Top secrets to growing family wealth – ‘from shirtsleeve to shirtsleeve’

* This article is brought to you by Ilze Alberts

What does wealth, health and wellbeing look like when you avoid the greatest risks to sustaining generational wealth?

Two thirds of family wealth fall prey to the buzzards before it is even passed to the second generation. And of that wealth, 90% of it is destroyed in the third generation. What telltale factors are prophetic when it comes to testing which wealthy and healthy empires will stand and which will fall?

Using human behaviour and psychology, Johannesburg wealth psychologist and family behaviour strategist Ilze Alberts reveals the top secrets to helping family wealth contribute to health in body and mind, and to soar like an eagle instead of being picked apart by buzzards.

Following is the first part in a 5 part series.

Here Alberts has a conversation with Dr John Demartini, a human behaviour specialist and polymath  about the proverb. Below is a synopsis of their conversation on their work with families facing the challenge.

What does the proverb “from shirtsleeves to shirtsleeves in three generations” mean?

The proverb means: The first generation has the big void, and is driven to create wealth, put their energy, their focus, their time and their inspiration on growing wealth for the family, and often create a family business as a consequence.

The second generation takes over the wealth, they inherit the wealth, they don’t really know anything about the wealth creation process, and they just focus on maintaining the wealth.

By the third generation it is all spend because the third generation is used to an affluent life style but not used to being productive to have an affluent life style.

In multi-generational family wealth this is often repeated, you see this over and over again. A wealth void drives the first generation to dedicate themselves to build wealth. They have the desire to give the best to their family and sometimes they confuse giving them everything with equipping them. The first generation can actually disable the second generation and make them dependent instead of productive and inspired.

What happens next is the following generation is created, where the family members are enabled and they don’t have a desire to grow or create wealth for the family and down goes the wealth. It’s not uncommon. This is important feedback to the family, because nature has a way of creating that, if a person doesn’t understand the principles of wealth building and sustain the meaning behind wealth building and the purpose of it, wealth will disappear.

Does it happen in all cultures?

Ilze Alberts says that it is true in the western cultures and in the eastern cultures that this proverb has been repeated for multiple generations. Some families so far have been very successful in transforming it, for instance the Rockefeller family, but it is still an energy that keeps on repeating itself. It is also referred to as “rags to riches to rags”, “rice paddy to rice paddy”, “gutter to gutter in three generations”.

What drives the first generation to create wealth?

The reason for the repetition of the proverb in all cultures, according to dr. John Demartini, is that there are some individuals that have a challenging beginning and they may have come from poverty in some cases, and they swear they don’t want to stay there. So they want to work very hard to do something that makes a difference and they want to earn as much as they can and they don’t ever want to be in that poverty situation again. So they save and they have a very strong work and savings ethic. They learn gradually how to invest their money and start having money work for them. As a result, they are inspired by the idea of building their wealth and it’s meaningful to them.

What happens to the second generation and what can the first generation parents do for them?

The void the first generation had with lack of financial resources, the second generation doesn’t have, unless they are trained and educated by their first generation parents. Dr John Demartini shared a story about a Forbes TV special he watched. A Billionaire from England was being interviewed. This man understood the proverb and he didn’t want to repeat history with his children, so he made his children work and start at minimum wage in his own company.

They were never allowed to go to another level of the company unless they had earned it and was shown respect by all the other employees. There was no upgrading. So they had to work their way up and only earn exactly what everybody else earned and they had to do every single job and they had to know the entire company or they would have never been allowed to take over the company. He said that he believed that a billionaire was not a billionaire unless they were able to sustain it for least three generations. He understood the principles and was making sure that his next generation had a work ethic and had a void and had to pay their own bills and pay their own responsibilities and had need for wealth. That’s really caring for the next generation, instead of supposedly caring for the next generation by taking away all challenge.

Pearls of wisdom

The proverb can be transformed by applying the principles of accountability, responsibility, dignity and respect for others and self. Voids drive values or priorities and without a perception of a void, wealth preservation cannot happen in a family.

  • Ilze Alberts is a pre-eminent wealth psychologist and human behavioural specialist and she is known for her expertise in building powerful families, businesses and leaders. As a recognized leader in human behaviour and in psychology, she has expert skills to work with businesses, families and individuals. She is an accomplished international speaker, author, teacher and human behavioural specialist. She offers her specialized service on high net worth families and family businesses as their behavioural strategist – a service for high net worth families and businesses seeking fulfillment and prosperity for multi generations.
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