Ivan Hernandez Discusses the Third Generation Curse with MarketCurrents

One of the biggest dilemmas that affluent families face is the so-called third generation curse, which states that the majority of families will lose both their wealth and their business by the time it reaches the third generation. However, despite less than 10 percent of family businesses surviving past the third generation, very few families adequately plan to stop it.

In a recent article in MarketCurrents, Omnia Family Wealth Co-Founder and Managing Director Ivan Hernandez discusses this pertinent problem that is plaguing families and their businesses, along with a few solutions to overcome it. 

“I would say that families are very aware of the third generation curse, but most families tend to think the chances are remote,” Hernandez explains. “It’s very similar to how people assume winning the lottery fixes all your financial woes, yet 70 percent of lottery winners go broke in seven years,” he continues.  “Only once you see that these actually are real issues that can impact your family can you truly address the forces that are most destructive to multi-generational wealth.”

Luckily there are steps that families can take to ensure that their family wealth lasts multiple generations. In addition to bringing in the right professionals to manage the business and having open conversations about the family’s wealth, business structure, founding ambitions, success, and struggles, philanthropy can also be a useful tool against the third generation curse.

According to Hernandez, “Philanthropy is a very effective vehicle for bringing the family together to discuss the intersection of wealth and values. We do find that most families with significant wealth also have significant charitable intent. In our work, we have seen families benefit in unexpected ways from engaging multiple generations in philanthropy.”

To learn more about beating the third generation curse, read the full MarketCurrents here.