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UBS and PWC’s 2015 Billionaires Report explores the creation, preservation and legacy of great wealth around the world
Zurich/Basel, 26 May 2015 – UBS AG and PwC (PricewaterhouseCoopers) today launched the 2015 Billionaires Report, "Billionaires: Master architects of great wealth and lasting legacies." Examining the differences between billionaires’ wealth creation, preservation and philanthropic practices across the U.S., Europe and Asia. The survey of 1,300 billionaires analyzes data from the last 19 years (1995-2014) across the 14 largest billionaire markets, accounting for 75% of global billionaire wealth. Additionally, UBS and PwC conducted face-to-face interviews with more than 30 billionaires.
Shifting from Europe to the U.S. and Asia; self-made billionaires on the rise
In recent history, wealth creation has been the product of a few: the Billionaires Report found that 917 self-made billionaires have generated more than $3.6 trillion of wealth globally. Many started their journeys to becoming billionaires young, with 23% launching their first business venture before the age of 30 and a total of 68% did so before turning 40.
“We currently live in an age of opportunity and accelerated wealth creation, similar to the Gilded Age of the late 19th and early 20th Centuries, when entrepreneurship in the U.S. and Europe drove the first wave of innovation in modern history,” said Josef Stadler, Head Global Ultra High Net Worth, UBS. “But wealth generation is cyclical, and over the last few decades we have benefited from being on a strong arc of the cycle.”
While members of the billionaire population typically exhibit similar character traits – namely, an appetite for clever risk-taking, an obsessive focus on business and a strong work ethic – they have built their wealth in different ways.
In the U.S., for example, the financial services sector was the top manufacturer of self-made billionaires (30%). The wealth per billionaire in the sector averages $4.5 billion. By contrast, European (49.5%) and Asian (20%) self-made billionaires were largely created by the consumer industry in the last two decades. With an average wealth of $5.7 billion the European entrepreneurs are wealthier than the Asian ones ($3.2 billion) by far.
However, the self-made billionaire population in Asia is unique because wealth creation in the region is more recent than in other parts of the world. Asian billionaires are generally younger than billionaires elsewhere, having an average age of 57, which is 10 years junior to U.S. and European billionaires. In addition, a significant proportion grew up in poverty (25%), compared to 8% in the U.S. and 6% in Europe. As a result of these factors, UBS and PwC anticipate Asia to be the center of new billionaire wealth creation going forward.
Keep the business within the family, or cash out and move on?
More than two-thirds of global billionaires are over 60 years old and have more than one child, making the concepts of wealth preservation, wealth transfer and legacy top of mind. Wealth dilutes over time, especially as families grow, and as they age billionaires face the difficult decision of what to do with the businesses that made them wealthy: keep them or sell all or pieces of the enterprise.
“Billionaire wealth creation over the last two decades has been largely correlated to the financial markets, which have the ability to slow – or worse, turn – in an instant. Therefore, strategic planning is paramount to wealth preservation, whether it be via family offices, personal investing or any other means,” said Michael Spellacy, Global Wealth Leader at PwC US.
The Billionaire Report found that most U.S. and European self-made billionaires choose to keep their businesses that built their wealth (60%), while one-third (30%) sell pieces of their business via an IPO or trade sale, while 10% cash out. The majority of self-made billionaires that cash out become financial investors, investing on their own, seeking specific risk-return goals, and/or delegating investments to a family office or personal financial advisor. In Europe and Asia, billionaires are most likely to create a business dynasty, with 57% of European and 56% of Asian billionaire families, respectively, taking over the family business when the patriarch/founder retires. This scenario is far less likely in the U.S. (36%).
LEGACY AND PHILANTHROPY
Philanthropic giving on the rise, coalescing with legacy
Today’s billionaires have a growing interest in philanthropy, supporting education, health and humanitarian causes around the world. In particular, they tend to be focused on efforts that provide tangible, measurable results: knowing how many lives have been impacted by their donations, seeing improved health or living conditions, or financing of various causes through micro-lending.
In the U.S., “visible philanthropy,” donated through institutions is popular. For example, more than 100 billionaires have joined Bill Gates’ “Giving Pledge,” agreeing to donate more than 50% of their wealth, since its inception. UBS and PwC expect that the Giving Pledge and individual contributions will increase philanthropy in all forms over the next two decades.
We invite you to read the full report here: www.ubs.com/billionaires
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 most wealthy 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.
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 modeling and analysis. This information and data is part of PwC proprietary data and analytics structures and are non-commercial in nature and specifically non attributable regarding the identity of any underlying individual or family. PwC acts as a supplier of data and analysis for the purpose of this report. In addition the following were specifically leveraged 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 The Global Private Banking and Wealth Management Survey (2013, 2011, 2009), and the Asset Management 2020, A Brave New World (2014), and Family Business Survey: Up Close and Professional (2014)
- For the long-term time series (1900 to 2013) of wealth and income we used the “The World Top Incomes Database” (Facundo Alvaredo, Tony Atkinson, Thomas Piketty and Emmanuel Saez) (accessed on 12/2014)
- Other analysis is based on our proprietary PwC databases which covers non client specific detailed bottom-up data on more than 1,300 billionaires from the US, Germany, UK, France, Switzerland, Turkey, Italy, Spain, China, India, Hong Kong, Japan, Singapore, Russia. This is a private non-commercial data structure designed to support analysis of specific market segments.
- For the research on personality traits, we utilized research done by Gallup/Inc. Magazine (September 2014 “Inside the mind of the entrepreneur”) on the entrepreneurial personality traits
• Nordhaus, William D. 2004. "Schumpeterian in the American Economy: Theory and Measurement." National Bureau of Economic Research Working Paper W10433
- Specific interviews with more than thirty billionaires in various geographies were conducted exclusively by PwC and the information from those qualitative discussions were incorporated on a non-attributable basis without regard to any business/client relationship with any person, firm or organization.
Notes to Editors
UBS draws on its over 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. Its business strategy is centered on its pre-eminent global wealth management businesses and its leading universal bank in Switzerland, complemented by its Global Asset Management business and its Investment Bank, with a focus on capital efficiency and businesses that offer a superior structural growth and profitability outlook.
UBS is present in all major financial centers worldwide. It has offices in more than 50 countries, with about 35% of its employees working in the Americas, 36% in Switzerland, 17% in the rest of Europe, the Middle East and Africa and 12% in Asia Pacific. UBS Group AG employs about 60,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).
PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory 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.
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