Daily Management Review

World’s Billionaires Got Richer In 2020 As World Grappled With Pandemic


World’s Billionaires Got Richer In 2020 As World Grappled With Pandemic
The wealth of billionaires reached new heights in 2020 when the rest of the world was grappling with unemployment and lost jobs and businesses because of the Covid-19 pandemic.
And currently many of those billionaires are trying to hold onto and consolidate their fortunes even as the world is slowly trying to get out of the pandemic and its impact. And yet others are concerned about pre-empting and navigating the demands of government as well as the wide public for the wealthy to play a role in contributing to the costs of a recovery form the pandemic. 
"The stock market crashed a year ago, by July or so my portfolio was back where it was before, at the beginning of the year, and now it's far higher," said Morris Pearl, a former managing director at BlackRock who chairs Patriotic Millionaires, a group that believes that those with high net worth should be playing a more active role to close the wealth gap. "The fundamental problem is this gross inequality that's getting worse."
According to a report published by the news agency Reuters based on interviews with seven millionaires and billionaires and more than 20 advisers to the wealthy, engaging in philanthropy, shifting their wealth and businesses into trust funds, and relocating to other countries or states that have favourable tax regimes are among the plans that the ultra-rich are currently discussing.
"It's quite evident that the bill is coming for everybody," said Rob Weeber, CEO at Swiss wealth manager Tiedemann Constantia. Selling major assets like businesses before tax rates rise is also being considered by some clients, Constantia said.
According to reports quoting wealth managers, there has been a sharp rise in demand from clients to set up trusts in the United States where there is now an anticipation of higher taxes for the rich after the election of Joe Biden as the president. Setting up a trust would give the super-rich the opportunity of passing on the wealth to their children or relatives under the current $11.7 million tax-free threshold per person in the US. Biden had proposed during his campaign of bringing down the threshold to $3.5 million as it was in 2009.
"We saw a surge of trusts created and funded in Q4 of last year," said Alvina Lo, chief wealth strategist at Wilmington Trust. "The vast majority of our clients adopted a wait-and-see approach until the election in November, and then it just kicked up into high gear."
According to Forbes, during 2020, there was wealth increase for almost two thirds of the billionaires of the world and the wealth of the biggest gainers reached unprecedented levels partly because of the trillions of dollars in recovery money given by policymakers.
By the middle of December 2020, there was about a 20 per cent increase in the wealth of billionaires for 2020, estimated Forbes, which tracks publicly known fortunes.