Page 32 - Waterfall City Issue 4 April 2025

Waterfall City Finance

THE GREAT

WEALTH

TRANSFER

How to make it last
beyond three generations

By Thomas Berry, Head of Sales at PSG Wealth

A or education. Still, there is always
study by The Williams
a risk that others may opt to pay
Group, which tracked
off debt or fund early retirements
3,200 families over two
decades, has found that
growth. Governments, too, are
70% of wealthy families lose their rather than fuelling economic
fortunes by the second generation, likely to increase scrutiny around
and 90% by the third. Interestingly, inheritance tax, adding another layer
this trend transcends geography and of complexity to generational wealth
culture, as reflected in the Chinese transfers.
proverb “Wealth does not last beyond
three generations”, which echoes The current risks facing
the American saying “Shirtsleeves to Great Wealth Transfer
shirtsleeves in three generations”. beneficiaries
Disputes, lawsuits, or reckless
This is particularly relevant spending can quickly erode fortunes
considering that the biggest global if proper succession planning isn’t in
wealth transfer is underway. In the place. Unfortunately, many families
coming years, baby boomers are set fail to implement the necessary
to pass down more than $68 trillion – Thomas Berry, Head of Sales at PSG Wealth structures to protect their wealth
more than double the size of the US over time. Sound financial education
economy. This, however, is not only The economic impact of any is one of the most critical factors in
an American – or developed market intergenerational wealth transfer effective intergenerational wealth
– phenomenon, but a global one, depends mainly on how it is transfer. A sudden influx of wealth
affecting wealthy families around the managed. Some beneficiaries may and a lack of financial literacy can
world, including in South Africa. reinvest in commerce, real estate lead to poor investment decisions,

30 Waterfall City Issue 4 2025