The statistics are sobering: approximately 70% of family wealth is lost by the second generation, and 90% by the third. These failures are rarely due to poor investment performance — they are failures of governance, communication, and preparation.
Beyond Financial Capital
The most successful wealth transfers are those that transmit not just financial assets, but the values, knowledge, and governance structures that created and sustained them. A family that inherits a fortune without understanding its origins, obligations, and management requirements is a family at risk.
At Rosenfeld & Partner, we approach next-generation readiness as a structured programme rather than a single conversation. It typically unfolds over several years, beginning with an assessment of the rising generation's financial literacy, values alignment, and leadership readiness.
Governance as the Foundation
Formal governance structures — family constitutions, advisory boards, regular family assemblies — create the framework within which wealth can be managed across generations without the friction, confusion, and conflict that so often accompany transitions.
These documents and processes serve multiple purposes: they codify decision-making authority, establish mechanisms for conflict resolution, define the family's philanthropic mission, and create a shared vocabulary for discussing wealth, responsibility, and legacy.
The Art of Letting Go
Perhaps the most difficult aspect of generational transition is the principal's willingness to gradually cede control. This is not merely a legal or structural exercise — it is an emotional one. The most effective transitions are those where the founding generation actively mentors their successors, progressively expands their responsibilities, and creates a safe environment for learning from inevitable mistakes.
Our role is to facilitate this process with sensitivity and structure, ensuring that the transition preserves both the family's wealth and its relationships.
This article is provided for informational purposes only. Every family's circumstances are unique, and governance structures should be tailored to specific needs.