90% of Wealthy Families Lose Their Wealth Within Three Generations. What are you doing?

Not in my family at least after moving to the states. Every subsequent generation was wealthier than the last. Some of my cousins have done very well for themselves through entrepreneurial ventures/joining risky startups+early stage companies that paid off big time.

I have been told that our family was very wealthy before a major conflict where they lost it all. We owned a ton of land and a huge home. My parents grew up middle class in their home country before moving to the US. I grew up upper middle class after my dad's business took off/was a stable income.

I will most likely not have kids - so there will be no lineage to worry about.

I have zero desire to pass on life changing wealth to my kids. they will inherit discipline, work ethic, knowledge, US citizenship, my library, and hopefully the best genes between mrs brofessor & me, that's it. I'm trying for "die with zero," and having seen what wealth passed on can do, it's disgusting and I don't want it

Clogs to clogs in 3 generations is the British phrase.

Grandpa starts a company, the kids expand it, the grandkids blow all the money. Very common. Google the Stroh (as in beer) family. Quite impressive: https://www.forbes.com/sites/kerryadolan/2014/07/08/how-the-stroh-famil…

I made my own money, but I’ll be the last grandkid standing inheritance wise. All my aunts/uncles blew the lot of it. Meanwhile my mom is still working on a stockpile of $20 sneakers she picked up at Kmart before they went out LOL. 

bawstin

However, it's more common than not to see their descendants not having the same ethics as theirs.

Sure.  Because to be wealthy, especially if you come from very little, you need to have an insane work ethic and sacrifice a lot in order to be successful.  Part of the motivation for that is so your kids don't have to do that, don't have to regret what they sacrificed to "make it," so that your kid who is an insanely talent saxophonist can do that instead of working 100 weeks at a bank.  Even the law of averages says that your kids are unlikely to end up with the same work ethic; the random chance that comes with the probability that your descendants have a mental or physical ailment that prevents them from being as successful as you is high, and that's without all the qualitative stuff.

While the parent had to create their professional network through work/cold emailing, the children are brought into it automatically. Plenty of more perks show up as a result. Being spoiled becomes more common too. When the ancestor dies, the wealth is split between the children, and rivalries are inevitably formed. Long-story short, we don't talk often enough about wealth being very fragile. 70% of wealthy families don't last 2 generations. 90% don't last 3.

Define "wealthy" and cite that statistic.  If I die with a million dollars in the bank, I'm certainly wealthy - but that's not the kind of generational wealth that I'd expect to be passed on for many generations.  If I die with $100mm in the bank that wouldn't be true - those cases might get lumped together but they are not the same.  This reminds of the The Millionaire Next Door, one of the worst books ever written on wealth or personal finance (or in general).

Speaking to my more wealthy peers, some very disciplined like their parents and others very spoiled, I hear very interesting stories (will change some detail to keep anon).

Right.  Because people are people.  Some spoil their kids, some don't.  Some kids are exposed to bad influences in a social circle.  Some kids are just dicks.  The number of variables here is so huge as to defy analysis.

For the readers who may despise some trust fund kid, realize that something big is at play that takes time (decades) to occur. They have to hope that the kid is spending responsibly so the well will dry up for the next generation.

There is no reason to despise a trust fund kid, or hate people with wealth, or anything like that.  We should absolutely look down on trust fund babies who pretend like they earned it themselves.  We should absolutely call out the people in this world who call themselves "self-made" except for the several million dollars they got from mom and dad.  Wealth in and of itself isn't bad, but we can and should judge the attitudes of people with wealth.

For the wealthier readers on WSO, I'm interested in hearing your thoughts on your family's financial situation, if they're spending like there is no tomorrow, or the walls are starting to crack, or if family/yourself are the 10% exception and manage to preserve that wealth, or anything else. For that last one, I'm interested in hearing how you're doing it, since many of us are interested in fostering a culture in which our new/current wealth can be preserved. 

Raise your kids to respect the value of money, to understand what it means to live within a budget (of any type), and to understand how they and their wealth relates to others.  If your child lives in a bubble of privilege, they won't respect what they have.  If my kids want to be artists, that's fine, and I'm happy to help them pay rent in a modest apartment and buy groceries, but I certainly would tell them that if they want to drive a BMW and drink Chateau Latour all day, they better be selling that art for top dollar.

Yup, its a common trend. First generations starts the business with very little, they tend not to be to lavish even after getting some wealth. Second generation experienced a taste of poverty and work hard to expand the business. Second generation becomes a bit more lavish. Though second generation are hard workers no doubt, they dont have that same grit of the 1st generation. However, second generation does a decent job expanding it. Third generation is now here. They have only tasted the full wealth and enjoyment of the second generation, they feel its easy to do nothing and that money has no value as they have plenty of it. They are essentially brainwashed into this.

The only way I can imagine wealth to surpass generations is through either a trust or some sort of common sense financial education provided by previous generations. Theres a family office I dealt with and they are on their 5th generation, all are wealthy industrial heirs, but super sharp, your talking Yale grads with PHDs, doctors, attorneys, etc. I actually brought this up to them and they are a rarity but how they have managed to be successful is to always talk about money problems with their children. This way children are not shielded from financial distress but rather they can understand the true value of money and that everything they buy requires them to work hard in order to earn it.

bawstin

An interesting thought I had lately.

This an ancient Chinese saying - it is not some original thought of yours. 

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My family history tells this story several times over. I count among my ancestors several Mayflower settlers and Virginia landed gentry, that wealth was lost fairly quickly. My great-great-grandfather was one of the largest shipowners in Connecticut during the 1800s, his sons were in the Social Register at turn of the century, and their sons and daughters went broke during the Depression. My grandparents’ generation had to re-learn what a strong work ethic was, and thankfully they passed that down to my parents, who are very successful white-collar professionals. The family “wealth” of my parents and grandparents now is mainly in the land we own across the northeast, and in the community and connections they’re a part of. I was raised in an upper-class community, but never had the glut of cash that many of my childhood friends did. I’ll credit my parents with teaching me a strong moral compass and a respect for hard work that thankfully me and my siblings all possess, and I know that each of us are striving for even greater successes.

Hopefully when I have kids I will be able to teach them the same life lessons that my parents gave me, and even though I know they’ll be raised with considerable privilege and a large inheritance, they can learn from our family’s mistakes and ensure a successive, dynastic approach to money and life.

I would not classify us as rich but i grew up down south in US , my father has between 4-5 million. We had a middle class home and he never bought us new cars they were always used and less than 20k he also never told us he had money. He never dressed exceptionally and was not interested in showing off wealth at all. Was told at 23 how much money he has and that his goal was to pass on as much money as he could to his kids when he passed away. I think this worked well because we never thought we came from a well off family until we were already grown so we were working to earn our own money and simply viewed that as a nice bonus we would likely get in our late 30s or so. 

My great-grandmother, an upper-middle-class antiques dealer, was featured in the society columns of the local newspapers back in the Thirties and Forties, and my grandfather would date debutantes early in his life. Papa (my grandfather) chose to follow his own way in life, working as a foreman for the Albert J. Welch Equipment Co. in Brighton, MA for many years. He was easily the hardest-working man at the company, and he was considered the go-to guy for the Welches. He always drove Cadillacs, owned a boat as a member of the Newton Yacht Club, and sent my godmother to Regis College and Harvard University. By the end of his life in 1999, I'm sure that he must've been worth a fair amount of money, but having never met my beloved Papa, I'm not quite sure how much there was or where it went. Still, I believe a portion of it may have been used to finance the construction of our house, which we built on the same property as my Nana and Papa's house in 2003.

Honestly, I wouldn't be surprised if my uncle ended up with some of it and blew it away. My family is now estranged from his side with good reason.