Altrata’s billionaire census: inequality, climate and North America

The rich just got a lot richer.

The ninth edition of the Billionaire Census powered by Wealth-X data – and the first published by Altrata, part of Euromoney’s new data and intelligence division – is full of facts to fascinate the ultra-wealthy and those determined to join their ranks. Private bankers committed to serving their financial needs will find it pretty interesting, too.

What the report shows is how fast the world of wealth is changing. There are more billionaires than ever – 3,311 in 2021, up 3.3% on the previous year, with the combined wealth of this group up 17.8%, to a record $11.8 trillion.

Much of this new wealth was inadvertently created by a pandemic that reshaped the economy, disrupting supply chains and creating profitable new business ventures in sectors from tech to healthcare.

The report highlights what factors super-powered personal wealth in 2021, including strong corporate earnings, a rebounding global economy, robust IPO activity and resurgent investor sentiment. At the mid-point of 2022, many, if not all, have gone into reverse – a stark reminder of how fast things change and the way we live now.

Let’s explore that through the lens of five key factors.

Until recently, it was easy to make headlines railing at the richest of the rich – the ‘1%’ decried by the likes of Bernie Sanders and Thomas Piketty. But that premise is already passé. In 2021, the richest 192 people accounted for 6% of all billionaires but held 41% of their wealth.

To put this in context, their combined net worth of $4.8 trillion is only a little shy of Japan’s GDP.

There’s an even bigger skew further up the value chain, where a new top tier of super-billionaires with a net worth of more than $50 billion now dominates.

Altrata reckons the world’s 20 richest people owned 4% of all billionaire wealth in 2016; in 2021, that figure was 17%. The report’s authors point to several contributory factors – from the scalability of big-tech to benevolent tax and regulatory measures, to abundant central bank liquidity poured into financial markets. Our new financial rulers are now the ‘1% of the 1%’.

The ripple effects of the global financial crisis (GFC) are still felt today. Before that point – but following the ascent of pro-free market leaders such as Margaret Thatcher – the rich were envied but tolerated. In the post-2008 era, that is no longer true.

Pretty much every action by governments and central banks since the GFC has turned the wealth gap into a chasm. Even senior bankers know the truth.

In October 2020, Citi’s incoming chief executive Jane Fraser said: “The wealth gap is disrupting society and has caused people to lose faith.” The pandemic, she added, made it “harder for people to get the education they deserve, the healthcare they need, the jobs that will give them financial security”. Of course, the irony is that Fraser employs private bankers to serve those who epitomize the issue.

The danger is a double-headed one. At the upper end of the spectrum, the rich befriend each other, creating a cloistered super-elite. When the new owners of Chelsea Football Club unveiled a nine-strong board on June 22, five were billionaires.

At the bottom end, anger at the skewed distribution of wealth – the non-profit ProPublica found that between 2014 and 2018, the 25 richest Americans paid an average federal tax rate of 3.4% – allied to a cost-of-living crisis caused by soaring prices, is forcing politicians to talk tough, if not yet to act decisively.

Most Americans favour a wealth tax on the ultra-rich, but so far most policies have failed to gain traction.

Europe is back, at least in wealth-management terms, Euromoney wrote early this year. In 2021, its billionaire population rose 6.8% year-on-year, to 954. But that was before Russia again turned its eastern rim into a war zone.

Asia, the world’s economic engine for two decades, saw its roster of billionaires rise just 1.8% to 899, the relative stalling caused by Chinese president Xi Jinping’s crackdown on real estate and big tech.

Whereas in North America, the number of billionaires topped the 1,000-mark for the first time. The US “bolstered its status as the dominant billionaire country”, Altrata says, accounting for 29% of all billionaires and 38% of accumulated wealth.

Consider, too, that JPMorgan topped our annual private banking survey, and that the private banking divisions of North American lenders are clearly more committed to digital innovation, and targeted and purposeful M&A than their European peers. And what you get is a growing sense that the future of wealth management lies not in Zurich or London, but New York.

(A sidenote here: Russia’s billionaire numbers declined by 11% in 2021; that figure, given Vladimir’s prosecution of war in Ukraine, is likely to plummet in 2022.)

A lot has been written about growing gender parity in wealth, and rightly so.

In June 2022, McKinsey said women investors in Western Europe controlled a third of region-wide assets under management, worth €4.6 trillion ($4.8 trillion), and were on track to grow at a compound rate of 8.1% by 2030, against 2.7% for assets owned by men.

But the Wealth-X report shows the apex of the wealth pyramid is just as XY as ever, with women accounting for just 13% of all billionaires.

Female representation is lowest (at 7.7%) in the notoriously male-dominated tech space.

Is this a surprise?

We all fret about the world we’re bequeathing to future generations. When wild weather events make headlines – droughts in South Asia today; floods in Europe tomorrow – we assume it must be the driving concern of everyone, rich and poor alike. Well, perhaps not – or at least, not just yet.

The top-five philanthropic causes among billionaires, according to Altrata’s Wealth-X data, are headed by education (65.9%) and healthcare and medical research (42.7%). Environment, conservation and animals come last on that list, with a share of 19.1% (respondents can choose more than one cause).

So, the rich do care – just not that much; and, very probably, not enough.