“There are a lot of very fine financial advisors out there, but there are also financial advisors who receive backdoor payments or hidden fees for steering people into bad retirement investments that have high fees and low returns. So what happens is these payments, these inducements incentivize the broker to make recommendations that generate the best returns for them, but not necessarily the best returns for you. . . the truth is most people don’t even realize that’s happening.” —President Barack Obama.

The President’s recent address to the Save Our Retirement Coalition at the AARP headquarters in Washington, D.C., underscored points we have shared with our clients and readers for years: financial advisors who don’t put their clients’ needs first may not act in their best interests 100% of the time.

In our culture, the phenomenon is called “from shirtsleeves to shirtsleeves in three generations.” In China, it is called “from peasant shoes to peasant shoes in three generations.” In Italy, the saying is “from the stable to the stars and back again,” and the Scottish expression is “the father buys, the son builds, the grandchild sells and his son begs.”

Research studies have found that about 70 percent of a high net worth family’s wealth is often gone by the end of the second generation, and 90 percent is gone by the end of the third generation. Contrary to standard belief, investment mistakes and changes in the economy are not at the root of these losses.

There is no shortage of books, TV programs, websites, companies, and songs expressing shared sentiments about money.  Ironically discussing how we actually invest our own is considered a taboo subject.

Marvin H. McIntyre wrote, “Money is the last taboo.  People will talk about their sex lives before they discuss their finances.”  According to one recent survey from Wells Fargo, nearly half of Americans say the most challenging topic to discuss with others is personal finances (44%).  But if no one is talking about it, how do we know what beliefs and behaviors divide those who get rich and manage to stay rich from those who do not?

Research has shown that in most families, 90% of inherited wealth is lost by the third generation.

When wealth is passed down through generations in a family, the long-term prognosis generally isn’t very good. Research has shown that in most families, 70% of inherited wealth is lost by the second generation, and 90% by the third. So it’s clear that the model for preserving wealth across generations is broken.