30 million or more are self-made. Additionally, a study by Fidelity Investments revealed that 88% of all millionaires earned their wealth through their own hard work and determination, rather than inheriting it. These findings highlight the importance of entrepreneurship and the potential for anyone to achieve financial success through dedication and perseverance.