‘The great wealth transfer’ is here: Billionaires set to give trillions to their kids

In recent months, the world’s new billionaires made more of their fortunes from inheritance than from entrepreneurship, according to the UBS Billionaire Ambitions Report.

It marked the first time in the nine-year history of the report that newly minted billionaires accumulated more wealth from inheritance than starting a business.

Fifty-three heirs inherited a total of $150.8 billion in the 12 months ending in April, exceeding the total of $140.7 billion accumulated by 84 new self-made billionaires, according to the Swiss bank’s report. The shift is likely to continue: The report said more than 1,000 billionaires are expected to pass $5.2 trillion to their children over the next 20 or 30 years.

“The great wealth transfer, which we’ve all been talking about for the last 10 years, is underway,” said John Mathews, head of UBS’ Private Wealth Management division. “The average age of the world’s billionaires is almost 69 right now. So this whole transition or wealth handover will start to accelerate.”

Many billionaires will leave the bulk of their wealth to charity. And some, like Amazon founder Jeff Bezos, continue spending their fortunes on real estate, yachts and flights to space.

Yet today’s billionaires will still have plenty to leave to their families. According to the report, the number of billionaires rose by 7% globally over the 12 months ending in April. The population of billionaires in the world increased to 2,544 from 2,376. Their total wealth great by 9% — from $11 trillion to $12 trillion.

The great wealth transfer from billionaires and multi-millionaires will likely change the landscape in investing and wealth management, as well as spending and philanthropy. More than two thirds of the billionaires with inherited wealth in the UBS survey said that they plan to continue and grow what their parents or grandparents achieved – whether it’s in a business, a brand or assets.

Yet their values and priorities may be different. The next generation of billionaire investors tend to be highly focused on climate change, technology and impact investing than older generations, according to studies.

Mathews said most of today’s older billionaires made their money through starting and operating a business and invest conservatively. He said the next generation is “looking to the future,” with more aggressive investing targets and a focus on AI, clean energy and the electric-vehicle transition.

“The wealth management industry needs to focus on those industries that can help accelerate the ability to invest in these areas,” Mathews said. “A lot of that falls in the area of private equity, direct private deals, and private placements as opposed to the traditional mix of fixed income and public markets.”