Often our clients ask us and seek guidance on how they can keep the wealth in their family over generations and prevent dissipation over time. Our firm was established by the Anglo-German Schroder family in 1804, maybe this is the reason they come to us.
Usually we begin with what I would describe as the star of doom. The star of doom comprises in its rays all the threats to the family wealth. At its core, the loss of the family fortune looms. The rays carry names.
These rays of the star of doom can be categorised into reasons closely tied to the family itself, ranging from bad investment or business advice to bad implementation, bad business decisions, divorce – Mr Bezos comes to mind – family conflict, which sometimes even blocks a family business from thriving, no mutually shared family values, no discipline, family fertility with many offspring, which have to divide the inheritance, expensive lifestyles, expensive hobbies, drug addiction and drug abuse to mental insanity.
“I cheat my sons wherever I can.” – William A Rockefeller, father of John D Rockefeller
Then there are rays of the star of doom which relate to reasons sometimes outside the influence by the family. This can be government action including sanctions and confiscations (e.g., the Soviet or Nazi regimes), inflation, taxation, revolutions (e.g., 1789 or 1917), wars and of course, more benign by comparison, fraud.
“My firm shall go to male family members only. No daughters or in law.” – Mayer Amschel Rothschild, stated in his will in 1812
In order to stay wealthy as a family over generations, the family has either to have the foresight to avoid all the threats the star of doom poses or indeed be very fortunate to navigate the seas of change successfully.
