The 70% third-generation wealth loss claim, examined

The claim that 70% of wealthy families lose their wealth by the second generation and 90% by the third rests on two separate sources, and neither measured what the claim says. The first is a set of interviews with 3,250 families conducted over 20 years by Roy Williams and Vic Preisser, which recorded that 70% of families "lose control of their assets and family harmony" after a transition. It did not measure how much wealth was lost, and its method was never published for review. The second is John Ward's 1987 study of 200 family-owned manufacturing companies in Illinois, which found that 13% were still under family ownership through the third generation, counting any sale, merger or acquisition as a failure. Better evidence on the persistence of wealth points in the other direction.

Where the 70% figure comes from

In a 2010 article for WealthManagement.com, Preisser described the research behind the book Preparing Heirs, which he co-wrote with Williams. The authors interviewed 3,250 families over 20 years and concluded that 70% of transitions "failed", in the sense that the family lost control of the transferred wealth, became fractious or spent heavily on litigation. They attributed 60% of failures to a breakdown of trust and communication within the family, 25% to heirs who were not prepared, and 15% to all other causes, including tax, legal and mission issues.

Two features of this work limit what can be drawn from it. The definition of failure combined financial loss with family discord, so a family that kept its capital and fell out would count as a failure. And the 90% third-generation figure that circulates alongside the 70% does not appear in Preisser's own account at all; it appears to be an extrapolation.

The 30/13/3 statistic and John Ward

The other strand is the family business literature. An Oregon State University review traces the "30/13/3" statistic to John Ward's mid-1980s work at Loyola University of Chicago, published in 1987. Ward examined 200 family-owned manufacturing companies in Illinois using business records from 1924 to 1984 and found that 13% lasted through the third generation under family ownership and 3% of those were prospering. Ward himself noted the study's limits and said the results might not reflect all family businesses. The sample covered one state and one industry, and any loss of majority family ownership, including a profitable sale, was counted as a failure.

What the critics say

Josh Baron and Rob Lachenauer, writing in Harvard Business Review in July 2021 and in an updated version on their firm's site, make three points. The findings are routinely misstated: the study showed that around a third of businesses lasted through the end of the second generation, roughly 60 years, which is not the same as a third reaching the second generation. The study had no comparison group, and their own review of about 25,000 publicly traded companies between 1950 and 2009 found an average lifespan of around 15 years, with a 2015 Boston Consulting Group analysis putting the five-year exit risk for US public companies at 32%, against 5% in 1965. The study did not ask why firms disappeared, and a family that sells a business and redeploys the proceeds has not failed.

The Oregon State review adds a related finding from Zellweger, Nason and Nordqvist in 2012: second-generation family enterprises had controlled an average of 6.1 firms over their history, creating 5.4, acquiring 2.7 and spinning off 1.5. Measured at the level of the enterprise rather than the original company, families appear far more durable. The review also cites Dennis Jaffe's argument that the statistic can become self-fulfilling.

What better evidence shows

Research on wealth persistence rather than business survival gives a different picture: Baron and Lachenauer cite Gregory Clark's finding that regression to the mean in family wealth can take 10 to 15 generations, and a Bank of Italy study matching Florence tax records from 1427 and 2011 that found today's top earners were already at the top then. At the very top, UBS's Billionaire Ambitions Report 2025 counts around 860 multi-generational billionaires overseeing $4.7 trillion, up from 805 overseeing $4.2 trillion in 2024, with third-generation wealth growing 12.3% in the year.

UBS's Global Family Office Report 2026 found that only 57% of offices have a wealth succession plan for the family and 27% have an organised process to prepare the next generation. The honest summary is that the 70% and 90% figures are not supported by their sources, that durable family enterprises are common, and that the risks which do exist concern communication, preparation and governance rather than an inevitable arithmetic of decline. Those risks are the subject of succession planning versus continuity planning, engaging the next generation and the family office governance gap.