A new report shows the ultra rich have a hard time maintaining their status. But don't fret too much for the billionaires.
Many of us tend to think that once they achieve their fortunes, the truly wealthy stay that way over long periods of time—generations or more. But the reality is actually quite different.
A new study from investment banking service UBS Group AG and PricewaterhouseCoopers (PwC) shockingly revealed that 56% of those with fortunes of greater than $1 billion in 1995 had fallen out of that worth bracket as of 2014—just 20 years later.
“Great wealth is volatile — highly volatile,” Michael Spellacy, a senior partner at PwC, said in a press release accompanying the report.
The report, an offshoot of this past spring’s comprehensive “Billionaires: Master architects of great wealth and lasting legacies,” found that those legacies don’t always last so long. The report looks at the differences between billionaires’ wealth creation, preservation, and philanthropic practices across the United States, 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. An animated summary of the full report can be seen here.
Of the 289 billionaires identified in 1995, only 126 remain in the group. Of the 163 who dropped out, 24 saw their wealth diluted among family members, 66 lost it to the inevitable and inexorable combination of death and taxes, and 73 saw fortunes decline due to business failures and other issues, the report said.
But don’t fret for the upper crust: New billionaires more than replaced those who lost their riches. UBS and PwC gathered data on 1,300 billionaires globally, more than 1,000 of them minted since 1995. The majority derived their money from finance, technology or the consumer and retail industries over the past two decades.
In a welcome trend, many of the new billionaires are women. The number of female billionaires worldwide has increased nearly sevenfold in the past 20 years to 145, driven largely by Asian entrepreneurs. In fact, women joined the billionaires’ club with a bang—with their ranks and wealth growing at faster rates than men. There were only 22 female billionaires in 1995.
The report found that among other indicators of sustained wealth, the second generation obtaining that wealth is crucial to whether or not the wealth is maintained.