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New members of the world’s ultra-rich class acquired more assets this year through inheritance than through wealth creation. This is the first time Swiss bank UBS has recorded this in a nine-year survey of the world’s billionaires.
The bank’s research found that in 2023, 84 upstart billionaires around the world had amassed a total of $141 billion, of which $151 billion was inherited by 53 heirs.
“There’s a growing presence of billionaire heirs,” said Benjamin Cavalli, head of global wealth management strategic clients at UBS. “New billionaires born during this year’s study period accumulated more wealth through inheritance than through entrepreneurship. More than 1,000 billionaires gifted an estimated $5.2 trillion to their children. “So this is a topic that we expect to see a lot more of over the next 20 to 30 years.”
The number of billionaires worldwide rose from 2,376 to 2,544 in the 12 months to April 2023, with Europeans having the most wealth tied to consumer-focused companies, according to the study. It turns out that they are experiencing an increase.
“The large-scale wealth transfer is now really gaining momentum,” said Max Kunkel, chief investment officer for global families and institutional investors at UBS. But he added that the findings also show a relative slowdown in wealth creation.
“This suggests that wealth creation is more difficult in an environment of high interest rates and economic and geopolitical uncertainty,” Kunkel added.
The findings come as a “massive wealth transfer” continues from older baby boomers and Generation X to millennials and younger generations. Research firm Cerulli Associates estimates that approximately $73 trillion will be inherited by 2045 in the United States alone.
The UBS survey also found that 62% of billionaires cite “geopolitics” as their biggest business concern, ahead of inflation or the possibility of a U.S. recession. But Kunkel said first- and second-generation billionaires have different concerns about the outlook, with first-generation wealthy individuals more focused on the possibility of a U.S. recession or other immediate threats. he pointed out.
A generational divide has also emerged in the asset classes favored by billionaires. Older investors were more likely to plan to expand into fixed income and private credit, while younger investors remained keen on public and private equity.
“Among our older billionaire investors, there is a focus on income-producing assets, fixed income and even private credit,” Kunkel said. “As an aside, this is true for the very high quality part of private credit. The next generation is thinking more about long-term risks. Geopolitics and innovation.”
“This era of great wealth creation may be over,” said Matthew Fleming, a partner at London-based asset management firm Stonehage Fleming, commenting on the study.
He added that Stonehage Fleming’s own customer research was consistent with some of UBS’s results. While geopolitics was at the forefront of the ultra-rich’s investment decisions, younger elites were more likely than their parents to consider the impact of their wealth on society.
“It’s a good thing that there’s a lot of wealth in the hands of responsible managers at the moment,” he said. “The key is to make sure the next generation is properly prepared to take on the responsibility.”