According to Swiss bank UBS, which released its annual report on Thursday, the number and total wealth of billionaires rose last year. For the first time in recent memory, the fortunes inherited by the newly minted super-rich surpassed the cash created by self-made billionaires.

According to UBS’s 2023 Billionaires Ambitions Report, the number of billionaires increased by 7% to 2,544 worldwide, and their combined net worth increased by 9% to an estimated $12 trillion.

For the first time since the study’s inception in 2015, billionaires’ inheritances have contributed to their wealth accumulation more than their own commercial ventures.

53 heirs of the 137 new billionaires inherited $150.8 billion in total over the last year, surpassing the $140.7 billion inherited by the 84 new billionaires who acquired their fortune on their own, according to the bank.

As more money moves between generations, the generational wealth transfer is becoming more and more prevalent, according to UBS, one of the largest wealth managers in the world, which is in charge of $5.5 trillion in invested assets.

“This is a theme we expect to see more of over the next 20 years, as more than 1,000 billionaires pass an estimated $5.2 trillion to their children,” said Benjamin Cavalli, head of strategic clients at UBS Global Wealth Management.

According to Cavalli, UBS saw great opportunity in the generational shift, but there was also risk because long-term ties broke and the people with enormous money underwent changes.

The bank works with second, third, and fourth generation families and has commercial relationships with about half of the world’s billionaires.

“Over the next 20 – 30 years you can either be on the winning side or receiving side of it,” he said referring to the wealth transfer. “Or you also happen to be in a vacuum and lose substantial assets if you do not know the potential beneficiaries,” he told reporters.

The report brought attention to a trend that the growth of tech industry titans like Elon Musk of Tesla and Jeff Bezos of Amazon, symbolising a move away from self-made billionaires.

However, UBS noted that this trend has slowed down as a large number of company founders, who have also profited from growing financial markets, rising real estate values, and the expansion of emerging markets, get older and pass on their wealth to the following generation.

According to UBS, fewer companies floated in 2022 and the first part of 2023 has also made it harder for business owners to reach the full potential of their ventures.

However, even with the substantial inherited riches, this did not inevitably translate into a new wave of ultra-wealthy twentysomethings.

“Very often they are rather 50+,” Michael Viana, head of strategic client coverage at UBS. “It is actually more the King Charles effect, they actually are quite advanced in age as well when taking over.”

(Adapted from Reuters.com)

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