By the time a $100 million estate reaches the fourth generation, the investment goals of the owners may be vastly different from that of the founders, according to Harold Pine, managing director of Chasefield Capital LLC, a multi-family office in Denver, Colo.

Four generations are often in play in a family situation today, says Pine, and an advisor has to take the changing nature of the wealth into consideration, as well as the changing goals of the succeeding generations.

“The first generation worked hard to create the wealth and the second generation sees that and probably preserves it, but succeeding generations may become wealth distributors rather than wealth creators,” he says.

“As financial advisors, we need to determine whether the subsequent generations are prepared to guard the wealth and make the right decisions for it to continue to grow,” he adds.

Pine has one family as clients where succeeding generations took a $50 million estate and drew down half the money in four years. “Stewardship is not a universal characteristic,” he says.

If a lot of people are involved in third- and fourth-generation wealth, it might be wise to bring in a financial psychologist to help keep the peace and make heirs aware that there is not as much money as they might have anticipated, Pine advises.

Subsequent generations may not be technically and behaviorally prepared to handle the wealth, so they may just want to divide up the money.

“Families usually try to engrain in their children and grandchildren how hard the money was to make and incentivize them to be good stewards, but that may not happen,” he adds. “Instead of having a 100-year time frame, they have a shorter view and become distributors.”