Cycle of Wealth

Family wealth is not self-perpetuating.

Our research with Cambridge University indicates that 70% of all family wealth transitions fail within the first generation.

The statistics for the failure rates of wealth transition are consistent across all geographies, through different economic cycles, tax regimes and historical periods.

To understand why, it is important to appreciate the “Cycle of Wealth”.

The reason family wealth dissipates is because it follows the same pattern as all energy in the universe.

Just like the birth of a star begins with vigorous creation, so too the creation of Family Wealth begins with an entrepreneurial vision and frequently a relentless work ethic.

Succeeding generations seek to maintain the wealth in all forms, protecting the family’s financial, human and intellectual capital.

Subsequent generations move further away from the energy, drive, discipline, opportunity and instinct of the initial creation. Consequently, family wealth has a tendency to dissipate and decay.

The key lesson for families is that each new generation must re-define itself and equip itself to be the new, first generation of creative energy.