Family and Wealth: Navigating the Star of Doom
Our clients often ask a single question. How can they keep wealth in the family across generations? The Anglo-German Schroder family founded our firm in 1804. Perhaps that heritage is why they come to us. In a family office, this question sits at the centre of everything.
We usually start with what I call the star of doom. Each ray of the star stands for a threat to the family wealth. At its core lies the ultimate danger: the loss of the fortune. Every ray carries a name.
Threats that come from within
Many rays point back to the family itself. Poor investment advice is one. Weak implementation and bad business decisions are others. Divorce belongs here too, and Mr Bezos comes to mind. So do family conflict, absent shared values, and a lack of discipline. Large families also divide the inheritance among many heirs. Finally, expensive lifestyles, costly hobbies, addiction and illness can all drain the wealth.
I cheat my sons wherever I can.
William A. Rockefeller, father of John D. Rockefeller
Threats that come from outside
Other rays lie beyond the control of the family. Governments can act through sanctions or confiscation, as the Soviet and Nazi regimes did. Inflation and taxation erode value more quietly. Revolutions, such as 1789 or 1917, and wars can wipe out fortunes. Fraud, by comparison, looks almost mild.
My firm shall go to male family members only. No daughters or in-laws.
Mayer Amschel Rothschild, in his will of 1812
So one lesson stands out. To stay wealthy across generations, a family must foresee these threats and avoid them. A well-run family office helps it navigate the seas of change. And a little good fortune never hurts.
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