Jörg Alt SJ Private Wealth in Germany- Introduction Compiled and ordered notes from interviews including cross-checks with publicly accessible material, prepared for future use. Language check and German quotes translated into English thanks to Dr. Sue Berning. Joerg 16.11.2016 2 Table of Content Table of Content ......................................................................................................................... 2 1 Why focussing on private, not corporate, wealth? ............................................................. 5 2 Introduction ........................................................................................................................ 6 3 Sources ............................................................................................................................... 7 3.1 Deficits in standard surveys and samples .................................................................... 7 3.2 Insights based on tax data ............................................................................................ 8 3.3 Macroeconomical & statistical data bases ................................................................... 9 3.4 SOEP ......................................................................................................................... 10 3.5 HFCS & PHF ............................................................................................................. 11 3.6 Scholarly sociological studies ................................................................................... 13 3.7 Journalistic sources, Wealth Rankings ...................................................................... 13 3.8 Public statements by wealthy persons ....................................................................... 14 3.9 Private Banking institutions, Bank advisors, Wealth Manager ................................. 14 3.9.1 Databases underlying wealth reports .................................................................. 16 3.10 Own contacts to top wealth holder ......................................................................... 17 3.11 Other sources of information ................................................................................. 17 3.12 Conclusion ............................................................................................................. 17 4 Classic categorization of the wealthy ............................................................................... 18 4.1 Old money – new money ........................................................................................... 18 4.2 Self-made – inherited; earned – unearned wealth (married) ..................................... 19 4.3 Chance and self-branded wealth ................................................................................ 19 4.4 Illicit or criminal wealth ............................................................................................ 19 4.5 Conclusion ................................................................................................................. 20 5 Context for large fortunes in Germany & Bavaria ........................................................... 20 5.1 Historically ................................................................................................................ 20 5.2 More recently ............................................................................................................. 23 5.3 The churches .............................................................................................................. 24 5.4 Conclusion ................................................................................................................. 26 6 Categorizing wealth, wealthiness & wealthability ........................................................... 27 7 Portfolio Composition ...................................................................................................... 29 7.1 Changes over time ..................................................................................................... 29 7.2 Portfolio compositions ............................................................................................... 30 7.2.1 Bach/Corneo/Steiner 2011 ................................................................................. 30 7.2.2 Schratzenstaller 2011 ......................................................................................... 30 7.2.3 PHF 2010/2011 & 2014 ..................................................................................... 31 7.2.4 Credit Suisse 2015 .............................................................................................. 36 7.2.5 Conclusion .......................................................................................................... 37 3 8 Quantifying wealth concentration among Germany’s top 1% ......................................... 38 8.1 Germany’s top 1% ..................................................................................................... 38 8.1.1 Income ................................................................................................................ 38 8.1.2 Wealth ................................................................................................................ 39 8.2 Valuation problems & wealth development .............................................................. 40 8.3 Studies regarding wealth concentration ..................................................................... 42 8.3.1 Tax data based analysis by Bach, Corneo Steiner 2011a ................................... 42 8.3.2 SOEP & Wealth Lists ......................................................................................... 48 8.3.2.1 Grabka/Westermeier 2015 ........................................................................................ 48 8.3.2.2 Bach, Thiemann, Zucco 2015 ..................................................................................... 50 8.3.2.3 Credit Suisse 2015 ..................................................................................................... 52 8.3.2.4 Bach, Beznoska, Thiemann 2016 ............................................................................... 52 8.3.3 The question of inheritance regarding wealth concentration ............................. 54 8.3.3.1 Credit Suisse, Wealth-X, UBS… .................................................................................. 54 8.3.3.2 Braun and colleagues ................................................................................................ 55 8.3.3.3 Bönke, Corneo, Westermeier 2015 ........................................................................... 55 8.3.3.4 Ströing, Lauterbach, Grabka ...................................................................................... 56 8.3.3.5 Piketty, Stiglitz, Hecker… ........................................................................................... 57 8.3.3.6 Discussion .................................................................................................................. 58 8.4 Rise and falls ............................................................................................................. 59 8.5 Conclusion ................................................................................................................. 60 9 German wealth holder in international comparison ......................................................... 61 9.1 Diverging numbers for HNWIs ................................................................................. 61 9.2 Wealth-X/UBS 2014 on UHNWIs ............................................................................ 62 9.3 Manager Magazin ...................................................................................................... 63 9.4 Other international rankings ...................................................................................... 64 9.5 Family businesses and entrepreneurial families ........................................................ 65 9.5.1 Context ............................................................................................................... 65 9.5.2 Family businesses (Familienunternehmen) ........................................................ 65 9.5.3 The entrepreneurial family (Unternehmerfamilien) ........................................... 66 9.5.4 A German strength vs. France and the US ......................................................... 67 9.5.5 Tax injustice regarding SMEs vs. MNEs ........................................................... 68 10 The wealthy person .......................................................................................................... 69 10.1 2007 Sinus Study ................................................................................................... 69 10.2 Wealth-X, UBS, PwC… ........................................................................................ 71 10.3 The Big Five Personality Traits of Lauterbach ...................................................... 71 10.4 The eight personality types of Druyen and El-Sehity ............................................ 72 4 10.5 Stifterstudie 2005 & 2015 ...................................................................................... 74 10.6 Conclusion ............................................................................................................. 77 11 The wealthy “class” .........................................................................................................