Inherited wealth outpaces self-made billionaires: UBS

inheritance estate planning succession plans UBS

4 December 2023
| By Laura Dew |
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The intergenerational wealth transfer is in full swing with the number of billionaires who have inherited their money outpacing self-made billionaires for the first time.

According to the latest UBS Billionaire Ambitions Report, a total of US$150.8 billion was inherited globally by 53 heirs over the last year compared to US$140.7 billion which was self-made.

UBS said this is the first year that the growth in accumulated wealth was driven by inheritance rather than entrepreneurship, reflecting the intergenerational wealth transfer which is expected to see US$5.2 trillion pass down generations over the next 20 years.

 

“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,” the report stated.

 

There were 37 billionaires in Australia last year, and this has risen to 41 in 2023, a growth of 10.8 per cent.

There’s a similar rise in their wealth which grew 10.7 per cent from US$156.7 billion to US$173.5 billion.

The changing of the guard brings with it fresh challenges in how the new generation looks to invest and continues the family legacy. Heirs favour direct private equity investment, UBS said, while self-made billionaires look to private debt and developed market bonds. 

Heirs are also becoming more philanthropic than their parents and focusing on sustainable innovations and clean technologies.

However, heirs may not necessarily be keen to continue the family business, with 57 per cent of heirs opting to step away from the business. 

Benjamin Cavalli, head of strategic clients at UBS Global Wealth Management, said: “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.”

When it comes to succession planning, Cavalli recommended greater collaboration between generations, discovering common values between generations and focusing on governance. 

“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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