In November 1986, in Lowell, Massachusetts (USA), a man who had built one of the largest computer companies in the world made his son president of it. Fred Wang was thirty-six. The board had objected. The non-family executive who had held the job walked out over the decision eighteen months before it was even announced.[1, 2]
Preparing children for wealth means building their capacity to hold capital – judgment, financial fluency, an agreed purpose, and practice at decisions that carry real consequence – rather than only building the structures that will one day deliver capital to them. The first takes fifteen years. The second takes a lawyer and an afternoon.
Almost every family I know of has finished the second and not fully started the first.
No more Unprepared Inheritance: preparing children for wealth
Picture © Pavel Danilyuk / Pexels
An inheritance is not a sum of money. It is a sum of money plus a person capable of holding it. You have a plan, a structure, a tax opinion and a target return for the first half. For the second half, you have hope.
I have come to call this the Unprepared Inheritance.
It is not that you have neglected your children. It is that the asset has a professional class attached to it and the person does not. There is a fee schedule for the trust deed. There is none for whether your daughter can chair a meeting where her brother disagrees with her.
Wang sen. understood asset preparation completely. He established two trusts, one for his children and one for his grandchildren; at one point the children's trust alone held more than USD 500 million in Wang stock.[1] By 1984 Forbes ranked him the fifth-richest American at USD 1.6 billion.[3] The structure was immaculate.
The preparation of the people was not attempted at all. Asked years later what he remembered of his father in childhood, Fred Wang said he was "working most of the time."[1]
Charles Kenney, the Boston Globe editor who wrote the definitive account of the collapse, put it in one sentence: "By trying to run his company primarily for the benefit of his family, Wang had harmed both the company and the family."[1]
That is the Unprepared Inheritance in full. Not a failure of love, and not a failure of planning. A failure to notice that they are two different plans.
What does 'preparing children for wealth' mean?
Preparing children for wealth means giving them repeated, supervised experience of the four things capital will demand of them:
- understanding what they hold,
- deciding what it is for,
- making consequential decisions before those decisions are irreversible, and
- working with siblings and advisers who will not always agree with them.
Note what is not on that list. Knowing the number. Being told the plan. A two-day workshop at nineteen. Those are disclosures, and disclosure is a single event.
Preparation is a decade of small, real, survivable decisions – which is why it cannot be delegated to a seminar, and cannot be started in the year you decide to retire.
Jessica McGawley, who has spent nearly two decades preparing next generations, puts preparing children for wealth in one line: you have to prepare both the wealth for the child, and the child for the wealth.[15]
Interviewing whole family systems, she finds the same result almost every time. The assets are managed to a high standard. The people who will inherit them are not.
See also: The Five Capitals of Family Wealth.
Why does preparing the asset never prepare the person?
Because you and your children are not from the same country, and you are trying to teach them a language you learned as an adult.
The psychologist James Grubman named this precisely in Strangers in Paradise (2013).[4] You are an immigrant to the land of wealth: you grew up under constraint, learned money as scarcity, and arrived here through an exit, a career, or a windfall. Your children are natives. They were born here. Wealth is not an achievement to them and never will be – it is weather.
That gap is the mechanical reason preparation gets skipped. Not indifference. The absence of a transferable curriculum.
There is a second reason, and it is about you rather than them.
Bill McLean, who leads family business transition at Richter in Toronto, notes that the founding generation was itself raised under a rule of silence: "The parents were largely raised in a world where people didn't discuss this."[16]
The family lives visibly well – houses, schools, travel – while nobody says the word. His phrase is exact: the biggest secret in the world.
So when you teach from your own biography, it does not transfer, and the conversation ends in mutual frustration – which most families quietly interpret as a character problem in the child.
It is not. It is a translation problem, and translation is a structural task.
See also: The Biggest Mistakes Wealth Creators Make After Selling Their Business.
Is the three-generation curse real?
No. The proverb is folklore, the statistic behind it measured something else entirely, and repeating it makes the outcome it predicts more likely.
You know the line: shirtsleeves to shirtsleeves in three generations, 70% of wealth lost by the second, 90% by the third. Grubman traced those numbers to their source and found almost nothing holding them up.[4a, 15]
The origin is a single 1987 study by John L. Ward of Northwestern's Kellogg School: 200 Illinois manufacturers tracked from 1924 to 1984, of which 13% were still owned by the same family at the end.[14] That is where "only 13% last three generations" comes from, and the 70% figure is its inverse.
Look at what was measured: Ward asked whether a business stayed in family hands – not whether a family stayed wealthy. Sell the company, diversify, remain enormously rich, and his method records you as a failure.
Extrapolating a sample of Midwestern manufacturers who survived the Great Depression to every family, industry and jurisdiction is not a finding. It is a stretch.
What should concern you is what the myth does. Grubman, Dennis Jaffe and Kristin Keffeler argue in Wealth 3.0 that repeating the curse feeds the fear that children will turn out entitled or passive – which pushes parents toward secrecy and control-heavy structures, which leaves children disengaged, which produces exactly the outcome they dreaded.[4a]
The fear is not a warning. It is a risk factor.
Preparing children for wealth: what's the truth about unprepared heirs?
It says the money is moving, that it is concentrated in very few households, and that the technical work almost never causes the failure.
In the UK, Kings Court Trust and the Centre for Economics and Business Research project roughly £5.5 trillion passing between generations across 2017 to 2047.[17] Set that against the Office for National Statistics figure McGawley cites for a typical British inheritance: about £11,000.[15]
The same phenomenon, four orders of magnitude apart. In the United States, Cerulli projects USD 124 trillion through 2048, more than half of it from the 2% of households that are high- or ultra-high-net-worth.[5]
The great wealth transfer is not a broad social event. It is concentrated in families that look like yours.
On what goes wrong, the reference work is the Williams Group's – a different study from Ward's, and more defensible. Roy Williams and Vic Preisser tracked 3,250 families through actual transitions over twenty years.[6]
Their causation split: 60% of failures traced to a breakdown of trust and communication inside the family, 25% to unprepared heirs, 10% to families with no agreed purpose, and under 5% to technical error in tax, legal or investment work.
Fewer than one in twenty failed transitions is caused by a technical mistake. That is where your money and attention currently go.
Then look at what the industry reports about itself. The UBS Global Family Office Report 2026 surveyed 307 family offices, average family net worth USD 2.7 billion. Only 27% had a structured process to prepare their heirs.[7] These are families with unlimited resources to do this properly. Roughly one in four does.
And the next generation is asking for it. Across 146 single family offices, AlTi Tiedemann Global and Campden Wealth found their top educational priority is understanding the purpose of the family's wealth – yet only a third of families have a developed plan for the use of their capital.[8]
Your children are asking what it is for. You have an allocation policy where the answer should be.
What does a prepared next generation look like?
It looks unremarkable for about forty years, and then it holds under a decision most families never survive.
Fletcher and Claire Chouinard both worked at their father's company for decades before anyone outside it knew their names. He ran FCD Surfboards, a Patagonia-backed business he built after leaving college to shape boards full time. She became creative director.[9]
In 2016, aged forty-one, Fletcher described it to The New Yorker: "We're not just owners, or board members. We have normal salaries. We weren't brought up to give a damn about money. Actually, I think we were raised to be slightly embarrassed about it."[9, 9a]
His sister, then thirty-eight, put her condition on record: "If the company became something I didn't believe in, I wouldn't want to be here."[9, 9a]
That is not a philosophy. That is a job, a salary, an opinion about the business, and the standing to act on it.
Then came the decision. In September 2022 the family transferred all ownership of Patagonia, valued at roughly USD 3 billion, to two entities: the Patagonia Purpose Trust, holding the 2% of stock that carries the votes, and the Holdfast Collective, holding the other 98%. Profits not reinvested – roughly USD 100 million a year – now protect nature and fight the climate crisis.[10]
The part that belongs here is who pushed for it. "It was important to them that they were not seen as the financial beneficiaries," Patagonia's chief executive Ryan Gellert said of Fletcher and Claire. "They felt very strongly about it."[9, 11]
That was not the product of a governance retreat. It was four decades of ordinary employment inside a business with an explicit purpose – preparation done properly: invisible, slow, then decisive in a single afternoon.
Fred Wang's first consequential test was the presidency of a USD 3 billion company at thirty-six, in public, with his father's reputation attached. Fletcher and Claire had thirty years of small tests before one that mattered.
Same order of capital. Opposite preparation. Opposite outcome.
When to start preparing children for wealth, and what to tell them?
When preparing children for wealth, start with capability, and start now. Disclose the number last, and move in stages.
Most families invert it. They say nothing for twenty years, then disclose everything in one conversation, usually triggered by a diagnosis or a transaction, and call that preparation. It is the opposite.
McLean describes what happens when children find out in their twenties or later: "They end up getting this massive wealth shock… It's emotionally paralysing for some of them."[16] A number delivered to someone with no practice at decisions is not information. It is a weight. A heavy one.
The evidence on silence is unambiguous. UBS research published in May 2025 found nearly one third of women who inherited from their parents had no prior conversation with them about the transfer, and four in ten inherited with no estate plan in place.[12]
In a third of those families, the first conversation about the money happened after the person who could have explained it was gone.
The sequence I would defend when preparing children for wealth:
- Ages seven to ten: how money works. Brad Jesson of Corient puts the first informal conversations here, and is blunt about the alternative: it cannot be "when they're eighteen, we'll put them in a programme."[16] Saving, delayed gratification, capital versus income. No family figures attached.
- Adolescence: what the family does, and why. The business, the decisions that built it, and the mistakes. Your errors are the most valuable teaching asset you own. And do not parent with your wallet – money used to solve parenting problems does not produce stewards.[16]
- Early twenties: a real decision at a survivable size. Genuine authority over a small pool, and a result they must report on. Small enough that being wrong is educational, large enough that it is uncomfortable.
- Mid-twenties: the room. Observation on the investment committee before a vote on it.
- Then, and only then: the quantum. By now the number confirms what they have already been handling. It does not arrive as a verdict on their future.
The stages are not set in stone; much depends on your children's maturity and your circumstances. And if your children are already adults and none of this has happened, you have not missed it.
Jeff Halpern of TD Wealth is emphatic that it is not too late.[16] McGawley's guidance for anyone starting: lower the pressure and lengthen the horizon – give it three to five years, because progress that sticks takes time.[15]
How do you build preparation into a structure that outlives you?
You give it an owner, a budget and a reporting line – the three things the financial capital already has and the human capital almost never does. In the impact multi-family office I build, this is the part of the mandate families are least prepared to specify and most relieved to have named.
- Discuss and write down what the capital is for, in one page, before anything else. The Campden research says this is the single thing your next generation is asking for.[8] It is also the cheapest item on this list.
- Name someone accountable for next generation wealth education by title. Not "the family." Not "we all pitch in." McGawley is direct about where this sits: where there is no single family office, someone inside the multi-family office or among the family's independent advisers should own this education and meet the children regularly – not only when a distribution or crisis forces it.[15]
- Treat the relational work as specialist work. A capable person who understands the numbers, or an adviser who has held the family's trust for years, is not enough. Those things matter, McGawley notes, but they are not a methodology – done badly, this work produces confusion, dependency or harm.[15]
- The encouraging part: relational capacity is teachable. Listening, handling conflict, giving and receiving feedback are skills, not fixed traits.
- Give each child a real mandate at a survivable size, and make it purpose-linked. A philanthropic or impact allocation is the most efficient teaching instrument you have, because it forces both questions at once: what is this for, and does it work?
- Separate ownership from operation, in writing, before it is tested. Wang sen. did not.[2] The Chouinards did: the family guides the trust that elects the board, and a non-family chief executive runs the company.[10] Owning and operating are different jobs, and your children may be excellent at one and unsuited to the other.
There is an uncomfortable reason this work is rare, and McGawley names it: preparing a person is slower, messier and far less easily invoiced than preparing a balance sheet.[15]
What happened to the family that prepared only the asset?
Fred Wang was fired by his father on 4 August 1989. Wang senior was seventy, weeks out of throat cancer surgery, and had to do it himself.[1] He died on 24 March 1990. The turnaround executive brought in to replace his son laid off more than half of the company's 30,000 employees, and Wang Laboratories filed for Chapter 11 on 18 August 1992.[1, 2, 13]
In Lowell, the city the company had carried, unemployment went from 4.3% in 1984 to 12.5% in 1991.[2]
Nobody made a catastrophic investment. No fraud, no market collapse, no ruinous transaction. A brilliant man built a USD 3 billion company and a USD 500 million trust, and prepared neither son to hold either one.
You have the same two projects in front of you. Only one of them has a deadline you control, and it is not the one your lawyer is working on.
Steward your wealth. Don't just hold it.
Frequently Asked Questions (FAQ)
There is very little behind that figure. It is the inverse of a single 1987 study by John L. Ward, who tracked 200 Illinois manufacturers from 1924 to 1984 and found 13% still in the same family's hands – a measure of whether a business stayed in the family, not whether a family stayed wealthy. Families do lose wealth, but the cause is communication, trust and unprepared heirs, not a generational law of nature.
The figure should come last, after capability has been built. Informal conversations about how money works can begin between ages seven and ten; what the family does and why belongs in adolescence; a real decision at a survivable size in the early twenties; observation in the governance rooms before any vote. UBS research published in May 2025 found nearly one third of women who inherited from their parents had no prior conversation about the transfer at all.
Very few, by their own reporting. The UBS Global Family Office Report 2026, covering 307 family offices with an average family net worth of USD 2.7 billion, found only 27% had a structured process to prepare their heirs, and 29% cited insufficient financial or governance education as the barrier to involving the next generation.
Not for technical reasons. The Williams Group's study of 3,250 families found 60% of failures traced to breakdowns of trust and communication inside the family, 25% to unprepared heirs and 10% to the absence of an agreed purpose – tax, legal and investment error together accounting for under 5%.
An impact multi-family office is a firm that manages the capital of several entrepreneurs and families under a mandate to generate measurable social or environmental outcomes alongside financial return. A Swiss multi-family office for impact is structurally useful in preparing children for wealth because measuring non-financial results is its core discipline rather than an add-on, which suits it to running a purpose-linked mandate in a next-generation family member's hands. Where there is no single family office, practitioners argue that responsibility for next generation education should sit explicitly with the multi-family office rather than being left to chance.
Sources
[1] Charles C. Kenney – Riding the Runaway Horse: The Rise and Decline of Wang Laboratories, Little, Brown and Company, 1992. Excerpted as "An Wang's Legacy to His Children," Family Business Magazine, 30 May 1992. Kenney was an editor at The Boston Globe. Source for: the two trusts (children's trust at one point exceeding USD 500 million); board members' view that Fred Wang lacked "the experience, judgment – and heft" to lead.
Fred Wang's recollection that his father was "working most of the time"; the firing of Fred Wang in 1989; Rick Miller laying off more than half of the company's 30,000 employees; peak scale of more than 30,000 employees and revenues in excess of USD 3 billion; and the summary judgment quoted in the article. https://www.familybusinessmagazine.com/succession/business-leadership/wangs-legacy-his-children/
[2] Wang Laboratories – corporate history and chronology. Source for: John Cunningham's resignation as president in July 1985; Fred Wang named president in November 1986 over the objections of senior management and outside directors, who had repeatedly pressed for a professional manager; peak revenue of USD 3.07 billion in fiscal 1988; Chapter 11 filing on 18 August 1992; unemployment in Lowell rising from 4.3% in 1984 to 12.5% in 1991.
Cunningham's resignation is contemporaneously reported in The Washington Post, "President of Wang Laboratories Resigns," 20 July 1985. https://en.wikipedia.org/wiki/Wang_Laboratories https://www.washingtonpost.com/archive/business/1985/07/20/president-of-wang-laboratories-resigns/6c738ae0-0371-45f6-a292-adbc2bff3362/
[3] Forbes wealth ranking, 1984, as recorded in the Wang Laboratories corporate histories. By 1984 An Wang and his family owned approximately 55% of Wang Laboratories stock, and Forbes estimated his personal worth at USD 1.6 billion, ranking him the fifth-richest American. https://www.encyclopedia.com/social-sciences-and-law/economics-business-and-labor/businesses-and-occupations/wang-laboratories-inc/
[4] James Grubman PhD – Strangers in Paradise: How Families Adapt to Wealth Across Generations, 2013. Origin of the "Immigrants to the Land of Wealth" and "Natives in the Land of Wealth" framing. Grubman chaired the Content and Curriculum Committee behind the UHNW Institute's Ten Domains of Family Wealth. https://jamesgrubman.com/books/
[4a] James Grubman, Dennis T. Jaffe & Kristin Keffeler – Wealth 3.0: The Future of Family Wealth Advising, 2023. Source for the argument that repeated invocation of the three-generation curse drives parents toward secrecy and control-heavy structures, disengaging the next generation and making the feared outcome more likely. Also the source, via Grubman's tracing work, for the debunking of the 70/90 figures. https://jamesgrubman.com/books/
[5] Cerulli Associates – U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2024, press release 5 December 2024. USD 124 trillion transferring through 2048; USD 105 trillion to heirs; USD 62 trillion (more than half) originating from HNW and UHNW households, which are 2% of all households. A United States projection, used directionally and paired here with UK figures for balance. https://www.cerulli.com/press-releases/cerulli-anticipates-124-trillion-in-wealth-will-transfer-through-2048/
[6] Roy Williams & Vic Preisser – Preparing Heirs, Robert D. Reed Publishers, 2003; Williams Group research record. Twenty-year study of 2,500 families through actual wealth transitions, extended by a further 750 families with Miami University's business school – 3,250 in total. Source for the 60 / 25 / 10 / under-5 causation split. Note: the Williams Group defines transition "success" as the family retaining control of its assets and family harmony post-transfer. This article uses the causation split, not a headline failure rate, and distinguishes it explicitly from the Ward study, source 14. https://www.thewilliamsgroup.org/our-story/
[7] UBS – Global Family Office Report 2026, published 28 May 2026. 307 family offices across more than 30 markets; average family net worth USD 2.7 billion. Source for: 27% with a structured heir-preparation process; 29% citing insufficient financial or governance education as a barrier; 35% with a defined succession plan. https://www.ubs.com/global/en/media/display-page-ndp/en-20260528-global-family-office-report-2026.html
[8] AlTi Tiedemann Global & Campden Wealth – Family Office Operational Excellence Report 2025, published 12 June 2025. 146 single family offices across North America (82), Europe (42) and Asia Pacific (22); fieldwork November 2024 to March 2025. Source for the next generation's top educational priority being the broader purpose of the family's wealth, and for only about a third of families having fully developed plans for the use of their capital. https://www.campdenwealth.com/press/new-family-office-research-reveals-cross-border-wealth-rise-and-defining-purpose-unlocks-next/
[9] Chloe Berger – "Meet the mysterious Patagonia heirs who agreed to give away their billion-dollar fortune," Fortune, 17 September 2022. Source for Fletcher Chouinard's work at FCD Surfboards; Claire Chouinard's graduation from Otis College of Art and Design and her role as creative director; and the reproduction of both The New Yorker quotations and the Gellert quotation. https://fortune.com/2022/09/17/who-are-chouinard-children-patagonia-heirs/
[9a] Nick Paumgarten – "Patagonia's Philosopher-King," The New Yorker, 19 September 2016. Originating source for the Fletcher and Claire Chouinard quotations. Note: the Fletcher quotation is reproduced here with one word softened. https://www.newyorker.com/magazine/2016/09/19/patagonias-philosopher-king/
[10] Patagonia Works – "Patagonia's Next Chapter: Earth is Now Our Only Shareholder," company press release, 14 September 2022. Primary source for the ownership structure: Patagonia Purpose Trust (all voting stock, 2%) and Holdfast Collective (all non-voting stock, 98%); projected annual dividend of roughly USD 100 million; the family guiding the Purpose Trust and electing the board; Ryan Gellert as chief executive. https://www.patagoniaworks.com/press/2022/9/14/patagonias-next-chapter-earth-is-now-our-only-shareholder/
[11] David Gelles – "Billionaire No More: Patagonia Founder Gives Away the Company," The New York Times, 14 September 2022. Originating source for the Gellert quotation and the approximately USD 3 billion valuation. https://www.nytimes.com/2022/09/14/climate/patagonia-climate-philanthropy-chouinard.html
[12] UBS – Own Your Worth / Investor Watch research, published 7 May 2025. Nearly one third of women who inherited from parents had no prior conversation about the transfer; four in ten inherited with no wealth transfer or estate plan in place; 80% faced significant challenges navigating the process. https://www.ubs.com/global/en/media/display-page-ndp/en-20250507-own-your-worth-report.html
[13] Wang Laboratories Chapter 11 filing, 18 August 1992 – contemporaneous reporting, The Baltimore Sun, 19 August 1992, and The Seattle Times, 23 August 1992. https://www.baltimoresun.com/news/bs-xpm-1992-08-19-1992232193-story.html
[14] John L. Ward – Keeping the Family Business Healthy: How to Plan for Continuing Growth, Profitability, and Family Leadership, Jossey-Bass, 1987. Kellogg School of Management, Northwestern University. The originating study behind the three-generation proverb: 200 randomly selected Illinois manufacturers tracked from 1924 to 1984, of which 20% survived as independent firms under the same name and 13% remained in the same family's ownership.
Verified independently of the McGawley article, source 15. Ward measured business survival, not family wealth preservation; and the sample is Midwestern US manufacturers already trading in 1924 who survived the Great Depression. https://www.kellogg.northwestern.edu/academics-research/research/detail/1987/keeping-the-family-business-healthy-how-to-plan-for/
[15] Jessica McGawley – "Preparing children for the great wealth transfer," FTAdviser, 2 July 2026. Founder of Dallington Associates; nearly two decades preparing next generations, working from interviews across the whole family system. Source for: "prepare both the wealth for the child, and the child for the wealth"; the finding that assets are consistently well managed while the people who will inherit are not; the five-part preparation model (permission, technical education, relational capacity, exposure, time); relational capacity as a teachable skill set; the three-to-five-year horizon; the allocation of responsibility to the multi-family office or independent advisers where no single family office exists; "they are not a methodology"; the risk of confusion, dependency or harm when the work is done badly; and the observation that preparing a person is far less easily invoiced than preparing a balance sheet.
Also the article's citation of Kings Court Trust / Cebr and of ONS figures on typical UK inheritance. https://www.ftadviser.com/content/2d9ead89-78bb-48b8-994e-b7b8874d30c6
[16] Anna Sharratt – "'The biggest secret in the world': How to talk to children about wealth – and why you should," Canadian Family Offices, 27 July 2026. Source for: Bill McLean (partner and head of family business transition, Richter, Toronto) on parents "largely raised in a world where people didn't discuss this," on the family's affluence being "the biggest secret in the world," and on the "massive wealth shock" experienced by children who discover the scale in their twenties or later.
Jeff Halpern (business succession advisor, TD Wealth) on it not being too late; Brad Jesson (partner, family office advisory, Corient) on beginning informal money conversations between ages seven and ten and on not "parenting with your wallet." https://canadianfamilyoffices.com/special-reports/summer-wealth-sr/the-familial-challenge-how-to-talk-about-money
[17] Kings Court Trust with the Centre for Economics and Business Research – Passing on the Pounds: The Rise of the UK's Inheritance Economy, 2017. Projection of approximately £5.5 trillion passing between generations in the UK. Note on the window: the projection covers 2017 to 2047, not "the next 30 years" from today – a distinction worth keeping, since the period is now nine years underway. https://www.kctrust.co.uk/passing-on-the-pounds/
Transparency and Disclaimer
This article is published by NewGrowth.Capital, the Swiss impact multi-family office for conscious wealth stewards, and is intended for informational purposes only. It was produced with the support of Artificial Intelligence (AI). Nothing in this article constitutes investment, legal, tax, or financial advice, nor a recommendation to buy, sell, or hold any asset. Reading this article does not establish an advisory or client relationship with NewGrowth.Capital. Views expressed reflect the author's perspective at the time of writing and may change without notice. All external sources referenced have been reviewed with great care, yet no warranty is given for their accuracy, completeness, or timeliness.
