For the first time in 10 years, average wealth of self-made US billionaires surpasses average wealth of US billionaires with inherited fortunes
October 14, 2016 — NEW YORK–(BUSINESS WIRE)–UBS Group AG and PwC today presented their joint annual billionaires report, “Are billionaires feeling the pressure?” The report examines wealth creation within the billionaire segment in 2015 and singles out the transfer of $2.1 trillion in billionaire wealth that is expected over the next two decades.
2015 saw a pause as total billionaire wealth fell by $300 billion to $5.1 trillion. Headwinds such as the transfer of assets within families, commodity price deflation and an appreciating US dollar, have impacted the growth of billionaire wealth. Average billionaire wealth dropped from $4.0 billion to $3.7 billion and the US added only five net new billionaires in 2015. In contrast, Asia produced one billionaire every three days, with China alone accounting for over half of the 113 additions.
The findings build on UBS/PwC’s previous billionaire reports, released in May and December 2015. According to the new report, we are about to witness the greatest transfer of wealth in history. Approximately 460 billionaires will transfer $2.1 trillion, the equivalent of India’s GDP, to their heirs over a period of just 20 years. For most of Asia’s young economies, where over 85% of billionaires are first-generation, this will be the first-ever handover of billionaire wealth.
Stand-Out Wealth
John Mathews, Head of Ultra High Net Worth, UBS Wealth Management Americas, comments on the new report:
“The U.S. has always been a standout for creating wealth, and this report shows that the American dream is alive, with the wealth of the self-made billionaires outweighing that of the multi-generational billionaire.
“As we head into the greatest period of wealth transfer we’ve ever seen, there is much insight that we can gain from the experience of the successful wealth transfer and legacy planning that takes place in Europe.
“The findings of this report help UBS stay ahead of the issues that matter in order to better advise our clients, which include over half the world’s billionaires.”
Michael Spellacy, Global Wealth Leader at PwC US:
“As the shockwaves from regulatory upheaval in the EU continue to trigger global currency fluctuations, strategic planning becomes even more crucial for wealth preservation. Those who control assets face tough investment questions.
“Encouragingly, this year’s report shows that Europe’s billionaires were the most resilient with many of the 60 individuals from Europe inheriting their fortunes in 2015 for the first time.
“The US, which boasts the biggest collection of billionaires by region, sets the trend. Total US billionaire wealth fell, but ‘new money’ fared better than old, falling by just 4%, from an average of $4.7 billion per individual to $4.5 billion.”
Key findings from the report include:
A $2.1 trillion inheritance
The past 20 years of exceptional wealth creation will soon be followed by the largest-ever wealth transfer. We estimate that less than 500 people (460 of the billionaires in the markets we cover) will hand over $2.1 trillion, a figure equivalent to India’s GDP, to their heirs in the next 20 years. For most of Asia’s young economies, where over 85% of billionaires are first generation, this will be the first-ever handover of billionaire wealth.
The Gilded Age pauses
After more than 20 years of unprecedented wealth creation, the Second Gilded Age has stalled. The transfer of assets within families, commodity price deflation and an appreciating US dollar have emerged as significant headwinds. In 2015, in the markets we cover, 210 fortunes broke through the billion-dollar wealth ceiling and 160 billionaires dropped off, leading to a net increase in the billionaire population of 50 to 1,397. Yet their total wealth fell from $5.4 trillion to $5.1 trillion. Average wealth fell from $4 billion in 2014 to $3.7 billion in 2015. It is still too early to tell if 2015 signals a pause in the Gilded Age or something more.
Old legacies’ lessons for new billionaires
Of the billionaire fortunes that have fallen below the billion-dollar mark since 1995, 90% were not preserved beyond the first and second generations. At a time of economic headwinds and imminent wealth transfer, Europe’s old legacies are a model for new billionaires to avoid this fate. Germany and Switzerland, in particular, are the countries with the greatest share of ‘old’ wealth. Asia’s family-orientated billionaires may wish to adapt the European model of wealth preservation to their own needs.
New philanthropic models
In the first half of the 20th century, entrepreneurial families such as the Carnegies and Rockefellers funded significant advances in areas such as education and health. By doing so, they displayed many traits associated with billionaires – chiefly business focused and smart risk-taking – to drive success. After over three decades of this new Gilded Age, billionaire philanthropy is growing all over the world. New philanthropic models are emerging (loans, guarantees, contracts, impact investing etc.) and the millennial generation is putting philanthropy at the heart of their family values. In spite of this the current Gilded Age may not match its predecessor’s record.
To find out more, we invite you to read the full report here: www.ubs.com/billionaires
About the UBS-PwC Billionaires Report
This report is unique in its scope and approach. It addresses the characteristics and challenges facing some of the wealthiest individuals in the world. It paints a portrait of how they achieve great wealth, and the challenge around passing it on and what will be the nature of their legacy. It is global in scope across all major markets and covers both self-made and inherited wealth. Different regions, cultures and backgrounds have different distinctive drivers of wealth. Many of the lessons gleaned from this work are broadly applicable to anyone with wealth and a perspective on it, their plans for the future and their families and what will be their lasting legacies.
About UBS
UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. The operational structure of the Group is comprised of our Corporate Center and five business divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management and the Investment Bank. UBS’s strategy builds on the strengths of all of its businesses and focuses its efforts on areas in which it excels, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which it operates, in order to generate attractive and sustainable returns for its shareholders. All of its businesses are capital-efficient and benefit from a strong competitive position in their targeted markets.
UBS is present in all major financial centers worldwide. It has offices in 54 countries, with about 34% of its employees working in the Americas, 35% in Switzerland, 18% in the rest of Europe, the Middle East and Africa and 13% in Asia Pacific. UBS Group AG employs approximately 60,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).
About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
About the UBS-PwC Billionaires Report
This report is unique in its scope and approach. It addresses the characteristics and challenges facing some of the wealthiest individuals in the world. It paints a portrait of how they achieve great wealth, and the challenge around passing it on and what will be the nature of their legacy. It is global in scope across all major markets and covers both self-made and inherited wealth. Different regions, cultures and backgrounds have different distinctive drivers of wealth. Many of the lessons gleaned from this work are broadly applicable to anyone with wealth and a perspective on it, their plans for the future and their families and what will be their lasting legacies.
