Next generation of billionaires collect more wealth from inheritance than work, says UBS

Newly minted billionaires have collected more of their wealth from the deaths of relatives than through their own work and entrepreneurship, according to a Swiss bank favoured by the super-rich.

Of the 137 people who became billionaires in the 12 months to this April, 53 inherited a combined $150.8 billion (€138 billion) from their family, the report by UBS found. This exceeds the combined $140.7 billion created by “84 new self-made” billionaires over the same period.

The bank said it was the first time in the nine-year history of its annual report on the fortunes of the richest 0.00004 per cent of society that “the next generation of billionaires accumulated more wealth through inheritance than entrepreneurship”.

Benjamin Cavalli the head of strategic clients at UBS Global Wealth Management, said: “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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The report said the “growing significance of these families can be seen across all major geographical regions”. In Asia-Pacific, inheritors’ average wealth was $2 billion compared with $1.6 billion for entrepreneurs. In the Americas, the inheritors were worth $2.2 billion versus the entrepreneurs’ $1.5 billion. In Europe, the Middle East and Africa (EMEA), the inheritors’ average wealth of $4.4 billion – twice the entrepreneurs’ $2.2 billion.

It comes as there is a growing public debate about the role of inheritance tax in helping to pay for public services and to assist families struggling to cope with the cost of living crisis.

Overall, the number of billionaires around the world increased by 7 per cent to 2,544 and their combined wealth increased by 9 per cent to $12 trillion, UBS said.

The report said the huge wealth already transferred to the next generation was “just the tip of the iceberg”.

“As increasing numbers of the early tycoons age, so responsibility is beginning to pass to their heirs, fostering potential future multigenerational billionaire families,” UBS said. “This great wealth handover has long been anticipated, but the 2023 edition of the UBS Billionaire Ambitions report shows that it’s under way and gathering momentum.”

The report said: “During the next 20 to 30 years, over 1,000 of today’s billionaires are likely to transfer more than $5.2 trillion to their heirs. How do we calculate this number? Simply by adding up the wealth of the 1,023 billionaires who are aged 70 or more today.

“Looking to the longer term, the exceptional wealth resulting from the boom in entrepreneurial activity since the 1990s has established a foundation for future generations of billionaire families.” – Guardian