Global wealth manager UBS has announced the launch of the ninth UBS Billionaire Ambitions report.
The report surveyed, for the second time, UBS billionaire clients around the world on the unique challenges and opportunities they face as stewards of great wealth.
Benjamin Cavalli, Head of Strategic Clients at UBS Global Wealth Management explained: “This year’s report found that the majority of billionaires that accumulated wealth in the last year, did so through inheritance as opposed to entrepreneurship. This is a theme we expect to see more of over the next 20 years, as more than 1,000 billionaires pass an estimated USD 5.2 trillion to their children.
“The next generation has fresh views about business, investing, and philanthropy, redirecting large pools of private wealth to new business opportunities arising from the times we live in. Engineering a smooth succession will require founders and their families to do things differently, more than ever discovering common values and purpose to navigate a way forward that appeases all generations and allows them to continue building their legacies.”
After a surge in entrepreneurial activity over the last few decades, this year’s report found that many billionaires are passing their wealth on to the next generation and for the first time in nine editions of this report, the next generation of billionaires accumulated more wealth through inheritance than entrepreneurship. A total of USD 150.8 billion was inherited by 53 heirs over the last year, exceeding the 84 new self-made billionaires’ total of USD 140.7 billion.
As the great wealth transfer progresses, each generation has their own view on legacy. Sixty-eight percent of billionaires surveyed with inherited wealth, said that they aim to continue and grow what their parents achieved in terms of business, brand, or assets. Believing in continuing the current family legacy, 60% of heirs want to enable future generations to benefit from their wealth and plan to continue to follow their parents pre-defined philanthropic goals (32%).
However, heirs are conscious that they may need to reshape and reposition their wealth to continue the family legacy. As they inherit their parents’ businesses, investments, and foundations, heirs look to focus more on today’s major economic opportunities and challenges, such as innovative technologies, the clean- energy transformation and impact investing. First-generation billionaires are aware of this, with 58% claiming their greatest challenge will be instilling the necessary values, education, and experience in their heirs to take over.
Heirs also have their own views on risks to the business and how they should be positioned for the future. For example, 66% of first-generation billionaires rank a potential US recession as their primary concern, closely followed by geopolitical tensions (62%). In contrast, heirs are concerned about inflationary pressures (57%) and the availability and price of raw materials (52%). However, all agree on the opportunities and risks of generative artificial intelligence (“AI”), with 65% viewing AI as offering one of the greatest commercial opportunities to their operating business over the next 12 months. As technology gains prominence, 58%
viewed a cyber threat or hacking as the biggest risk.
When it comes to investing, 43% of first-generation billionaires intend to increase their allocation to private debt over the next 12 months and 38% plan to increase developed market bond holdings. Heirs favour private equity, with 59% looking to raise direct private equity investments and 55% looking to invest more in private equity funds.
Among billionaire heirs, there is a strong entrepreneurial theme, and many see alternative opportunities to joining the C-suite of the family business. More than half of the 53 heirs surveyed are choosing to step away, opting for careers more suited to their own ambitions, skills, and circumstances. There is also a rise in heirs becoming philanthropists and driving sustainable innovation, creating new business ventures, or building on existing ones with a focus on sustainability and philanthropy.