Billionaire Heirs Have a How-to-Spend-It Problem

“Let me tell you about the very rich. They are different from you and me.” F. Scott Fitzgerald could have added that they are also generationally different from each other.

For the first time in the history of UBS Group AG’s annual study of billionaires, new billionaires accumulated more wealth through inheritance than entrepreneurship: Some $151 billion was inherited by 53 heirs in the year to April 6, versus the $141 billion in fortunes of 84 new self-made billionaires.

As the Swiss bank points out, the pivot may have been expected, but this “great wealth handover” is gaining momentum. More than a thousand aging billionaire entrepreneurs are expected to bequeath $5.2 trillion to heirs in the coming two to three decades.

Shifting Priorities

What’s striking are the findings of a related UBS survey showing contrasting attitudes between the self-made and their successors. The main goals of second-generation billionaires are to enable their descendants to benefit from the same wealth — a priority of first-generation billionaires too — and to continue and grow what forebears had achieved. But barely one-third of billionaire heirs cited “philanthropic goals / making an impact in the world and society” as their main objective. For first-generation billionaires, the proportion was 68%.

Just 16% of the heirs are prioritizing “enabling or supporting others,” through, say, cultural legacies or sports sponsorship, compared with 48% of first-generation billionaires.