According to Investopedia, “generational wealth refers to financial assets passed from one generation of a family to another. Those assets can include cash, stocks, bonds, and other investments, as well as real estate and family businesses.” In this article, we delve into the statistics that family offices are up against as well as the strategies they deploy to ensure family wealth is passed down to the younger generation.
The stats
It’s widely known that the role of family offices is to grow and preserve generational wealth. But, before we go into the role that family offices play in preserving family assets, let’s take a look at the stats that they are up against. Several challenges can arise when transferring wealth and planning for succession. In fact, the infamous stats show that a significant portion of wealthy families struggle to maintain their wealth across generations, with 70% losing their wealth by the second generation, and 90% by the third.
That staggering statistic is what brought about the “Shirtsleeves to Shirtsleeves” adage, which describes how multi-generational wealth tends to diminish over time. According to this saying, wealth typically dissipates within three generations, and many grandchildren struggle to manage the wealth inherited from their grandparents and parents. This issue has loomed over the world’s affluent families for decades, posing a threat to the continuation of their legacies.
Why family offices?
