How the world’s richest handle their money: a SocGen Private Banking report

A global study of how the world’s richest families manage and focus their wealth indicates strong regional differences in the sectors that produce the wealth, and the ways the owning families handle their fortunes.

A study of 1,253 families in 12 countries, conducted by Forbes Insights and sponsored by Société Générale Private Banking, showed most (around 70%) of those joining the ranks of billionaires are individuals who have created their fortunes themselves.

The minimum net worth of the participating individuals was $1bn, with three exceptions – a minimum of $370m in India, $500m in China and $210m in Singapore. The 12 countries covered were Brazil, China, France Germany, Hong Kong, India, Mexico, the Middle East (the United Arab Emirates, Saudi Arabia, Kuwait and Lebanon), Russia, Singapore, the UK and the US.

The aim of the study was not to create a list of the world wealthy, but to gain insights into how the wealthiest individuals create, manage and pass on their fortunes. Since 2008 there has been strong growth in the numbers of self-made billionaires, the worth of inherited fortunes (second or third generation) and the number of inherited fortunes that have diversified and are still growing.

Bruce Rogers, Chief Insights Officer, said the study suggested inherited fortunes tended to be more passively managed, but there are examples (Bruno Arnault in France) where the family has both preserved its inherited fortune, and developed new parts to it.

The study also compares engagement with wealth in mature and emerging markets, with France, Germany, Hong Kong, Singapore, UK and US falling into the former category, and the other nations into the latter. In mature markets, some 65% of the fortunes were self made, and 18% inherited, while in emerging markets, 77.5% were self made and just 4% inherited.

In Europe, there are distinct national differences. Overall, there is direct family engagement in managing their fortunes in about half the examples, but in France, among 14 families polled, it was much higher, at 64%. In the UK, where 32 families were polled, there is the highest percentage of individually managed fortunes (75%) and a notably strong entrepreneurial spirit contributing to the creation of new wealth.

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