Inherited wealth overtakes self-made fortunes among global billionaires

By Newsdesk

December 04 2023
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In a striking shift in the distribution of wealth among the world's elite, inherited fortunes are now eclipsing those earned through entrepreneurship, marking a pivotal chapter in global economic trends.

Inherited wealth overtakes self-made fortunes among global billionaires

The UBS Billionaire Ambitions Report has unveiled that, for the first time, the aggregate value of wealth passed down to heirs has surpassed that held by self-made billionaires.

During the past year, a staggering US$150.8 billion was bequeathed to 53 inheritors worldwide, edging out the US$140.7 billion amassed by self-made business moguls.

Pointing to an emergent pattern in wealth accumulation, UBS underscored the surge in intergenerational wealth transfers, projecting a colossal US$5.2 trillion to change hands between families over the coming two to three decades. The report elucidates, "As many billionaire entrepreneurs age, more than 1,000 of them are expected to pass US$5.2 trillion to their heirs over the next 20 to 30 years. While this great wealth handover has long been anticipated, data suggests that it is now gathering momentum."

This influx of inherited wealth is not only reshaping the billionaire landscape globally, but also in Australia, where the billionaire count has risen from 37 to 41 in the last year alone, marking an increase of 10.8 percent. Correspondingly, their collective wealth has grown by 10.7 percent, from US$156.7 billion to US$173.5 billion.

With this generational shift comes new pressures and considerations, particularly regarding investment styles and legacy preservation. Heirs are demonstrating a preference for direct private equity investments, while their self-made counterparts traditionally opted for private debt and developed market bonds.

Moreover, today's heirs appear to be steering away from taking the reins of family businesses, with a notable 57 percent choosing alternative paths. They are also showing a stronger inclination towards philanthropy, especially with interests in sustainable and clean technological innovations.

Benjamin Cavalli, head of strategic clients at UBS Global Wealth Management, captures the essence of this evolving landscape: "The next generation has fresh views about business, investing and philanthropy, redirecting large pools of private wealth to new business opportunities arising from the times we live in.”

For those engaged in succession planning, Cavalli advises a harmonious and collaborative approach between generations. He elaborates on the necessity of aligning on shared values and effective governance as the bedrock of a seamless transition, stating that "Engineering a smooth succession will require founders and their families to do things differently more than ever, discovering common values and purpose to navigate a way forward that appeases all generations and allows them to continue building their legacies."

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