A Flawed Notion
- Justin Lueger
- Jun 27
- 3 min read
I am fortunate to work in a privileged profession.
People entrust us with their life savings. That’s a big deal. Aside from medical professionals, there’s probably nothing more sacrosanct, more guarded in this life than people’s wealth.
We take that trust seriously.
And while I am all for helping our clients grow their wealth, there is one notion in our industry that has never settled well with me. It’s a term that gets bandied about on social media, and some people strive to make it a reality. I wish they wouldn’t.
It’s an idea that probably goes back as far as material wealth became a reality, but it seems to be picking up more traction lately. I wish it wouldn’t.
The notion is called “generational wealth.”
The idea is to build up such a large sum of wealth that it not only funds your desired lifestyle but also the lifestyles of your children, grandchildren, and perhaps even more distant branches of the family tree. It’s wealth that literally changes generations of people’s lives. We’re not talking a couple of thousand of dollars or even hundreds of thousands. We’re talking millions of dollars that get passed on at death. Enough wealth that money is no longer a struggle for those that inherit it.
On the surface, that seems perfectly noble, maybe even selfless. Setting up your family for success is an understandable goal.
For many, giving wealth is a form of immortality. It’s a gift that keeps on giving. They have such pride in their family name that they want their children to be as successful, financially, as they have been – if not even more so. Some hold a belief that helping the next generation is their responsibility. They cringe at the thought of seeing their kids struggle.
But life is about trade-offs, and you must consider the dark side of what generational wealth can mean.
Giving large sums of money to heirs can rob the next generation of the satisfaction of working hard and reaping the fruits of their own labor. Money, especially inherited at a young age, can blunt their ambition. It disconnects them from the reality of their friends, co-workers, and neighbors. And it can leave a lasting stain of guilt and anxiety.
Most of all, it’s not sustainable. If generational wealth is like a family relay race, sooner or later the baton gets dropped.
Take the Vanderbilts.
Cornelius Vanderbilt was a cunning businessman. His entrepreneurial talents allowed him to amass a fortune. At his death in 1877, Vanderbilt was worth $100 million. In today’s dollars, that would be about $5 billion. Vanderbilt, indeed, created generational wealth.
But it didn’t last much more than two generations. Roughly 50 years after his death, the wealth he created was largely gone – frittered away by spoiled and unprepared heirs.
The same thing often happens with lottery winners.
Giving a lot of wealth to your heirs isn’t always a gift. It can be a curse.
The great thing about this country is that no one can tell you what to do with your wealth, for the most part. So do what you wish.
But just know that winning the ovarian lottery isn’t the best way to allocate your net worth. Wealth is best used when it’s earned, not earmarked at conception.
If I had my way, generational wealth wouldn’t be a thing. Make the next generation work as hard as you did. There’s real value in that.
Financial struggles are priceless. That’s one thing you can’t buy with money.
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