Billionaires in the last year have accumulated more wealth through inheritance than entrepreneurship, indicating that the great wealth transfer is gaining momentum, said the ninth edition of UBS Billionaire Ambitions Report 2023 by Swiss bank UBS. A total of $150.8 billion was inherited by 53 heirs over the last year, exceeding the 84 new self-made billionaires’ total of $140.7 billion.
“This year’s report found that the majority of billionaires that accumulated wealth in the last year, did so through inheritance as opposed to entrepreneurship. 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,” said Benjamin Cavalli, Head of Strategic Clients at UBS Global Wealth Management.
Billionaire stats in APAC
Amy Lo, Chairman, UBS Global Wealth Management Asia, Co-Head UBS Global Wealth Management APAC, said, “It is exciting to see that APAC minted the most new billionaires during the period among all regions, with a total of 85 new billionaires from Mainland China and Hong Kong in particular. The number of billionaires also grew 11.3 per cent and 13.3 per cent in Mainland China and Hong Kong respectively, and almost all billionaires (98 per cent) in Mainland China are self-made.”
Young Jin Yee, Co-Head UBS Global Wealth Management APAC, said, “APAC continues to have the highest number of billionaires and highest proportion of self-made billionaires in the world. The number of billionaires in the region increased from 922 to 1019, while their total wealth increased by 8.1 per cent to $3.7 trillion.”
Meanwhile, the wealth of billionaires in India dropped by 10.9 per cent in 2023 to $637.1 billion from $715.3 billion in 2022. India has a total of 153 billionaires, data from the UBS Billionaires Ambitions Report 2023 showed. It further stated that out of 153 billionaires, 90 are self-made and 63 have inherited the wealth.
What’s the chosen way to go for heirs
As the great wealth transfer progresses, the report stated, 68 per cent of billionaires surveyed with inherited wealth, said that they aim to continue and grow what their parents achieved in terms of business, brand, or assets. Believing in continuing the current family legacy, 60 per cent of heirs want to enable future generations to benefit from their wealth and plan to continue to follow their parents’ pre-defined philanthropic goals (32 per cent).
Heirs, it added, are conscious that they may need to reshape and reposition their wealth to continue the family legacy. As they inherit their parents’ businesses, investments, and foundations, heirs look to focus more on today’s major economic opportunities and challenges, such as innovative technologies, the clean-energy transformation and impact investing. First-generation billionaires are aware of this, with 58 per cent claiming their greatest challenge will be instilling the necessary values, education, and experience in their heirs to take over.
“Heirs also have their own views on risks to the business and how they should be positioned for the future. For example, 66 per cent of first-generation billionaires rank a potential US recession as their primary concern, closely followed by geopolitical tensions (62 per cent). In contrast, heirs are concerned about inflationary pressures (57 per cent) and the availability and price of raw materials (52 per cent). However, all agree on the opportunities and risks of generative artificial intelligence, with 65 per cent viewing AI as offering one of the greatest commercial opportunities to their operating business over the next 12 months. As technology gains prominence, 58 per cent viewed a cyber threat or hacking as the biggest risk,” the report said.
When it comes to investing, 43 per cent of first-generation billionaires intend to increase their allocation to private debt over the next 12 months and 38 per cent plan to increase developed market bond holdings. Heirs favor private equity, with 59 per cent looking to raise direct private equity investments and 55 per cent looking to invest more in private equity funds.
According to the report, among billionaire heirs, there is a strong entrepreneurial theme, and many see alternative opportunities to join the C-suite of the family business. More than half of the 53 heirs surveyed are choosing to step away, opting for careers more suited to their own ambitions, skills, and circumstances. There is also a rise in heirs becoming philanthropists and driving sustainable innovation, creating new business ventures, or building on existing ones with a focus on sustainability and philanthropy.
“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. 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,” Benjamin Cavalli said.
