Picture this scenario: a fabulously wealthy tycoon breathes his last, leaving behind a fortune worth tens of billions of dollars. Then fast forward through just two or three generations. The grandkids of the rich man gather for a family reunion, only to find that not a single one is now financially well off. Each has squandered his or her lavish inheritance and is left with little to show for all that spending except bitter memories. 

If that were a Hollywood screenplay, this is where the final credits would roll. But in fact, it’s a true American story of the Vanderbilt family, one of the legendary names in capitalist lore. And before you dismiss the tale as irrelevant to the “normal” lives we lead today, you might want to take a look at this recent article from MarketWatch written by wealth advisor Charlie Garcia. It turns out, says Garcia, that the “Vanderbilt Curse” is a real phenomenon, describing how American wealth rarely survives through the third generation after it is passed down. 

What does this mean for us? Simply this: if we expect to bequeath even a modest amount of wealth to our heirs, the time is now to prepare them to train their own kids in healthy, lasting principles of money management and good, positive stewardship. Your family can avoid the Vanderbilt Curse. Garcia’s article claims to show us how, so let’s read on. 

“From Silk Sleeves to Rolled-Up Sleeves”: the Vanderbilt Curse 

Garcia begins with a sobering history lesson. “When Cornelius Vanderbilt died in 1877, the industrialist left behind roughly $100 billion in today’s dollars,” he recounts. “Yet, at a Vanderbilt family reunion less than a century later, in 1973, not a single descendant could claim millionaire status.”  

Garcia notes that the Vanderbilt heirs had gone “from silk sleeves back to rolled-up sleeves in just three generations.” He adds ironically, “Wealth, it turns out, isn’t hereditary.” 

When Fabulous Wealth Disappears: The Law of Entropy 

“So,” Garcia asks, “how exactly do you mishandle $100 billion? Turns out, there’s a law — physics, not criminal — that explains it perfectly. It’s called entropy, and it basically says all things naturally slide from order into chaos unless you keep applying effort. Ice melts, whiskey evaporates and mansions fall apart if you stop fixing the leaks. Family fortunes? Same principle.” 

Garcia explains that he first encountered this profound metaphor in a conversation with Jay Hughes, who he calls “a leading authority on preserving multigenerational family legacies and author of several comprehensive books on the subject.”  (Hughes has his own website here.) Regardless of the source, the metaphor rings true: things generally move from order to chaos. 

When Family Wealth Deteriorates Into an “Expensive Mess” 

In his MarketWatch article, Garcia shows himself to be a student of history. He cites historian Will Durant who observed a familiar pattern. 

“Societies rise, thrive and inevitably decline into an expensive mess,” Garcia writes, paraphrasing Durant.  “Family wealth follows the same inevitable trajectory. Prosperity peaks just before someone declares, ‘Hey, let’s buy matching yachts.’”   

That, Garcia observes, is “entropy at work — the silent assassin of financial legacies.” 

Determined to Use Family Wealth as a Force for Good 

Garcia is well acquainted with the use – and misuse – of family wealth. He is founder of an organization called R360 — an invitation-only network of more than 140 families. Their average net worth: $600 million.  

“Our ambition is bold,” he asserts: “to curate a global community of 1,000 entrepreneurial superheroes determined to be a force for good. Our members understand wealth isn’t just trust funds or balance sheets; it’s fuel for purposeful stewardship. They actively resist entropy, channeling their entrepreneurial drive toward solving humanity’s toughest challenges.” 

Garcia argues that financial entropy can be avoided when family wealth “becomes an intentional tool rather than a passive inheritance.” This approach doesn’t guarantee wealth will never be squandered, but it does improve the odds. 

Vanderbilt Curse Began with Unprecedented Success 

Most of us know the name “Vanderbilt,” but we might not know the story behind it. Garcia gives us an overview which we have edited due to space constraints. 

“Cornelius Vanderbilt was your stereotypical first-generation tycoon — the kind who believes competition isn’t good but something you crush,” Garcia writes. He was born dirt-poor, quit school at age 11, and bought his first boat, the “Swiftsure,” when he was 16, eventually turning it into a hugely successful ferry service. Then came railroads. 

“Soon he wasn’t just playing Monopoly,” Garcia writes: “he owned the board. At his peak, he controlled the New York Central Railroad and personally held one-ninth of all currency circulating in America.” 

A Classic Mistake: Neglecting to Train the Next Generation 

In spite of his staggering success, says Garcia, “Vanderbilt made a classic mistake: He spent so much energy building his fortune, and he forgot to teach his kids how to keep it.” 

Garcia writes that, after Cornelius had died, his son William treated the family wealth carefully, but without the “entrepreneurial spark” that built all that fortune in the first place. But it was the third generation, “born rich and entitled,” who truly showed the pitfalls of entropy.  

“Vanderbilt’s grandkids treated spending like an Olympic sport,” says Garcia. “Mansions, yachts, expensive divorces and catastrophic investments became their signature moves. Money vanished faster than free beer at a frat party, and before long the grand fortune splintered into pieces too small to matter.”  

“Affluenza” Crept in as Comfort Eclipsed Wise Stewardship 

The family, says the article, fell victim to a condition sometimes called “affluenza” in which unearned comfort erodes motivation. As the family expanded, the sense of familial cohesiveness diminished, and the goal of preserving family wealth vanished. 

“It’s a timeless cycle,” Garcia observes, “summed up by an age-old proverb: ‘Hard times create strong individuals; strong individuals create good times; good times create weak individuals; weak individuals create hard times.’ The Vanderbilts played this drama perfectly, each generation stepping neatly into its predetermined role — from gritty entrepreneur to genteel loafer.” 

The Vanderbilt Curse Doesn’t Have to Prove True 

Garcia notes that wealthy families don’t have to succumb to the so-called Vanderbilt Curse. He cites the Rothschilds, the legendary banking family who, Garcia says, wrote ironclad rules about family behavior that helped them avoid entropy for more than two centuries. 

“Or look at the Rockefellers,” he adds. “The family discovered early that the best defense against decay was embedding philanthropy and purposeful stewardship directly into their DNA. They handed each generation a mission greater than just counting their inheritance, offering purpose instead of mere privilege.” 

Whether citing good examples or bad, says Garcia, the lesson is clear: “Money doesn’t manage itself — at least not in your favor. Entropy waits patiently, ready to transform order into chaos.  Even modest inheritances – the family home or retirement savings – can vanish quickly if left unmanaged.”  He adds, “Ultimately, the size of your legacy matters far less than how deliberately you protect it from disorder.” 

Avoiding Entropy by Creating a Lasting Legacy 

In his MarketWatch article, Garcia issues a clarion call to all of us to equip the next generation of financial stewards.  

“Entropy isn’t fate,” he writes — “it’s a warning. Even if you don’t have a fortune, you still have something worth protecting. Whether it’s the family home, your modest savings or grandpa’s fishing boat, the rules for combating entropy are identical.”  Here are his six rules, which we’re quoted verbatim from his article. 

First, be explicit: Vague legacy instructions are like handing your car keys to a 12-year-old and hoping for the best. Spell it out clearly. 

Second, talk openly about money: Secrets create suspicion, suspicion creates fights, and family holidays become battlegrounds. Nobody wants to turn Thanksgiving into a cage match. 

Third, teach financial responsibility: Warren Buffett famously made his kids farm cornfields before they got a cent. He knew money without effort is like dynamite without instructions — fun briefly, then messy. 

Fourth, put it in writing: Even a simple will or trust can save your heirs from turning an inheritance into an episode of “Judge Judy.” 

Fifth, bring in professional help: Someone unemotional who can tell your heirs “no” without making it personal is worth every penny. 

Finally, cultivate family projects: Even modest joint ventures or small charitable acts help bind generations together, actively pushing entropy back. 

Protecting Your Legacy Demands Vigilance and Clarity 

“Entropy isn’t selective,” Garcia concludes. “It wants your stuff, no matter how modest. It will gladly dismantle a bungalow in Queens as swiftly as it does an estate in the Hamptons. Protecting your family’s legacy demands vigilance, clarity and enough concern to ensure attention.” 

He advises us all to think of an inheritance as a mission handed down from the great beyond, with a note attached that reads, “Don’t screw this up.” He calls families to pursue the active duty of stewardship, not just through legal documents like wills and trusts, but through candid dinner-table conversations where values are handed down. 

“Those who succeed don’t just resist entropy but confront it head-on,” he writes.  “They know exactly what they’re passing down, and precisely what it means. Families who ignore these lessons don’t just lose money; they lose something far more precious — the story, unity and purpose behind the inheritance. And that, ultimately, is a loss no accountant can measure.”  

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(originally reported at www.marketwatch.com)