Last updated: 07:32 / Friday, 30 December 2016
UBS/PwC Billionaires Report

Billionaire's Overall Wealth Declined by USD 300 Billion

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Billionaire's Overall Wealth Declined by USD 300 Billion
  • Approximately 460 billionaires will transfer USD 2.1 trillion to their heirs in the next 20 years
  • Average billionaire wealth fell from USD 4.0 billion to USD 3.7 billion
  • Europe has the greatest number of multigenerational billionaires at 182
  • 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

UBS Group AG and PwC 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 USD 2.1 trillion in billionaire wealth that is expected over the next two decades.

2015 saw a pause as total billionaire wealth fell by USD 300 billion to USD 5.1 trillion. Headwinds such as the transfer of assets within families, commodity price deflation and an appreciating US dollar, impacted the growth of billionaire wealth. Average billionaire wealth dropped from USD 4.0 billion to USD 3.7 billion and the US added only five net new billionaires in 20151. 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 Billionaires Reports, released in May and December 2015. According to the new report, we are about to witness the greatest transfer of wealth in human history. Approximately 460 billionaires will transfer USD 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.

Josef Stadler, Head Global Ultra High Net Worth, UBS, said: “The findings of this report help us stay ahead of the issues that matter to better advise our clients, which include over half the world’s billionaires and three out of every five billionaires in Asia. Even as China’s growth moderates, it is the bright spot for great wealth growth. Led by a tech sector on the rise, China minted 80 new billionaires in 2015 and Asia overall created a new billionaire nearly every three days. Meanwhile Europe's billionaires stood out for maintaining and passing wealth down to their heirs. This is something that regions like Asia, where many more billionaires are first generation, can learn a lot from, especially as we head into the greatest period of wealth transfer we’ve ever seen. Just as Asian billionaires can gain from the experience of wealth transfer in Europe, there’s much that Europe can learn from the rapid billionaire growth in Asia.”

Michael Spellacy, Global Wealth Leader at PwC US added: “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 USD 4.7bn per individual to USD 4.5bn.”

Key findings from the report include:

A USD 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 USD 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 USD 5.4 trillion to USD 5.1 trillion. Average wealth fell from USD 4 billion in 2014 to USD 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-takers – 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.

You can read the full report here.

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