For the first time in 10 years, average wealth of self-made
US billionaires surpasses average wealth of US billionaires with
inherited fortunes
Key findings:
- Total billionaire wealth declined in 2015 by $300 billion to
$5.1 trillion while average billionaire wealth fell from $4.0
billion to $3.7 billion due to headwinds such as the transfer of
assets within families, commodity price deflation and an
appreciating US dollar
- Europe has the greatest number of multigenerational
billionaires at 182 (54%), and they have proven to be the most
resilient at preserving their fortunes. The US has 175 (33%)
multi-generational billionaires and APAC has 76 (15%)
- For the first time in 10 years, the average wealth of self-made
US billionaires surpassed the average wealth of US billionaires
with inherited fortunes ($4.5 billion vs $4.3 billion)
- Approximately 460 billionaires will transfer $2.1 trillion to
their heirs in the next 20 years
- Led by China, Asia created one billionaire nearly every three
days accounting for over half of new billionaires in 2015
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.
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
Methodology
This year, the report has analyzed data covering 1,397
billionaires and looking back two decades. The database includes
the 14 markets, which belong to the largest markets in the US,
Europe and APAC and account for around 80% of global billionaire
wealth. Furthermore, we conducted over 20 interviews with
billionaire advisors, as well as face-to-face interviews with more
than 30 billionaires and approximately 30 of their heirs. UBS and
PwC advise a large number of the world’s wealthy, and have unique
insights into their changing fortunes and needs.
A number of sources were utilized to research and profile the
characteristics of wealthy individuals. These were blended into a
mosaic analytical framework from which we conducted extensive
modelling and analysis. This information and data is part of PwC
proprietary data and analytics structures, non-commercial in nature
and specifically non-attributable regarding the identity of any
individual or family.
PwC acts as a supplier of data and analysis for the purpose of
this report. In addition, the following sources were specifically
used as a part of our research:
- PwC has a significant body of research
drawn from publishing studies on Wealth and Private Banking, and
Family Businesses including current and future perspectives on a
number of industries from which we were able to derive insights.
These include but are not limited to Next Generation Survey of
Family Business Leaders 2016; Banking Tax 2020; 18th Annual Global
CEO Survey: A Private Company View (2015); Family Business Survey:
Up Close and Professional (2014); and from our network firm INTES:
Nachfolge in Familienunternehmen (2015). Further, UBS’s body of
research and insights in wealth and private banking were leveraged.
These include, but are not limited to, the UBS House View: Year
Ahead 2016: The answers for 2016 and Years Ahead: our 5-7 year
view; UBS Investor Watch: The Global Family Office Report 2015; UBS
Philanthropy Compass; UBS-INSEAD study: Family Philanthropy in Asia
and UBS; Harvard Study: From Prosperity to Purpose.
- Other analysis is based on our
proprietary PwC databases which cover detailed non-client-specific
bottom-up data on approximately 1,400 billionaires from the US,
Germany, UK, France, Switzerland, Turkey, Italy, Spain, China,
India, Hong Kong, Japan, Singapore and Russia. This is a private
non-commercial data structure designed to support analysis of
specific market segments.
- Specific interviews with a number of
billionaires and representatives of the next generation in various
geographies were conducted by PwC and UBS separately and the
information from those qualitative discussions was incorporated on
a non-attributable basis without regard to any business /client
relationship with any person, firm or organization. Further, we
have conducted over 20 interviews with billionaire advisors.
- For the long-term series of the MSCI
and GDP data we used the MSCI World gross data (accessed on
05/2016) and the World Bank’s Global Economic Prospect database
respectively (accessed on 05/2016).
Notes to Editors
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20161013005094/en/
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