The billionaire smash-up derby

The calamitous financial events of the last 12 months saw a massive $2ooobn (E1530bn) wiped off the net worth of the world’s billionaires. In March 2008, the team of fortune hunters at Forbes unearthed 1,125 individuals with a collective wealth of $4400bn. This was the biggest crowd of uberwealthy ever. One year on and it’s the biggest ever smash up. Despite all their scratching around, Forbes could only root out 793 individuals, worth an aggregate of just $24oobn. This equates to a collective wealth erosion topping 45 per cent. Such numbers do not bode well for wealth managers. The top 10 still looks relatively familiar in terms of who is on the list with only three changes from 2008 (In – Larry Ellison, Theo Albrecht and Amancio Ortega; Out – Anil Ambani, KP Singh and Oleg Deripaska). However, even those who made the list have seen universal declines in their wealth, with some having lost mesmerising sums, including the most famed financial strategists and the biggest recent winners. While rankings are always a complex science, one had become incredibly accustomed to watching the almost monotonous gains year-on-year of the world’s super rich. So much so that the last half decade in particular had almost become a boring guessing game of who had grown richer and who was getting rich(er) the quickest. Now, however, the tables have turned and it is a question of who has succeeded in losing the least. And there are some big, big losers. Eighty-seven per cent of the list in fact is down on last year. Demonstrating the demands of maintaining wealth and the dependence on the performance of their businesses, top of the losers in absolute wealth loss terms was last year’s biggest winner, Indian telecoms mogul Anil Ambani, boss of Reliance Communications. His worth fell $31.9bn from 2008’s high of $42bn to $10.1bn in 2009. He was followed by fellow Indian, Lakshmi Mittal, London-based head of global steel conglomerate ArcelorMittal. He lost $25.7bn, seeing his wealth slide to $19.3bn. Third, and a major surprise to some, was famed investment guru Warren Buffet, leader of the iconic firm Berkshire Hathaway which suffered its worse ever year. Buffet lost $25bn to fall to a worth of $37bn. They were not alone. While wealth dropped all over the world, a clear geographic divide has been marked out and the biggest losers, in general, have been the emerging markets. Unlike their economy, the relative best performers were the Americans even though they had the biggest net loss of billionaire numbers (they started with the most after all). Their number on the list has gone up. This year Americans occupy half the top 20 spots and account for 44 per cent of the total net worth, and 45 per cent of the losses. The question on Scorpio Partnership’s lips is the impact this – and wealth erosion in general – will have had on the wealth management industry. In last year’s Scorpio KPI Benchmark we revealed the global private banking industry controlled $17,400bn in assets under management. If these asset levels are impacted at the aggregate level that the world’s super rich have seen their wealth dwindle (45 per cent) then the last five or six years of growth in the industry will have well and truly been wiped out. That is a sobering prospect. Indeed, if it is anywhere near to being that bad then one must question where the industry will find the first and most immediate re-building block – trust. Stephen Wall is a senior associate at wealth management strategy think-tank Scorpio Partnership