Why 70% of Wealthy Families Lose Their Fortune by the Third Generation
Why wealthy families lose their fortune by the third generation: the 70% and 90% statistics explained, the real causes of failed wealth transfer, the “shirtsleeves to shirtsleeves” pattern, and how to protect family wealth.
The line that wealthy families lose their fortune by the third generation is one of the most repeated claims in estate planning, and it usually comes with the same numbers: 70% of family wealth gone by the second generation and 90% by the third. The saying is old, the research behind it is smaller and shakier than most articles admit, and the causes it points to are less about taxes than about trust, communication and unprepared heirs. This guide explains where the numbers come from, why wealthy families lose their fortune according to the researchers who counted, what critics say is wrong with the statistic, and which steps the sources recommend to avoid the pattern. Several sources here sell advice or wealth services, which the text flags, and the figures are old enough that they should be treated as a warning, not a forecast.
Quick Answer: Do 70% of Wealthy Families Lose Their Fortune?
- The claim: about 70% of family wealth is lost by the second generation and about 90% by the third, according to ANZ Private, which attributes the figures to a Williams Group study of 3,250 families.
- The study is contested. A 2025 Rzeczpospolita analysis calls the extension of earlier research into a 70% claim a statistical misuse, and says the study lacked transparent methodology.
- The main cause is not tax. Three sources attribute about 60% of failed transfers to a breakdown of communication and trust in the family, and about 25% to unprepared heirs.
- Professional work is rarely the problem. CPABC reports that traditional succession work, such as legal, accounting and financial structure, is sound about 97% of the time.
- Prevention is mostly conversation and preparation: family meetings, heir education and a shared mission.
Where the 70% and 90% Figures Come From
ANZ Private, writing in May 2023, says about 70% of family wealth is lost by the second generation and about 90% by the third, and that roughly one in 10 families can expect wealth to last beyond the grandchildren. It traces these numbers to a 2002 longitudinal study by The Williams Group of 3,250 families over 25 years.
CPABC’s magazine describes the same research differently. Emily Griffiths-Hamilton, a family enterprise advisor, writes in 2019 that roughly 70% of family business and wealth transition plans fail in each generation, based on 3,250 interviews with family business owners by Roy Williams and Vic Preisser, published in their 2003 book Preparing Heirs. Truist cites the same book and defines a failure as “the involuntary removal of assets from the control of the beneficiary.” Truist says successful multi-generational transfer is “as low as 30 percent,” and Williams Group’s own podcast discussion starts from about 70%, then says the real figure may be closer to 80% or 85%.
The source details do not line up perfectly, which is itself a warning.
| Source | Failure figure | Research base |
|---|---|---|
| ANZ Private (2023) | 70% by second generation, 90% by third | 2002 study, 3,250 families over 25 years |
| CPABC (2019) | About 70% fail in each generation | 3,250 interviews, Preparing Heirs (2003) |
| Truist (page updated January 2026) | Successful transfer as low as 30% | Preparing Heirs (2003) |
| Williams Group discussion on Kitces.com | About 70%, speaker’s estimate 80% to 85% | 20-year study of about 2,500 families, later cited as 3,000 |
The “failure” definition also differs: ANZ describes wealth lost, while CPABC and Truist describe plans that fail and assets removed from beneficiary control. These are not the same thing, so the 70% claim does not literally mean families are broke.
Why Wealthy Families Lose Their Fortune: The Real Causes
Three sources break the failures into the same four categories, with small differences.
| Cause of failed transfer | CPABC | Truist | Williams Group discussion |
|---|---|---|---|
| Breakdown of communication and trust | 60% | About 60% | 60% |
| Unprepared heirs | 25% | 25% | 25% |
| Lack of a mission or vision | 12% | 12% | 10% |
| Other (professionals, tax, legal, investments) | 3% | About 3% | 5% |
The table shows how heavily the blame falls on the family, not the structure. In the Williams Group discussion, silence about wealth is called the biggest risk indicator, and the failure causes include parents avoiding money talk and siblings or heirs distrusting each other. Heir preparedness includes knowing how to say no and handling social pressure. The Williams Group discussion is a promotional setting, since the firm charges about $15,000 to $20,000 for an assessment and first meeting and about $90,000 to $120,000 for its full process on average, so its emphasis on the family process matches what it sells. Truist offers wealth advice and also promotes its Center for Family Legacy and a board game. The same four causes still show up in an independent source, CPABC, which does not sell the service.
The Shirtsleeves-to-Shirtsleeves Pattern
The wider saying is “shirtsleeves to shirtsleeves in three generations.” Truist describes it as the pattern in which the fourth generation must rebuild wealth from scratch. ANZ Private explains why in human terms this:
- Each generation understands less about the work of building wealth, and the third, raised in comfort, has no reference point for its grandparents’ labour.
- Wealth creators focus on their businesses, not on preserving what they earned.
- First-generation owners often delay estate planning, and some assume they have decades left, even into their 70s.
- Divorces, births, deaths and relationship changes can disrupt plans.
- Poorly planned ownership and transfers can erode assets.
None of these are legal or tax errors. They describe a family drifting away from the discipline that built the money.
What Critics Say About the Third-Generation Statistic
Not everyone accepts the numbers. Beata Krzyżagórska-Żurek, a lawyer writing in Rzeczpospolita in November 2025, traces the oldest version to a 30-13-3 rule: about 30% of family businesses survive to the second generation, about 13% to the third and about 3% to the fourth and beyond. That rule comes from John Ward’s 1987 book Keeping the Family Business Healthy, which studied 200 manufacturing firms in Illinois between 1924 and 1984.
She raises several caveats:
- Ward defined survival narrowly, as continuing as an independent firm under the same name, so a family that sold a firm profitably would count as a failure.
- The original English wording says “less than two-thirds survive the second generation,” but popular citations shorten it to “to” a generation instead of “through” it.
- Williams and Preisser extended the figures into a claim that 70% of family firms fail at the transition, which she calls a statistical misuse, noting the study lacked transparent methodology.
- Citing Innosight and McKinsey data, she notes the average lifespan of an S&P 500 company fell from about 90 years in the 1930s to roughly 15 to 18 years today, which suggests fragility is common to all businesses, not just family ones.
A fair reading is that families really do struggle to hold wealth across generations, but the neat 70%/90% numbers deserve skepticism. Use them as a prompt to plan, not as a prediction for your own family.
How Wealthy Families Avoid Losing Their Fortune
The recommendations across sources overlap, which is more reliable than any single statistic.
1. Hold Regular Family Meetings
CPABC calls regular meetings the most effective way to avoid the main failure causes, because they build unity, improve communication and provide transparency about decisions. It suggests a family enterprise facilitator, especially early on, and notes that building a shared vision takes several meetings.
2. Prepare the Heirs
Truist recommends teaching taxes, debt, insurance and prenuptial agreements to adolescents and young adults before they face them. CPABC advises fostering stewardship, responsibility and commitment by explaining heirs’ potential roles.
3. Define a Mission and Governance
PwC Australia’s family business research lists four tenets of successful succession: communication, governance, flexibility and values. It recommends a family strategy, a charter and a dispute resolution mechanism, reviewed regularly, and notes that outside advisers can manage emotions that are hard to resolve internally. In the same piece, PwC found only 25% of surveyed Australian family businesses have a robust, documented and communicated succession plan and 28% have a constitution or governance protocol, though the sample is Australian and dates from 2021.
4. Plan Early and Treat Wealth as a Legacy
ANZ Private advises seeing wealth as a legacy for the wider family, taking portfolio risk more cautiously than business risk and planning for family changes such as divorce. It also recommends independent tax and legal advice before restructuring or transferring assets.
5. Add Outside Help
Both CPABC and the Williams Group discussion recommend bringing in outside experts for family dynamics instead of relying on the family or a single adviser to facilitate.
A Practical Checklist to Keep Wealthy Families From Losing Their Fortune
- Schedule a first family meeting and agree on its purpose.
- Ask what each family member wants from the wealth.
- Write a short shared mission statement.
- Teach heirs the basics of taxes, debt and insurance.
- Document governance rules and a way to settle disputes.
- Review estate documents and family changes every few years.
- Bring in a neutral facilitator if talks stall.
Frequently Asked Questions About Wealthy Families and Lost Fortunes
Is it true that 90% of wealthy families lose their fortune by the third generation?
It is widely quoted, with ANZ Private attributing it to a Williams Group study of 3,250 families, but critics say the research lacked transparent methodology. Treat it as a warning, not a measured fact.
What is the main reason wealthy families lose their fortune?
Three sources attribute about 60% of failed transfers to a breakdown of communication and trust within the family, ahead of unprepared heirs at about 25%.
Does tax planning prevent family wealth from disappearing?
It helps, but the sources suggest it is rarely the deciding factor. CPABC says traditional succession work is sound about 97% of the time.
What does “shirtsleeves to shirtsleeves” mean?
Truist uses it for the pattern in which the fourth generation must rebuild wealth from scratch.
How can a family start protecting its wealth?
Begin with a family meeting about values and expectations, then prepare heirs and put governance in place.
This overview is educational and does not replace legal, tax or financial counsel. The statistics discussed are old, disputed and drawn from several firms that sell wealth services, so use them cautiously and speak with qualified professionals about your own situation.
Sources
- ANZ Private, “How to beat the three-generation curse” (May 26, 2023, last modified December 2, 2024; private bank) – https://www.anz.com.au/private-banking/insights/how-to-beat-the-three-generation-curse
- CPABC, Emily Griffiths-Hamilton, “Why most family business and wealth transition plans fail,” CPABC in Focus (September 1, 2019) – https://www.bccpa.ca/kbase/kbase-search/taxation/taxation/articles/why-most-family-business-and-wealth-transition-plans-fail
- Truist, “Shirtsleeves to shirtsleeves: beating the odds of sustaining family wealth” (page updated January 2026; commercial interest as a wealth adviser) – https://www.truist.com/resources/wealth/articles/shirtsleeves-to-shirtsleeves-beating-the-odds-of-sustaining-family-wealth
- Kitces.com, discussion with Amy Castoro of Roy Williams Group on heir preparedness, trust and communication (undated; the firm sells family readiness services) – https://www.kitces.com/blog/roy-williams-group-amy-castoro-bridging-generations-heir-preparedness-trust-communication/
- Rzeczpospolita (pro.rp.pl), Beata Krzyżagórska-Żurek, “Fakty kontra mit trzeciego pokolenia” (November 28, 2025) – https://pro.rp.pl/nawigator-prawny-poradnik/art43430781-fakty-kontra-mit-trzeciego-pokolenia-trzeba-na-nowo-spojrzec-na-trwalosc-firm-rodzinnych
- PwC Australia, “How family businesses can safely hand over to the next generation” (June 7, 2021) – https://www.pwc.com.au/pwc-private/family-business-survey/family-business-succession-to-next-gen.html
