New billionaire heirs outpace self-made billionaire heirs as $5.2 trillion in wealth begins to transfer

London
CNN
—

Billionaires minted in recent year have amassed more wealth through inheritance than entrepreneurship for the first time since UBS began tracking fortunes. One of the richest people in the world for nearly a decade.

The Swiss bank said in a report on Thursday that billionaire heirs are more likely than their fathers to focus on the main opportunities and challenges facing the global economy, and to invest in sectors such as clean energy and artificial intelligence.

“Significant wealth transfers are gaining momentum as many billionaire entrepreneurs age,” said Benjamin Cavalli, who oversees the firm’s strategic clients. UBS’s global wealth management unit told reporters.

“This is a topic 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.”

UBS, whose clients include half the world’s billionaires, found that $150.8 billion was inherited by 53 heirs over the 12 months to April, exceeding the $140.7 billion raised by 84 new self-made billionaires during that period.

Overall, the number of billionaires globally rose by 7% to 2,544. Their combined wealth rose by 9% to $12 trillion, before inflation is taken into account.

This total It is still short of the peak of $13.4 trillion reached in 2021, when the global billionaire community grew to 2,686 people following a post-pandemic surge in assets such as stocks and real estate.

The report’s findings also reflect the country’s vulnerable state The IPO market continues until 2022 and early 2023, which limits the opportunities for entrepreneurs to list their businesses, thus increasing their wealth.

The report said that for the first time, Europe led the growth in billionaire wealth, as “post-pandemic shopping spree” lifted profits and share prices of leading French-based luxury goods companies, benefiting the billionaire families behind them.

This includes LVMH Chairman Bernard Arnault and his five children. Arnault is the third richest man in the world, with a net worth of $167 billion, according to the Bloomberg Billionaires Index. Arno’s wealth surpassed that of Elon Musk, founder of Tesla, and Jeff Bezos, founder of Amazon – who ranked first and second, respectively – late last year.

The report highlighted that while technology and healthcare billionaires have amassed the greatest wealth over the past decade “Early signs of improving fortunes” for industry billionaires, including the likes of India’s Gautam Adani, who is behind the multinational Adani Group, and Mukesh Ambani of Reliance Industries.

“This may continue amid government incentives in many countries to promote the energy transition and increase defense spending,” the report said.

Risks and opportunities for UBS

The “astonishing” transfer of wealth to younger generations represents a huge opportunity for UBS, but also poses significant risks, according to Cavalli.

“You can either be on the winning or receiving side, or … you will lose significant assets in time if you don’t know the potential beneficiaries,” he said.

Typically, younger clients They prefer to have a different banker than their parents, although not necessarily a younger banker, Cavalli said, noting that many of the heirs are over 50 themselves.

The changing of the guard could also have an impact on charitable giving, with less than a third of legacy generations seeing charitable goals as one of their main goals, compared to two-thirds of first-generation billionaires, according to the UBS report.

Heirs are more inclined towards impact investing – that is, investing that is socially or environmentally beneficial – “It’s more of a ‘classic grant-making philanthropy,’” Cavalli said. “Patriarchs of the past have been known to write checks to causes they have a personal passion and 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 stock worth at the time $40 million to the Henry E. Huntington Library and Art Gallery, according to one report. Regulatory filing.