How NOT to lose the family fortune in three generations.

Without Losing it …or them.

70% of wealthy families lose their wealth by the second generation, and 90% by the third, according to a recent study in the US.  *

An astonishing 90 percent of family wealth and families will be back in ‘clogs’ in three generations. Yes, 90%. If you have both created and sustained financial wealth, you are a wealth steward. You know how much effort, care, courage, passion, and sacrifice that took. You hope to leave this Legacy of Opportunity to the generation that follows.   But the statistics don’t bear this out.

However, as an ardent proponent of wealth stewardship from one generation to another to ensure that families successfully pass wealth onto the next generation and increase the likelihood they and your relationships will thrive, I offer a prescription to help families thrive.

  1. Passing on wealth calls for a level of competence, trust, and integrity that is both natural and learned. It requires an understanding of what it takes to create wealth and to keep it. It also requires a healthy attitude toward risk and reward. A wealth steward sees the care of resources as both a privilege and responsibility, not as an entitlement. He or she understands that the resources passed into their care are not for their sole use but for the good of the family.
  2. To be an excellent wealth steward demands a high level of self-confidence, acquired knowledge, emotional maturity plus strong self-awareness and self-esteem. It should be fostered by an understanding and expression of what makes each of us unique and useful. That individualization helps us identify healthy boundaries so that we can be both a unique and valued separate person and a valued member of a group.
  3. So, if you want to successfully pass your wealth onto the next generation… Let them be Them! Help them find their unique talents and build a life of purpose around that. Celebrate their contributions to the family and the world, regardless of what you want or hoped they would be or do. Empower them by trusting them to make their mistakes and build muscle and confidence as they overcome them.
  4. Be an Enriched Family! Is the question  “are you a rich family? Or is it more meaningful to ask the question “is your family enriched”? Do you and your family members understand what it means to carry your last name? What defines your family’s True wealth? Does everyone feel like a valued part of a greater, more valuable whole? You can support this enrichment by creating fun family meeting forums, the sole purpose of which is to share and celebrate your common values, pass on wisdom, develop traditions and share stories. This also is the place to introduce your network, provide support systems, nurture your reputation and celebrate your accomplishments. A lifetime of hard-earned wealth and wisdom is wasted if it is not shared both before and after your time on Earth.
  5. Give and get Smart! Educate. Developing wealth stewards is a proactive process, and there will be a right time to disclose family assets. Young people are naturally self-oriented as they seek to find their own place in the world. Most often, they are not overly interested in financial management. However, money makes the world go around so we must all gain financial acumen, whether we “enjoy” it or not. A good way to first engage young people and grow their financial literacy is with a family charitable foundation. Here they learn about cash management, investing, compliance, financial reporting, and due diligence techniques.

It is never too early or too late to grow wealth stewards in your family if you want to successfully pass your wealth on to the next generation, perhaps it’s time for a different kind of communication.

“Discussions about money and loving relationships seldom occur in the same conversation. Is it time to start a new conversation.”

Chris Clarke is the author of True Family Wealth- Love Money and an Inspired Life.   She is CEO and co-owner of First Affiliated Holdings Inc., a Family Office firm which helps families in Toronto, across Canada and overseas manages their finances.  For more information


  • Source: Williams Group wealth consultancy.