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The total wealth held by international billionaires has been affected by external factors in 2015, decreasing to $5.1 trillion from $5.4 trillion, according to a new report by UBS and PwC.
Factors such as asset transfer within families, the deflation of commodity pricing, such as petrol, and the appreciated value of the United States dollar are responsible for a decline of total wealth. UBS and PwC’s annual “Billionaires Report” found that the average billionaire’s wealth dropped from $4.0 billion to $3.7 billion.
Michael Spellacy, a global wealth leader at Pricewaterhouse Coopers said “strategic planning becomes even more crucial for wealth preservation,”. This year 60 individuals from Europe inherited their fortunes in 2015 for the first time.
The United States., which boasts the biggest collection of billionaires by region, sets the trend. Total U.S. billionaire wealth fell, but ‘new money’ fared better than old, falling by just 4 percent, from an average $4.7 billion per individual to $4.5 billion.”
UBS and PwC’s Billionaire Report found that Europe has the highest number of multi-generational billionaires. These 182 individuals, or 54 percent of billionaires, have proved to be the most resilient in preserving wealth. Familial ties and upholding legacy are important to many billionaire families, meaning that the wealthy of Europe tend to the businesses that may have been established generations before either by investing in their companies or buying other family-owned firms.
Germany and Switzerland have the highest concentration of “old wealth” based on inheritance, whereas billionaires in U.S. are beginning to outnumber those of inherited wealth.
One hundred -seventy five, billionaires are multi-generational. But, for the first time in 10 years, the average of self-made billionaires has overtaken those who inherited their fortunes. The average self-made billionaire has a total wealth of $4.5 billion compared to multi-generational billionaires’ average of $4.3 billion. Asia mainly China has created one billionaire nearly every three days.
Transferring wealth is a common cause of fortunes becoming diluted. When a billionaire dies, the wealth is split between heirs, and oftentimes the resulting fortune does not meet the billion-dollar wealth ceiling.
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Written
on October 18, 2016