Be a Rockefeller, Not a Vanderbilt

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Most of us have heard the proverb: “Shirtsleeves to shirtsleeves in three generations.” What many may not realize is that this is the American expression of a phenomenon that is by no means limited to this country. In Chinese, the same saying translates as “from peasant shoes to peasant shoes in three generations.” In Japan, it’s “from rice paddy to rice paddy…”; in Italy, “from the stable to the stars and back again”; and in Scotland, though covering four generations, the principle is baldly framed: “The father buys, the son builds, the grandchild sells, and his son begs.”

For decades – maybe centuries – persons of great vision and determination have been building financial legacies that they hoped would provide for their families on down through the years, but in the vast majority of cases, those legacies were mismanaged and/or squandered by subsequent generations. But there are rare cases of wealth builders who put in place structures and policies that enabled their families to continue to thrive, even long after the passing of the founding generation. In America, two famously contrasting examples are the Vanderbilts and the Rockefellers. Though Cornelius Vanderbilt’s deathbed advice to his son was “Keep the money together,” the vast fortune he had accumulated with his railroad and shipping empire was dissipated by the time 50 years had passed after his death. The Rockefellers, on the other hand, whose fortune was built during the same “Golden Age” as the Vanderbilts, still control a financial legacy that is worth billions. By means of careful planning and thoughtfully designed guidelines, they have “kept the money together,” even though they are well known for their generous philanthropic efforts in the arts, conservation, healthcare, and other worthy causes.

Be a Rockefeller, not a Vanderbilt

As financial advisors and wealth managers, we want our ultra-high net worth clients to emulate the Rockefellers, not the Vanderbilts. How can we help them do that? We provide sound investment and financial planning advice while building the type of relationship that helps to ensure that our advice will be received and followed. But beyond that, we need to help them think through estate planning, education – of themselves and those who will come after them – and governance.