Where the Wealthiest Made, Lost Money in 2020

One thing that mattered greatly in terms of the effect of the pandemic on the ultra-wealthy was the primary industry of the individual, and last year, their fortunes fared differently depending on the industry they were attached to.

After excluding billionaires from their analysis, researchers found that only two of the five primary industry groups recorded an increased in related wealth in 2020:

• Banking and finance, 24.7% of UHNW; year-over-year change, -0.3%.
• Business and consumer services, 10.1%; y-o-y change, 0.8%.
• Real estate, 6.8%; y-o-y change, -0.7%.
• Nonprofit and social organizations, 6.5%; y-o-y change, 0.1%.
• Hospitality and entertainment, 5.1%; y-o-y change, -0.3%.

The report noted that the marginal expansion of wealth in the nonprofit sphere largely reflects individuals' asset allocations, a combination of public and private holdings and liquid assets. These assets are managed to protect their fortunes, some of which are devoted to philanthropic endeavors.

Age also had a bearing on the ultra-wealth performance in 2020. The fortunes of those under 50, the youngest and by far the smallest rich cohort in absolute numbers, grew by the largest margin, contributing nearly two-thirds of the overall 2% annual rise in total ultra-high-net-worth wealth. 

Technology as a primary industry accounted for a greater proportion of individuals in this group than in others, the report said. 

The wealth of those between 50 and 70, the largest age group, grew at the second-fastest rate in 2020, contributing 0.5% to ultra-high-net-worth wealth growth. Banking and finance, the growing business and consumer services sector and technology helped to propel this expansion. 

About a third of the ultra-wealthy individuals are older than 70. Many continue to be active in their business operations to varying degrees, but researchers found a clear shift to spending a larger proportion of their time on philanthropic initiatives. 

According to the report, this may partly explain the group's negligible contribution to overall ultra-high-net-worth wealth growth last year. The performance of their private and public holdings — and their liquid assets' exposure to foreign currency movements in various parts of the world — also played a role.