In today’s uncertain economic landscape, with the largest generational wealth transfer in history underway — preserving wealth has never been more challenging, or more important. Yet despite growing complexity and risk, the same story plays out over and over again. According to a 20-year study by The Williams Group:
• 70% of wealthy families lose their wealth by the second generation.
• 90% lose it by the third.
At GatePass Capital, we’ve seen first hand how high-net-worth families can unintentionally jeopardize what they’ve built — not through bad luck, but through avoidable missteps, behavioral traps, and a lack of cohesive planning across generations. Let’s break down why retaining wealth is so difficult, and what can be done about it.
The Behavioral Side of Wealth
Being wealthy doesn’t make you immune to poor decision-making. In fact, high-net-worth (HNW) individuals often fall into cognitive traps — precisely because they’re smart and successful. Overconfidence bias is a big one. Research shows that HNW investors are more likely to believe they outperform the average investor and are more likely to make costly investing mistakes.1 This often leads to concentrated risk, ignoring professional advice, or doubling down when diversification is needed most.
On the flip side, fear and herd behavior drive many wealthy investors to react emotionally in volatile markets. Panic-selling during downturns (2008, 2020, 2022…) locks in losses at the worst time and creates a pattern that erodes long-term performance. Dalbar data has shown that the average investor consistently underperforms the market by 2–4% annually due to bad timing decisions.
Morgan Housel said it best in The Psychology of Money: “Getting money and keeping money are two different skills.” The mindset that builds wealth — optimism, boldness, risk tolerance — is not the same one that preserves it. Maintaining wealth takes humility, patience, and a healthy fear that it can slip away faster than it came.
And then there’s lifestyle inflation. With wealth comes opportunity, but also pressure. Upgrades become expectations, spending creeps higher, and cash flow disappears faster than anyone expects. Emotional spending is a silent killer of generational wealth.
“Shirtsleeves to Shirtsleeves” — Why Generational Wealth Fails
The old saying still holds true: “Shirtsleeves to shirtsleeves in three generations.” Generation one builds it. Generation two spends it. Generation three has no idea how it got there.
This is less about money and more about mindset, communication, and values. When families avoid conversations about wealth, roles, or financial expectations, confusion and resentment fill the void. The next generation isn’t taught how to manage wealth — they inherit assets, not education. Without context, money becomes abstract, and purpose disappears.
But here’s the good news: it’s preventable. Families that engage in intentional planning, open communication, and shared purpose are far more likely to preserve wealth — and even grow it.
The Cost of No Plan
Beyond psychology, many high-net-worth families simply don’t have a coordinated financial and estate plan in place. And the consequences are real. Lack of estate planning can lead to unnecessary estate taxes, probate delays, and family disputes. Just look at James Gandolfini’s estate: nearly $30 million evaporated due to poor planning.
Concentrated investment risk is another silent threat. Wealth is often created through a business or niche investment but overexposure becomes dangerous without proper diversification.
Neglecting tax strategy, carrying too much debt, or failing to adjust spending habits to changing conditions can slowly eat away at even the largest nest eggs. Wealth doesn't just need to be grown. It needs to be defended — deliberately and thoughtfully.
How GatePass Helps Families Preserve Wealth
At GatePass Capital, we specialize in helping high-net-worth families avoid the common traps that undermine wealth. Our Preserve multifamily office approach brings together investment, estate, tax, and legacy planning under one roof — coordinated and personalized to your family’s needs.
Here’s how we can help:
Because real wealth isn’t just about money. It’s about alignment, purpose, and preparation.
Don’t Just Pass It Down. Pass It On — With Intention.
In the years ahead, nearly $100 trillion will be transferred from Baby Boomers and older generations in what is being called the largest wealth shift in history. The question is: will it last?
If you’re a business owner, executive, or family wealth steward, now is the time to act — when you can, not when you have to. If you’d like to learn more to ensure you and your family are set up for generational wealth, set up a call today with one of our advisors.
1 Klontz, B. T., P. Sullivan, M. C. Seay, and A.Canale. 2015. “The Wealthy: A Financial Psychological Profile." Counseling Psychology Journal: Practice and Research 67 (2): 127–143.
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