The Rich Get Richer as Billionaires Increase in Number 

Whatever the world’s economic and market turbulence last year, one group has held up well: billionaires.

The combined wealth of the world’s billionaires, defined as individuals with a net worth of $1 billion or above, increased by 5.4% to a record $7.7 trillion, according to Wealth-X’s 2015-2016 billionaire census.  By comparison, the gross domestic product of the U.S. is around $17 trillion.

The world’s billionaire population grew by 6.4% to 2,473 in 2015.

Billionaires controlled 3.9% of the world’s total household wealth in 2015, slightly down from 4% in 2014, according to Wealth-X, a consulting group that uses public records and research staff to manually track the habits of ultra-high-net-worth individuals, or people valued at more than $30 million.

“Wealth helps accumulate more wealth,” says David Barks, associate director of custom research for Wealth-X.

Europe, the Middle East and Africa are still the regional group with the most billionaires (1,013) while the Americas come in second with 782 billionaires. The Asia-Pacific region is poised to take over the Americas, Mr. Barks says. With 678 billionaires, Asia-Pacific produced four times more billionaires than the Americas during 2015.

But, the Americas did overtake Europe, the Middle East and Africa in total billionaire wealth, clocking in at $3 trillion, compared with about $2.8 trillion for EMEA.

As baby boomers transfer their wealth to the younger generation, more heirs are becoming billionaires and adding to the ranks. Billionaires with partially inherited wealth continue to be the fastest growing segment of this population, up 29.9% year-on-year, the census found.

Over the past two years, Marc Compton, market executive for U.S. Trust, Bank of America Private Wealth Management in Palo Alto, Calif., has seen more of the firm’s clients sell their businesses and transfer some of their wealth to their children.

These clients often grapple with how much to leave their heirs so it won’t ruin their character or initiative to work. “They want to pass on their values, not just their wealth,” he says.

For most billionaires, however, it takes more than an inheritance to join the so-called three-comma club, according to the census; 87% of billionaires, up from 81% in 2014, made the majority of their fortunes themselves.

Todd Morgan, senior managing director at Bel Air Investment Advisors LLC in Los Angeles, says several of his billionaire clients are entrepreneurs and they are “very driven” and typically opt to keep working long after they’ve made their fortune.

“It’s not, ‘I’m worth a billion, now I’m going to sit on a beach and relax.’ It’s more of, ‘What can I create or achieve next?’” he says.

As the ranks of billionaires grow, so, too does the desire to give back. Philanthropy was the primary passion among global billionaires, as it was in 2014, the census found. More than 56% of total billionaires either undertake or are interested in pursuing philanthropic activities.

Several of the billionaires Mr. Morgan works with are focused on philanthropy, he says. They may use some of their resources to solve a big problem, such as hunger or homeless, he says.

The Giving Pledge, an effort by Microsoft Corp. co-founder Bill Gates and Berkshire Hathaway Inc.’s Warren Buffett to encourage billionaires to donate the majority of their wealth, has also helped fuel some of his clients’ desire to give back in a significant way. “They realize that any billionaire can buy yet another house. They’d rather make an impact,” he says.

Source: WSJ

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