Writer Ayn Rand once said that, “Only the man who does not need it, is fit to inherit wealth – the man who would make his fortune no matter where he started.”
Truth rings clear in her words. Surveys have shown that less than a third of family wealth tied up with businesses makes it to the second generation. And only about 5 percent from that second generation makes it to the third. Riches to rags in three generations … every culture has the same sad tale. Is it possible to improve on those odds?
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Mark Daniell, author of Strategy for the Wealthy Family thinks it’s difficult, but not out of reach. “People just don't think multi-generationally, don't think about long term management and don't think about the kind of strategies that a family office or a deeply thinking family can put in place,” Daniell tells CNBC.
So it’s not just about money. It would seem those who want to preserve their wealth across space and time need to have a multi-generational strategy. This would involve distribution policies, investment strategies, trust structures and most important of all, educating the next generation.
We put this to the test and asked investor Jim Rogers, chairman of Rogers Holdings and father of two little girls, what his take on wealth preservation is.