Perhaps you've heard the ancient Chinese proverb that wealth does not pass three generations. And indeed, 70% of family businesses fail to pass successfully to the next generation. But why?
Canadian financial advisor and author Franco Lombardo pondered the question and found that many wealthy families have huge emotional problems. In fact, the wealthier they are, the bigger the mess:
"The emotional component just wasn't being dealt with," [Lombardo] told [Robert Frank of CNBC] in a recent interview. "The more money families have, the more these problems are magnified."
He said wealthy kids hate their parents for three common reasons. First, wealthy parents don't say "no" enough. "A child grows up with a sense that they get whatever they want," Lombardo says. "When they go out into the world and the world tells them 'no," they're angry. And they resent their parents."
The second cause is time. Wealthy parents are often absent parents, and the kids feel abandoned. When the parents try to make up lost time with money, the kids get even angrier. "Money is the wrong currency to pay back lost time. You make up lost time with time."
The third reason is society. The culture at large, Lombardo says, makes fun of rich kids. So parents tell their kids at an early age to hide their wealth. When the kids grow up, they feel that a big part of their identity has to remain hidden — and they blame their parents.