How Billionaires Think

[Music] thank you very much and good morning everybody and thank you so much Benjamin for being here this morning as well right let's get stuck in um you spend a lot of time talking to billionaires around the world the question we all want to know this morning is how do they think and what does Drive their decision making all right good morning everyone thank you Lise for for having me as well here uh I think there are some commonalities or or common traits amongst the billionaires but they certainly love to push the boundaries they're very decisive they have a Killer Instinct um and uh what I have seen in my sort of two decades in in Asia Pacific having gone through the Asian financial crisis and the GFC is uh they have incredible resilience um they you know often at times um you know people had business that got crumbled in a crisis they came back they emerged stronger learned from it uh and that's a true characteristics of of a billionaire so really resilient yes absolutely UBS has just launched the 10th edition edition of the billionaires ambitious report Ambitions report as we've just heard the Q code is on the screen the QR code is on the screen now it's the longest running wealth management study of billionaires what has really stood out to you over the last 10 years a couple of things so first I think for the benefit of the audience uh it is uh online report that we've been running one of its kind for the last 10 years so it's fairly representative I would say um and some of the common themes if we look back uh the last 10 years the first one which is a striking one is that the wealth has literally doubled um amongst the billionaires over the last 10 years to a staging 14 trillion us interesting to to observe if you look back from 2015 to 2020 we've had a 10% annual growth rate and from then onwards you know growth was fairly muted um at only 1% so we've seen a massive acceleration the first five years the last five years that was largely due to a Slowdown in globalization we've had covid and so forth the other one um is uh to observe is is the epicenter Remains the US 40% of the billionaires are at home in the US uh We've also seen an interesting wealth shift um uh into the tax side um although from a very low base but clearly uh that has tripled to now $2.4 trillion us doar over the last 10 years uh which is an interesting observation um and um maybe two other data points one is concentration I mean the top 100 billionaires and here I'm referring to an audience of 20 680 billionaires in total to so the 100 top command 36% of the Wells Pool which is quite staggering and that's up from 32% and the last one most exciting one is uh that we've seen a true emergence of uh of female billionaires U they have grown by uh a staggering 81% we have now uh um 344 female billionaires on our list music to my ears yes why is that why have we seen that growth I think there are probably a few drivers to that but the the one that that we observe people have the courage to more and more to get out they have held numerous prominent leadership positions in professional firms um and have taken the decision to to establish their own business businesses um Co was definitely one of the key driver very interesting and what about billionaires here in the Middle East Middle East yes uh I would say I call it Middle East M Middle East Africa that's how we sort of segregate the report but uh one interesting observation that sort of stands out versus maybe the rest of the countries 80% of the billionaire here are self-made uh which is uh quite staggering um and uh the other one is that we've seen the fastest growth um of the billionaire community in the M region after the US so 21.5% last year or this year 2024 to be precise versus uh 26. 89% in the US now here is the good news for for this region um um and that is really uh one observation that we've made is the billionaires are on the Move we've seen just in the last five years um One in Every 15 billionaire to sort of shift domicile and um so that's 167 to be precise out of the community and uh which are the beneficiaries certainly Middle East being one Singapore Switzerland and the US and the wealth pool the combined wealth pool of that sort of 167 um billionaires is roughly 400 billion in AUM the bulk of which has actually come to this region so that's the good news wow that is good news indeed there is currently a lot of uncertainty in the world as we're all very well aware can you share what some of their top concerns and challenges are and what they're actually doing to address those challenges I would say on really the top of the list is uh investment risks clearly and and again the way we we try to sort of dissect the two Dimension is we look at what is on top of their agenda concern in the next 12 months and the next 5 years the sort of common denominator um is geopolitical risk is really on top be 12 months and 5 years and conflicts obviously um then more shorter term interest rates is of concern to the billionaires we have a correction in the real estate market as potentially um one and the financial crisis believe it or not financial crisis um now if you pivot to the more longer term five years um people are worried about uh Global recession about uh a potential um uh debt uh fallout um and the last one maybe unsurprisingly uh is higher taxes yes not surprising and what exactly are they doing to address those challenges what measures are being putting in place maybe one I mean one observation clearly and and again no surprise to to all of you here as well is is to address some of the geopolitical concerns we've seen clients um shifting uh wealth into uh gold uh and precious metals uh as one uh destination and uh interesting also looking into to 2025 um actually 43% uh have um indicated that they're going to allocate the larger part of their liquidity into real estate uh so maybe more opportunistic contradictory in one hand they see a potential uh correction in the real estate market given some of the um higher interest rates we've seen the last few years but that in itself self will create an opportunity for them yes billionaires are set to pass on an estimated 6.3 trillion US dollars to their children over the next 15 years how well are you preparing them to do that and how are they preparing themselves to pass that enormous wealth on yes my favorite topic I must confess um and and if you I think again just some data points to put that in perspective right the law 10 years again since we've inaugurated this report we have seen 1.

4 trillion of wealth changing hands if you take the next 15 years we estimated that as you said uh 6.3 trillion and that is largely due to the fact of the demographics so a lot you know of our clients and the billionaires have have aged as well um so there's a larger community in the AG Gra of 70 and and above and uh with life expectancy you know um at 8286 uh clearly uh that's where we derived the number now what's interesting here is um I think this is for a firm like ours one of the biggest opportunity that we have seen it is probably also one of the biggest threat for anyone that is not prepared for it so we are going to see the largest wealth transfer we've seen in history uh we are going to see the importance and influence of um the next in line I.E largely a lot of uh women to become decision makers and again because of the um I would say life expectancy U females uh live longer we know that um the other one which drives the complexity and that's why we like it uh is that we have seen you know a staggering growth of children of all our billionaires again when we started in 2015 our billionaire Community consists of roughly 4,000 children today the same Community a bit larger obviously count 6 and a half thousand children wow and wealth is distributed across the globe nowadays uh be it business wealth be it tangible wealth and family members right and that makes it interesting for us being a global player and being home in 50 different um jurisdiction is that you know the days are gone where you know the children reside and stay in the same place necessarily where their parents are or where the business was founded so there is a material shift in this regard and tell me a little bit about the young investor organization you've done your homework on that one yeah of course um no so why I mean we we tried um back uh 17 years ago uh to actually learn more about our next generation of clients and I I I always caution here that when people talk about the wealth of the next gen actually it is wealth transferred to the next in line but clearly the Next Generation being uh one of the main beneficiaries so we have heavily invested in that Arena um clearly with the intention that we not only get them on board with our bank um but also to for them to get know us better so 17 years ago we have uh been co-founding in a sense um the young investor organization which you can look up on the internet as well which is an organization that um anyone who went through our sort of young investor programs um have the ability to sign up for and become a member so that Community today uh counts uh 1,800 people across the globe um and from the age group of early 20s all the way to late 40s um early 50s and uh we meet on a regular basis um Regional reunions annual reunions and clearly with the idea to ensure that we are Center Stage um and on top of their mind obviously when it comes to addressing their needs but also educating the younger generation such such a great thing the earlier you can start that the better but just one more point which I think is critical here and I also feel that there's a bit of a misconception uh around when we talk about wealth transfer it's not just the bankable wealth that's a fraction of the wealth poool of our billionaires and and obviously the larger uh audience of our clients business wealth makes up makes up the bulk of it and we our job day today is to handhold the clients sort of throughout that succession and and transition so we are well positioned obviously to help them not only making sure there's transition on the wealth pool uh as far as their bankable assets are concerned but also on the business wealth we help them to make them you know understand what are the sort of key decisions that they have to take when it comes to transfer of some of the businesses and I'm just intrigued we had a conversation earlier and with your level of expertise and working in this area for so many years as you say two decades the whole idea of inheritance it's changed you've seen a big shift haven't you yeah absolutely um I I think uh if I dial back when I when I uh started um early 2000 in the wealth management arena in Singapore um and I really didn't understand wealth management at all coming from the Investment Bank uh my my my goal was understanding the corporate Arena to talk about business succession and back then nobody liked to talk about what happens after they're gone um that's a fact and I I do think it is still a bit of a stigma here and there but today I mean as we also observe um our billionaire clients are in including their children more often than not in disgusting succession it was a taboo almost back then to talk about look what are you going to do if you're not here tomorrow anymore people do not like to talk about what's after their death normally um but I I must say we've seen a we've seen a complete change and again what has driven that largely is a lot of our clients have gone through the probate of their own parents as well and they have noticed how painful how cumbersome that is and they want to hopefully prepare the Next Generation uh for a better transition we haven't got long left as you can see I just want to ask you you know an amazing report so many insights from the past 10 years I know you can't see into the future Ben but what do you expect to see in the next decade always difficult to predict the future I think the one thing that you will see from the report um billionaires have to be and will be a lot more concerned about this world in the next uh 10 years uh the one thing that will be interesting to observe is how the governments are sort of uh taking the a balancing act on the fiscal side particularly given uh that we have a longer life expectancy so we're going to see a mounting increase in in Social Security costs how that will change the Dynamics will be interesting that in itself as a backdrop will create opportunity if I look at what happened the last 10 years on the technology front uh I think we are ready um for a a good ride uh to um you know to address the whole uh AI topic gen electrification uh renewable energy will be a a lot of there for billion huge opportunity and but it's interesting Ben because it's not about they can just act quickly because they've got the money to do it but as you say it's the resilience and the confidence to do it and yes the opportunistic way um and then lastly really is is is governance around their succession right that will be most of our clients most of the billionaires are yet not prepared for that so um you know fail to plan is a plan to fail and we'll finish on that note Ben kavali thank you so much for joining us this morning thank Youk you [Music]