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Billionaire entrepreneurs gamble inherited wealth

By James Beech

A rising taste for entrepreneurialism among billionaires who inherited their wealth is behind a dramatic 29% drop in the number of global billionaires in only two years.

The new Wealth-X Billionaire Census reported that billionaires whose wealth was inherited comprised only 13% of all global billionaires and 14% of total billionaire wealth.

The decline was described as “significant” by the consultancy firm, given that between 2013 and 2014, the billionaire population grew more than 3% while total inherited wealth shot up 13%.

However, the number of billionaires with inherited or self-made fortunes grew from 2014 to total 31% of the entire billionaire population, a rise of 6% year on year.

“This illustrates that inheritors are not looking to rely on their new-found wealth; they are attempting to use the wealth to pursue their own business interests or grow their existing family estates,” the report said.

“They are looking to make their own legacy and personal fortunes, rather than living on their family's existing reputation.”

In 2015, billionaires with self-made/inherited fortunes increased their mean wealth by $300 million, to total $2.96 billion. This represents the benefits of “an effective wealth transition strategy,” the report added.

“It is very important for the benefactors of new wealth to understand both the implications and responsibilities that come with owning significant wealth.

“Being unprepared can lead not only to wealth or asset loss due to uneducated investing, but also to reputational damage to the family name.”

Reputational damage was also a risk of growing numbers of younger wealthy people who flaunted their lifestyle on social media.

Wealth-X said it was “vital” a strategy existed to prepare next-gens for inheritance. Private banks and family offices have already identified the need among the super wealthy and offered next-generation programmes for the children of wealthy families, the report continued.

“The purpose of these programmes is to educate future beneficiaries about social responsibility, family governance and investments.

“Rather than rest on the security that inherited wealth provides, an effective wealth succession strategy and next-generation education platforms have given billionaires the drive to achieve success by themselves.”