Beyond Money: The Conversations That Keep Wealth in the Family

10/02/25

The ‘Third-Generation Curse’ suggests that wealth is built in the first generation, enjoyed by the second, and often gone by the third. According to commonly cited research, often attributed to The Williams Group, about 70% of wealthy families lose their wealth by the second generation, and about 90% by the third.

Wealth is not simply about money; it’s about values, communication and preparing the next generation to handle money responsibly. Generation A can build up a mountain of wealth, but it’s extremely difficult to show Generation B how to build it when they’ll never need to. They were often too young to appreciate how the wealth was created. Since Generation B never learned how to handle it responsibly, it’s even more difficult for Generation C to grasp that concept.

Families that lose wealth across generations have the following in common:

• Silence - parents avoid discussing money; they show kids how to spend it but not how to save, invest, plan around taxes, or budget..

• Financial Illiteracy - parents don’t mind talking about money, but the topic isn’t revisited enough to fully educate. Like playing a sport, it takes repetitive conversations and practice to improve.

• Lack of Purpose - wealth given without responsibility can erase motivation. Building a business can be exciting. Saving for a home can be motivating. Without a purpose for money, though, spending often becomes the default.

To be a family that keeps wealth across generations, do the following:

• Establish Family Governance - this sounds formal, but it doesn’t need to be; make it enjoyable. Discuss the following:

  • Agreed-upon principles, values and direction

  • How to best save, give, invest and spend

  • You are in a unique situation to have money to help others

  • The importance of giving - whether to churches, charities, or directly to people in need

  • Involve your kids in the decision-making process.

• Education on Specifics - Have a family meeting with your financial advisor. Teach your kids about mutual funds, IRAs, 401(k)s and other investment strategies.

• Transfer Wealth with Intention - Give your kids an allowance, and teach them to donate 10%, save 45%, and spend 45%. Adjust the percentages as needed. Teach them that receiving money means a responsibility to manage it wisely.

It is also important to note that if you don’t have kids, teach your nieces, nephews or others in your inner circle who will benefit from this.

My role as a financial advisor is to be a portfolio manager, but it also involves being a family wealth strategist and good communicator. Most families naturally have a financial leader, but giving other members meaningful roles helps ensure everyone feels invested. My job is to make every family member feel understood and involved.

You’ve worked hard to build your wealth. With the right planning, both financial and emotional, you can give your money the best chance to leave a responsible, lasting legacy.

*Do not use this as advice about your specific situation. Please contact me to talk about your specific situation. You are never charged for meetings or advice.