90% of Wealthy Families Lose Their Wealth Within Three Generations. What are you doing?
An interesting thought I had lately. Most of our wealthy peers in school and life stand out because they lived a very comfortable life as a result of the work of their parent's/grandparent's. They live in a large home, have a nice car, and nice clothes, likely go to a top university, and have a lot going for them due to their connections on Wall Street/Law/Government, etc. This might fit the description of a lot of people on WSO.
I grew up in the lower middle class, and while my parents didn't buy me a car or other luxuries, I feel pretty good about where I stand. I never felt poor, and I always knew I was capable of reaching for the stars (hence why I'm in IB). I do not despise wealthy people because, for most people, wealth came as a product of the hard work done by an ancestor. They too came from a humble background, and they studied their ass in school, made an invention/business, or entered high finance so they can create that prosperity.
However, it's more common than not to see their descendants not having the same ethics as theirs. 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.
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). Peer #1 is a flashy dude with his foreign car, designer clothes, etc... does not do well in school since parents are super rich in their home country. Peer #1's father grew up lower middle class, and eventually struck gold with a business model... he is in his 70s. Peer #2 also bloated thanks to grandfather's business, but tells me he hates his family due to lots of infightings to be the grandfather's favorite (presumably when he dies, they get more hold of the wealth). Peer #4 also flashy, grandfather (dead) did IB and was one of the heads... found out about IB recruiting too late and is struggling,... rumored that parents home was foreclosed and now are living through airbnbs. Peer #5, great-great grandfather was part of an aristocracy... kids now is dirt poor due to family gambling/drinking/sex. The stories go on and on, but the point is that the wealthy kids are at different stages of this phenomenon, and personally I think it's good that it exists or else we have a permanent aristocracy.
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. 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.