Key Takeaways
- Most of the wealth accumulated by new billionaires in 2023 came from inheritance, overtaking self-made wealth for the first time in the nine editions of a study by UBS.
- The report estimates that more than 1,000 billionaires are expected to pass on $5.2 trillion in wealth to heirs over the next 20 to 30 years.
- While more of new billionaires' overall wealth was generated by inheritance, the number of new self-made billionaires still surpassed the number of new billionaires who inherited the money.
- The number of new billionaires rose sharply this year compared to last, with nearly half of the new entrants coming from mainland China.
More of the wealth acquired by new billionaires came via inheritance, rather than through entrepreneurship, according to a recent report from UBS. It's the first time in the survey's nine-year history that billionaires created more wealth through inheritance rather than through work.
Of the $291.5 billion in wealth controlled by the class of new billionaires in the 2023 report, $150.8 billion came through inheritance, with $140.7 billion generated by so-called self-made billionaires, according to the UBS Billionaire Ambitions Report 2023.
It's part of a trend that wealth managers have been anticipating, the report said, as the past 30 years have been marked by an upsurge in the number of billionaire entrepreneurs. The report estimates that more than 1,000 billionaires are expected to pass on $5.2 trillion in wealth to heirs over the next 20 to 30 years.
"As increasing numbers of the early tycoons age, so responsibility is beginning to pass to their heirs, fostering potential future multigenerational billionaire families," the report said.
China Leads World in New Billionaires
Overall, the number of billionaires worldwide rose 7% this year to 2,544, according to the report. Mainland China accounted for about a fifth of the overall number of billionaires, but the country represented nearly half of the total of new billionaires.
There were 157 new billionaires in 2023, far exceeding the 35 who joined the ranks in 2022. Both years pale in comparison with the 416 new billionaires in 2021.
Despite having fewer assets, the number of new self-made billionaires came in at 84 in the 2023 report, more than the 53 new billionaires who inherited their wealth. The gap between the number of billionaires in each category has been narrowing. In 2021, the number of new self-made billionaires was seven times higher than the number of those who inherited the money, and last year it was three times higher.
Most who became billionaires through work did so by growing their business, the 2023 report found, with 65% achieving their wealth through organic business activity, although another 21% reported significant wealth gains through initial public offerings (IPOs).
While more billionaires are inheriting their fortunes, it doesn't mean they are stepping in to run the family business. Worldwide, only 43% of billionaire heirs took positions in the family company, with the rest choosing their own careers.
Billionaires who inherited their wealth highlighted investment opportunities in private equity, with 59% aiming to increase their allocation to direct private equity investments and 55% looking to invest more in private equity funds. Self-made billionaires appear more drawn to fixed income investments, with 43% intending to boost their allocations to private debt.
The study also shows that 68% of first-generation billionaires who earned their wealth stated that their philanthropic goals were a main objective of their legacy, while only 32% of billionaires inheriting their fortunes felt the same way.
"In UBS's experience, successor generations are often reluctant to gift money that they have not earned, and, in some cases, they may simply carry on with existing family foundations," the report said.
