Billionaires' wealth predominantly comes from inheritance, not earnings

For the first time since the UBS Billionaire Ambitions Report's inception in 2023, over half of the world's billionaires have received their wealth through inheritance rather than entrepreneurship. Furthermore, the report found that 65% of billionaires view Artificial Intelligence (AI) as one of their businesses' greatest opportunities.

The 2023 UBS Billionaire Ambitions Report reveals that billionaires have surprisingly accumulated more wealth through inheritance than entrepreneurship.

Last year, inheritance totaled $150.8 billion for 53 heirs, in comparison to $140.7 billion accumulated by 84 new self-made billionaires, according to the report.

Benjamin Cavalli, Head of Strategic Clients at UBS Global Wealth Management, commented, "This year's report found that more billionaires increased their wealth via inheritance than entrepreneurship in the past year. We anticipate this trend to continue over the next two decades, with thousands of billionaires expected to transfer around $5.2 trillion to their children."

Cavalli further indicated that next-generation billionaires direct significant private wealth toward innovative investments with their fresh business, investment, and philanthropy perspectives. He stressed that successful succession will require innovative strategies from founders and their families, focussed on defining shared values and objectives and satisfying all generations to continue their legacy.

The report states that 68% of surveyed billionaires have an inherited wealth plan to continue and expand their parents' business, branding, and asset-building accomplishments. With a vision to invest family wealth, 60% of heirs plan to promote their parents' philanthropic goals (32%) and ensure future generations benefit from their wealth.

The report emphasizes that heirs are aware that they may need to allocate their wealth differently to preserve the family's legacy. Heirs aiming for economic opportunities and challenges like technology innovation, energy transformation, and social investments (impact investing) are looking to take over their parents' companies, investments, and foundations. First-generation billionaires understand this, with 58% stating instilling values and experiences in their heirs is their biggest challenge.

In line with the report's findings, heirs consider inflationary pressure (57%) and availability and prices of raw materials (52%) as their businesses' main threats. First-generation billionaires identify US recession and geopolitical tensions as their primary threats (62%). However, 65% of the respondents view AI as a significant opportunity for their business, and 58% perceive cyberattacks as the greatest threat.

According to the report, 43% of first-generation billionaires plan to increase their private debt allocations over the next 12 months, and 38% plan to increase their stakes in developed market bonds.

Conversely, heirs are focused on private equity, with 59% planning to make direct investments and 55% intending to invest in private equity funds.

The report observes that entrepreneurship notably influences billionaire heirs, but many prefer to tread a different path than joining the family business. Over half of the 53 surveyed heirs opt for careers aligning with their ambitions and skills rather than continuing the family business. It is also noticeable that the number of heirs turning to philanthropy and sustainable innovations is increasing, creating a unique approach to business ventures or reshaping existing ones focusing on sustainability and philanthropy.

Evidence shows a partial global increase in the ultra-rich's wealth in 2022/2023, primarily due to European billionaires in consumer and retail businesses, reversing the previous 12-months' almost one-fifth decline. Overall, the number of billionaires globally increased by 7% in the past year, from 2,376 to 2,544. Their wealth also rose by 9%, from $11.0 trillion to $12.0 trillion.

It's notable that billionaires in the technology and healthcare sectors have gathered the most wealth over the past decade, there's also a 15% wealth increase for billionaires associated with industrial companies. UBS predicts continued growth, attributed to energy transformation in numerous countries and escalating defense expenditures.

The UBS Billionaire Ambitions Report 2023 is the ninth UBS publication analyzing billionaires' wealth. Conducted between June 28 and September 17, 2023, it surveys 79 billionaire clients worldwide on unique challenges and opportunities encountered when managing vast fortunes. This survey includes participants from Europe (including Switzerland), the Middle East, Singapore, the Hong Kong Special Administrative Region, and the USA.