The curse of the third generation

The fortunes of wealthy families usually evaporate within three generations. Only three in ten families hold on to theirs any longer, and economist Maarten de Groot discovered in his doctoral research at VU Amsterdam that this has little to do with money. "It's not about money. It's about the family," he summed it up in de Volkskrant. That research is relevant not only to the ultra-rich, but also to the early crypto investor. That person has by now become a first generation of their own. And so they run into the same question: what happens next?

The Vanderbilts were once, thanks to their railroad empire, the richest family in the world. Thirty years after the death of patriarch Cornelius, they had vanished from every rich list. The grandchildren competed over who could build the most expensive mansion and throw the most extravagant ball. Set against them the Brenninkmeijers, active since 1841 and, according to Quote, still the wealthiest family in the Netherlands. A thousand family members, and yet the whole clan gathers every year in the German town of Mettingen. Anyone who wants a role in the company has to earn that place through a fifteen-year apprenticeship. Same starting point, an entirely different destination.

Three in ten
Economist Maarten de Groot set out to find where that difference comes from. He studied seven entrepreneurial families, each with more than a hundred years of history, plus data on 175 high-net-worth families worldwide, and found a stubborn pattern. Only three in ten families hold on to their fortune for longer than three generations. The first generation builds something up, the second tenses up out of fear of losing it, and the third no longer knows the sacrifices and spends it all. You see that pattern everywhere in the world, regardless of tax regime or latitude. The curse lies not in the system, but in the family itself.

Agreements beat returns
What sets the survivors apart is not smarter investments, it is agreements. Successful families put down in writing how decisions are made, what role in-laws are given, and what purpose the capital serves. They involve the youngest generation years in advance, and some families give eighteen-year-olds a sum to invest or donate, purely as a learning exercise. Now you might think: nice for the Rockefellers, but my surname isn't on a skyscraper. Yet this is not a lesson for the ultra-rich alone. The Netherlands counts 276 thousand family businesses, well over seventy percent of all our companies, and according to De Groot even the butcher around the corner can draw a lesson from it. The mechanism, after all, is the same everywhere: wealth that goes undiscussed does not survive the generation of its builder. Whether it concerns billions or a nicely invested pension.

The first generation of crypto investors
Bitcoin has existed since 2009. Anyone who got in early is the first generation in De Groot's pattern. The patriarch, in miniature. So the question from his research now applies to them too: what happens next? Yet in many households the crypto holdings are the most concealed asset there is. Your partner knows there is something, but not what exactly, how much, or how to get to it. A safe whose code only you know is not an inheritance. So have that conversation in advance. Anyone who looks at their crypto assets the way those old families looked at their capital will find in us a willing sparring partner. A family charter is not needed right away; a good conversation at the kitchen table is a fine start.