The word “billionaire” evokes images of people in expensive suits stepping off private jets. But, while this may be true for some of the world’s richest individuals, a new group of wealthy individuals appears to be adopting a less showy lifestyle.
Younger tech billionaires are more often seen wearing casual clothes than the fine tailoring of old, and they are less likely to charter a private jet for a last-minute mini break.
“Whereas the go-to shopping list for an ultra-high net worth individual would previously have included a private plane and luxury yacht, such assets are now seen in the context of their carbon footprint and how this reflects on the owner’s reputation,” explains Caroline Russell, senior associate at London law firm Wedlake Bell, adviser to the wealthy around the world.
Russell cites negative headlines from Taylor Swift’s use of private jets in recent months. “Social media, of course, has a huge impact, here. Young ultra high net worths are on show for the public — and many will now think carefully before posting that posed private-jet selfie.”
This observation coincides with a rapid fall in the average age of the world’s billionaires: from 58 in 2014 to 47 in 2023, according to brokerage City Index, which analysed data from the American business magazine Forbes.
One country that stands out as a home to younger billionaires is Britain. Among the examples cited by City Index are Ben Francis, the 31-year-old chief executive and co-founder of sportswear and fitness clothing manufacturer Gymshark, who is worth £1.02bn, and 39-year-old Nik Storonsky, chief executive of fintech Revolut, who is worth £2.6bn.
Beyond heightened sensitivities over climate change and travel, though, are today’s young billionaires really spending and investing their money differently? And how far have their attitudes changed from the previous generation of wealth creators?
They are increasingly choosing not to buy jets or fast cars, reckons Jill Shipley, head of governance and education at AlTi Tiedemann Global, the global wealth and alternatives manager.
“Instead, people are focused on how their money can be activated to help society through impactful investments, purposeful entrepreneurship, and strategic philanthropy,” she says. One factor behind this may be the extreme financial inequality that wealthy millennials have witnessed while growing up — leading them to view wealth more negatively than their parents or grandparents, and want to do something meaningful with money they make or inherit.
When these wealth holders do spend money, Shipley finds they tend to buy sustainable goods, such as ethically sourced diamonds, eco-friendly homes and holidays, and electric vehicles.
“They are willing to pay a premium for products that are good for the environment and society,” she says. “Another trend is prioritising spending money on experiences over material possessions.”
Approaches can differ depending on whether the owner’s wealth is liquid or on paper. Specifically, advisers see a distinction between paper billionaire entrepreneurs — such as founders of a unicorn business whose money is in company stock — and those whose wealth is liquid and easily accessible in a bank or savings account.
Ben Lister, partner in the private wealth group at law firm Taylor Wessing, says: “Those yet to realise their wealth are often reliant on the disposal of smaller tranches of their holding during initial funding rounds, and their planning needs to consider both boom and bust — either the creation of enormous liquid wealth or total failure.”
However, he says those who have realised significant liquid wealth will initially want to deploy it to purchase homes around the world, cars and other assets of passion such as art and jewellery. After that, they will also want to invest the greater part for future generations and possibly for social and environmental impact and philanthropic goals.
According to Matthew Braithwaite — partner at Wedlake Bell and adviser to a wide range of UK and international clients, including families and family offices — perceptions matter more these days. “The world’s wealthy now have to give serious thought to how the public might view their investment decisions,” he says.
In some cases, there is a declared willingness to pay more tax, particularly among successive generations of wealth holders. “Nowadays, it can be more socially acceptable to appear in a list of highest taxpayers than [in] a rich list,” Braithwaite suggests.
“Previously, a key objective in any wealth planning exercise was a mitigation of tax, but many now view the payment of tax as their social and moral obligation.”
He cites lobby groups such as Patriotic Millionaires, a group of high net worth Americans who promote the restructuring of the US tax system to enable wealthy people to pay a greater share of income in taxes. It has supporters such as Abigail Disney, the heiress to the Disney empire, who has made public her guilt over the vast amount of wealth she has inherited.
But gaining wealth at a younger age also adds complexities, say advisers — especially if people have made a lot of money quickly, such as sports stars, musicians, actors and YouTube celebrities.
Estelle Tague, a private client partner at UK law firm RWK Goodman, says some young social influencers and musicians often fail to appreciate that what they are doing is work. “They often don’t realise that they must pay income tax and potentially value added tax, until they have spent their earnings, instead of saving a percentage for tax reserves. The knock-on effect is often a large tax bill and the costs of a professional tax adviser to resolve the issues.”
However, these mistakes are not only made by people in creative industries. Some younger billionaires fail to appoint any advisers to help them.
Tague argues that they are essential. “I call these advisers the ‘war council’ and recommend that they meet at least quarterly to support and advise the young wealth creator,” she says. “I once had a crypto billionaire client, who failed to diversify his crypto assets and listen to his advisers, completely losing his asset base and the entirety of his wealth.”
Wealthy people are also at risk of being taken advantage of by “supposed friends”, warns Eliana Sydes, head of financial life strategy at Y Tree, a UK-based group of financial advisers to the wealthy.
“It can be hard to know if someone is using you for your wealth or if your wealth is simply enabling your friends to join you in the activities you love,” she notes. “It’s nuanced and can be difficult to distinguish between both . . . we see some people return to relationships from before they earned their wealth, to protect against this.”
She says the risk of being taken advantage of is greatest for the children of the self-made ultra wealthy individual. They must negotiate the complexities of money and human relationships but will lack financial knowledge and social experience.
Mike LaCorte, chief executive of international investigators Conflict International, says younger wealthy individuals can also be targets for fraudsters, who devote time to profiling and researching individuals they hope to swindle. It means young people must be especially vigilant about potential investors and advisers, and even trading online assets.
“You wouldn’t believe how often some young millionaires will employ people or enter into negotiations with potential business partners without undertaking important due diligence,” says LaCorte. “I’ve heard of plenty of cases of wealthy young people, and some older people for that matter, being defrauded by someone who posed as an employee to steal company intel or assets.”
Wealthy individuals can also be as vulnerable in the bedroom as they are in the boardroom. “It’s not unheard of for wealthy individuals to be defrauded by someone who posed as a partner to access company secrets or bank accounts,” point out LaCorte.
“Screening suitors throws up a few interesting ethical and legal questions,” he concedes. “Ultimately, it’s difficult to conduct a full background check on a partner without their consent, though young millionaires should at least be looking for the obvious red flags, namely the lack of a social media presence and vagueness about backgrounds.”
Indeed, social media presents a big danger. Many young people will have grown up with a phone in their hands, and will not think twice about splashing images of their wealth on social media. A new purchase from a designer label or a new sports car will often find its way online. But this means a fraudster can build up details of these individuals from the online posts, which can in turn be used to steal someone’s identity — or potentially even lead to kidnapping.
“For young millionaires with children, I can’t stress enough how important it is that things like school uniform logos are blurred in social media posts,” says LaCorte. “It’s not just the young millionaire that’s at risk, but their family, too.”
However, one of the biggest risks to young people’s wealth can be their own failure to keep spending and investment in balance.
Stuart Crippin, partner and head of the private client team at Seddons in London, says: “While they are perfectly entitled to enjoy the money they earn, it is important that they are not profligate in overspending. It is very easy, especially with the risk of external influences, to overspend. There are many documented cases of wealthy young individuals who, for one reason or another, end up dissipating more or less all of the money which they initially made.”
At the other end of the scale, though, some wealthy people can be too frugal, say advisers. Christopher Groves, who co-heads the private client and tax team in Europe for law firm Withersworldwide, urges people to give money away during their lifetime rather than leaving decisions until death. “Too many people deny themselves the joy of giving assets away — be it to their family or to charity — and wait until they die. Far better to give it away during your lifetime.”
Investment adviser Sydes agrees: “We advise all our wealthy clients, regardless of age, to use their wealth to live the life they want and leave the legacy they want, if any — and to have a good time while doing it.”
This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment
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