Essentially I believe this long-term process is driven by a desire on the part of the family to develop its own intellectual capital, with financial capital being a tool with which it is grown. There is also the desire to maintain money, but families whose only desire is to maintain money do not make long-term goals because they fail to appreciate the two more important capitals: human and intellectual.
Historically most families have been unsuccessful at preserving what they have built.
That is true. The universal cultural proverb that says "shirtsleeves to shirt sleeves in three generations," is as old as writing itself. And when I say universal, I mean that it appears in every culture I have studied. Clogs to clogs, kimono to kimono, rice paddy to rice paddy, shirtsleeves to shirt sleeves. And it is a proverb that describes human behavior in terms of creating long-term families as failure.
The theory of the proverb is that the first generation starts off in a rice paddy, meaning two people with an affinity for one another come together and create a financial fortune. They usually do it without making significant changes to their values, customs or lifestyle. The second generation moves to the city, puts on beautiful clothes, joins the opera board, runs big organizations, and the fortune plateaus. The third generation, with no experience of work, consumes the financial fortune, and the fourth generation goes back in the rice paddy. This is the classic formulation of the shirtsleeves proverb, which is as true today as it has been throughout evolved human history.
By and large, inheritors of wealth have no appreciation of what is required to build it.
Yes. That is true in two senses. First, while many programs are available to teach second and later generations how to be great managers, there are no programs to teach them how to be great owners. Long-term wealth preservation is a question of ownership, not management. It is a series of long-term strategic decisions, which then link in short-term tactical decisions. Ownership is about strategic issues, and management is about tactical ones.
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