London CNN  — 

Billionaires minted in the latest year accumulated more wealth through inheritance than entrepreneurship for the first time since UBS started tracking the fortunes of the world’s richest almost a decade ago.

And billionaire heirs are more likely than their parents to focus on the major opportunities and challenges facing the global economy, investing in sectors such as clean energy and artificial intelligence, the Swiss lender said in a report Thursday.

“The great wealth transfer is gaining significant momentum as many billionaire entrepreneurs age,” Benjamin Cavalli, who oversees strategic clients in the global wealth management unit at UBS, told reporters.

“This is a theme we expect to see more of over the next 20 years as more than 1,000 billionaires pass an estimated $5.2 trillion to their children.”

UBS (UBS), which counts half the world’s billionaires as clients, found that $150.8 billion was inherited by 53 heirs over the 12 months to April, exceeding the $140.7 billion accumulated by 84 new self-made billionaires over that period.

Overall, the number of billionaires globally climbed 7% to 2,544. Their combined wealth rose 9% to $12 trillion, before taking inflation into account.

That total remains below a peak of $13.4 trillion reached in 2021, when the global billionaire community grew to 2,686 individuals following a post-pandemic rally in assets such as stocks and property.

The report’s findings also reflect the subdued state of the IPO market through 2022 and early 2023, which limited the opportunities for entrepreneurs to list their businesses and so increase their wealth.

“Economic, geopolitical and policy uncertainty have been a challenge to entrepreneurial wealth creation of late,” said Max Kunkel, chief investment officer for family and institutional wealth management clients at UBS.

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LVMH's Bernard Arnault pictured in Paris with his wife Helene and four of his five children, from left: Frederic, Delphine, Antoine and Alexandre. All five of his children work at the company.

For the first time, Europe led the growth in billionaire wealth as a “post-pandemic shopping splurge” lifted the profits and share prices of leading luxury goods companies, based in France, benefiting the billionaire families behind them, the report said.

That includes LVMH chairman Bernard Arnault and his five children. Arnault is the world’s third-richest man, with a net worth of $167 billion, according to the Bloomberg Billionaires Index. Arnault’s wealth eclipsed that of Tesla’s Elon Musk and Amazon’s Jeff Bezos — who hold the number one and two spots respectively — late last year.

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While technology and healthcare billionaires have accumulated the greatest wealth over the past decade, the report highlighted “early signs of improving fortunes” for industrials billionaires, which include the likes of India’s Gautam Adani, behind the multinational conglomerate Adani Group, and Mukesh Ambani of Reliance Industries.

“This may continue amid government incentives in several countries to promote the energy transition and higher defense spending,” the report said.

Risks and opportunity for UBS

The “staggering” transfer of wealth to younger generations presents a huge opportunity for UBS, but also poses considerable risks, according to Cavalli.

“You can either be on the winning or receiving side of it, or… lose substantial assets in time to come if you do not know the potential beneficiaries,” he said.

Typically, younger clients prefer to have a different banker to their parents, although not necessarily a younger banker, Cavalli said, pointing out that many heirs are themselves over 50.

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Following its rescue of failing rival Credit Suisse in March, UBS is now the world's second-largest wealth manager — behind only Morgan Stanley — with almost $5.4 trillion in assets under management.

The changing of the guard could also have an impact on charitable giving, with less than a third of inheriting generations seeing philanthropic goals as one of their main objectives, compared with two-thirds of first-generation billionaires, according to the UBS report.

Heirs lean more toward impact investing — that is, socially or environmentally beneficial investing — over “classic grant-giving philanthropy,” Cavalli said. “The patriarchs in the past have been well-known for writing checks to causes they personally have an affinity and a passion for.”

Billionaire investor Charlie Munger, who died Tuesday at the age of 99, was known for his charitable giving. For example, in October he donated Berkshire Hathaway shares worth $40 million at the time to the Henry E. Huntington Library and Art Gallery, according to a regulatory filing.