Succession planners work with families to avoid the dreaded ‘three-generation rule’ and ensure hard-earned wealth is preserved
- Cultures across the globe are filled with folklore on how wealth diminishes from a parent to child and then grandchild – but it all comes down to prudent planning and investing
- Two generations of Chinese families have built up sizeable wealth and now face the task of ensuring the next generation do not undo their hard work
This article was part of a special supplement on private banking which was published in the South China Morning Post print edition on October 20, 2021.
In their glossy marketing literature, private banks tactfully avoid any direct mention of the “three-generation rule”, but awareness of it can nevertheless be found between the lines.
It is, of course, nothing new, but rather a nugget of folk wisdom long passed on in cautionary tales told in family homes and clan gatherings all around the world.
Scots clustered close to a warming fire on dark winter evenings have been warned that “the father buys, the son builds, and the grandchild begs”. Young Chinese have heard from schoolteacher, patriarch or village elder that wealth does not pass three generations. And while Japan’s “rice paddies to rice paddies” and America’s “shirtsleeves to shirtsleeves” conjure up differing images for the same notional period, the essential message is identical: take the necessary steps to ensure hard-won wealth isn’t carelessly squandered.