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UBS/PwC Billionaires Report Reveals Billionaire Wealth Facing Headwinds with Overall Wealth Declining by $300 Billion

Donnerstag, 13.10.2016 15:35



NEW YORK --(BUSINESS WIRE)--

UBS Group AG and PwC today presented their joint annual billionaires report, “Are billionaires feeling the pressure?” The report examines wealth creation within the billionaire segment in 2015 and singles out the transfer of $2.1 trillion in billionaire wealth that is expected over the next two decades.

2015 saw a pause as total billionaire wealth fell by $300 billion to $5.1 trillion. Headwinds such as the transfer of assets within families, commodity price deflation and an appreciating US dollar, have impacted the growth of billionaire wealth. Average billionaire wealth dropped from $4.0 billion to $3.7 billion and the US added only five net new billionaires in 2015. In contrast, Asia produced one billionaire every three days, with China alone accounting for over half of the 113 additions.

The findings build on UBS/PwC's previous billionaire reports, released in May and December 2015. According to the new report, we are about to witness the greatest transfer of wealth in history. Approximately 460 billionaires will transfer $2.1 trillion, the equivalent of India’s GDP, to their heirs over a period of just 20 years. For most of Asia’s young economies, where over 85% of billionaires are first-generation, this will be the first-ever handover of billionaire wealth.

John Mathews, Head of Ultra High Net Worth, UBS Wealth Management Americas, comments on the new report:

"The U.S. has always been a standout for creating wealth, and this report shows that the American dream is alive, with the wealth of the self-made billionaires outweighing that of the multi-generational billionaire.

"As we head into the greatest period of wealth transfer we’ve ever seen, there is much insight that we can gain from the experience of the successful wealth transfer and legacy planning that takes place in Europe.

"The findings of this report help UBS stay ahead of the issues that matter in order to better advise our clients, which include over half the world’s billionaires."

Michael Spellacy, Global Wealth Leader at PwC US:

“As the shockwaves from regulatory upheaval in the EU continue to trigger global currency fluctuations, strategic planning becomes even more crucial for wealth preservation. Those who control assets face tough investment questions.

“Encouragingly, this year's report shows that Europe's billionaires were the most resilient with many of the 60 individuals from Europe inheriting their fortunes in 2015 for the first time.

“The US, which boasts the biggest collection of billionaires by region, sets the trend. Total US billionaire wealth fell, but 'new money' fared better than old, falling by just 4%, from an average of $4.7 billion per individual to $4.5 billion.”

Key findings from the report include:

A $2.1 trillion inheritance

The past 20 years of exceptional wealth creation will soon be followed by the largest-ever wealth transfer. We estimate that less than 500 people (460 of the billionaires in the markets we cover) will hand over $2.1 trillion, a figure equivalent to India’s GDP, to their heirs in the next 20 years. For most of Asia’s young economies, where over 85% of billionaires are first generation, this will be the first-ever handover of billionaire wealth.

The Gilded Age pauses

After more than 20 years of unprecedented wealth creation, the Second Gilded Age has stalled. The transfer of assets within families, commodity price deflation and an appreciating US dollar have emerged as significant headwinds. In 2015, in the markets we cover, 210 fortunes broke through the billion-dollar wealth ceiling and 160 billionaires dropped off, leading to a net increase in the billionaire population of 50 to 1,397. Yet their total wealth fell from $5.4 trillion to $5.1 trillion. Average wealth fell from $4 billion in 2014 to $3.7 billion in 2015. It is still too early to tell if 2015 signals a pause in the Gilded Age or something more.

Old legacies’ lessons for new billionaires

Of the billionaire fortunes that have fallen below the billion-dollar mark since 1995, 90% were not preserved beyond the first and second generations. At a time of economic headwinds and imminent wealth transfer, Europe’s old legacies are a model for new billionaires to avoid this fate. Germany and Switzerland, in particular, are the countries with the greatest share of ‘old’ wealth. Asia’s family-orientated billionaires may wish to adapt the European model of wealth preservation to their own needs.

New philanthropic models

In the first half of the 20th century, entrepreneurial families such as the Carnegies and Rockefellers funded significant advances in areas such as education and health. By doing so, they displayed many traits associated with billionaires – chiefly business focused and smart risk-taking – to drive success. After over three decades of this new Gilded Age, billionaire philanthropy is growing all over the world. New philanthropic models are emerging (loans, guarantees, contracts, impact investing etc.) and the millennial generation is putting philanthropy at the heart of their family values. In spite of this the current Gilded Age may not match its predecessor’s record.

To find out more, we invite you to read the full report here: www.ubs.com/billionaires

Methodology

This year, the report has analyzed data covering 1,397 billionaires and looking back two decades. The database includes the 14 markets, which belong to the largest markets in the US, Europe and APAC and account for around 80% of global billionaire wealth. Furthermore, we conducted over 20 interviews with billionaire advisors, as well as face-to-face interviews with more than 30 billionaires and approximately 30 of their heirs. UBS and PwC advise a large number of the world’s wealthy, and have unique insights into their changing fortunes and needs.

A number of sources were utilized to research and profile the characteristics of wealthy individuals. These were blended into a mosaic analytical framework from which we conducted extensive modelling and analysis. This information and data is part of PwC proprietary data and analytics structures, non-commercial in nature and specifically non-attributable regarding the identity of any individual or family.

PwC acts as a supplier of data and analysis for the purpose of this report. In addition, the following sources were specifically used as a part of our research:

  • PwC has a significant body of research drawn from publishing studies on Wealth and Private Banking, and Family Businesses including current and future perspectives on a number of industries from which we were able to derive insights. These include but are not limited to Next Generation Survey of Family Business Leaders 2016; Banking Tax 2020; 18th Annual Global CEO Survey: A Private Company View (2015); Family Business Survey: Up Close and Professional (2014); and from our network firm INTES: Nachfolge in Familienunternehmen (2015). Further, UBS’s body of research and insights in wealth and private banking were leveraged. These include, but are not limited to, the UBS House View: Year Ahead 2016: The answers for 2016 and Years Ahead: our 5-7 year view; UBS Investor Watch: The Global Family Office Report 2015; UBS Philanthropy Compass; UBS-INSEAD study: Family Philanthropy in Asia and UBS; Harvard Study: From Prosperity to Purpose.
  • Other analysis is based on our proprietary PwC databases which cover detailed non-client-specific bottom-up data on approximately 1,400 billionaires from the US, Germany, UK, France, Switzerland, Turkey, Italy, Spain, China, India, Hong Kong, Japan, Singapore and Russia. This is a private non-commercial data structure designed to support analysis of specific market segments.
  • Specific interviews with a number of billionaires and representatives of the next generation in various geographies were conducted by PwC and UBS separately and the information from those qualitative discussions was incorporated on a non-attributable basis without regard to any business /client relationship with any person, firm or organization. Further, we have conducted over 20 interviews with billionaire advisors.
  • For the long-term series of the MSCI and GDP data we used the MSCI World gross data (accessed on 05/2016) and the World Bank’s Global Economic Prospect database respectively (accessed on 05/2016).

Notes to Editors

About the UBS-PwC Billionaires Report

This report is unique in its scope and approach. It addresses the characteristics and challenges facing some of the wealthiest individuals in the world. It paints a portrait of how they achieve great wealth, and the challenge around passing it on and what will be the nature of their legacy. It is global in scope across all major markets and covers both self-made and inherited wealth. Different regions, cultures and backgrounds have different distinctive drivers of wealth. Many of the lessons gleaned from this work are broadly applicable to anyone with wealth and a perspective on it, their plans for the future and their families and what will be their lasting legacies.

About UBS

UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. The operational structure of the Group is comprised of our Corporate Center and five business divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management and the Investment Bank. UBS's strategy builds on the strengths of all of its businesses and focuses its efforts on areas in which it excels, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which it operates, in order to generate attractive and sustainable returns for its shareholders. All of its businesses are capital-efficient and benefit from a strong competitive position in their targeted markets.

UBS is present in all major financial centers worldwide. It has offices in 54 countries, with about 34% of its employees working in the Americas, 35% in Switzerland, 18% in the rest of Europe, the Middle East and Africa and 13% in Asia Pacific. UBS Group AG employs approximately 60,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

About the UBS-PwC Billionaires Report

This report is unique in its scope and approach. It addresses the characteristics and challenges facing some of the wealthiest individuals in the world. It paints a portrait of how they achieve great wealth, and the challenge around passing it on and what will be the nature of their legacy. It is global in scope across all major markets and covers both self-made and inherited wealth. Different regions, cultures and backgrounds have different distinctive drivers of wealth. Many of the lessons gleaned from this work are broadly applicable to anyone with wealth and a perspective on it, their plans for the future and their families and what will be their lasting legacies.

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