Recently, one of my clients brought his 18-year-old daughter, a medical student, to our meeting. He told me, “I want her to start learning about money and be involved in our financial decisions.”

I thought it was a wonderful idea. Too often, children grow up seeing their parents work hard, build wealth, and provide a comfortable life — but they’re never part of the financial conversations behind it. Then one day, when the wealth is passed down, they may not have the knowledge or discipline to manage it well.

Studies show that 70% of wealth is lost by the second generation, and 90% is lost by the third. So why does this happen? And more importantly — how can we prevent it?

Why Wealth Fades Across Generations

There are several common reasons:

1. Lack of Financial Education – Many heirs inherit money without understanding how to manage it. Without basic financial literacy, wealth can quickly disappear through poor decisions, overspending, or risky investments.
2. No Clear Estate Planning – Without proper wills, trusts, or structures in place, assets can be distributed inefficiently, leading to family disputes, unnecessary tax bills, and loss of control over wealth.
3. Different Money Values – The first generation builds wealth through sacrifice and discipline. The next generation, who grows up in comfort, may not share the same values or mindset about money.
4. Marriage Breakdowns – Divorce or relationship breakdowns can significantly impact family wealth, especially if assets aren’t structured properly to protect them.
5. Failure to Involve the Next Generation Early – Many parents avoid discussing money, thinking it’s too complex or inappropriate. As a result, children never learn by example.

How to Build Lasting Wealth

The good news is, it’s possible to change this pattern. Here are a few practical steps families can take:

1. Start Financial Education Early
   Encourage your children to learn basic money management — budgeting, saving, investing, and understanding debt. Even simple conversations can make a difference.
2. Include Them in Financial Discussions
   Bring your children to meetings with your adviser. Let them hear how financial decisions are made and why. This helps them see money as a tool, not just something to spend.
3. Be a Role Model
   Children mirror their parents’ behaviour more than their words. Show them how you make mindful financial decisions — saving regularly, spending wisely, and investing for the future.
4. Help Them Build Healthy Money Habits
   Encourage habits like saving a portion of income, setting goals, and thinking long-term. Show them the power of compound interest — how small, consistent investments can grow significantly over time. These lessons will help them appreciate patience and long-term thinking in wealth building.
5. Create a Solid Estate Plan
   Work with your adviser to ensure your wealth is structured properly through wills, trusts, and ownership structures that protect assets and support your long-term goals.
6. Pass Down Values and Wisdom, Not Just Money
   Teach your children what wealth truly means — freedom, choices, and responsibility. Help them understand the purpose behind your financial goals and the importance of using money to build a meaningful life.

The Real Legacy

True intergenerational wealth isn’t just about passing down money — it’s about passing down wisdom. The client who brought his daughter to our meeting is doing exactly that. He’s teaching her not just how to make money, but how to manage, protect, and grow it wisely.

Because when financial knowledge, values, and habits are passed on together with wealth, that’s when a family legacy truly lasts.