24th April 2024 – (Hong Kong) Hong Kong’s glittering skyline is more than just a symbol of its financial success; it embodies familial legacies, where the towering buildings are not merely constructed from glass and steel, but are also rich with stories of generational wealth. From the Stanley Ho family to the Lim Por-yen family, the narratives of wealth creation, maintenance, and potential squandering are played out against this backdrop, reflecting a cycle familiar to many of Hong Kong’s elite. This cycle, however, is fraught with challenges, particularly for the third generation, often perceived as the ‘squanderers’ of the wealth and status painstakingly built by their forebears.

The story typically begins with a formidable, visionary founder who establishes the family’s wealth. These are the architects of Hong Kong’s commercial landscape, individuals like Stanley Ho and Lim Por-yen, who not only built empires but also set the standards for entrepreneurial success. Their journeys from humble beginnings to the pinnacles of their respective industries are marked by a combination of grit, foresight, and sometimes, fortuitous timing. They are the embodiment of the first-generation wealth creators, the ‘builders’ who lay down the economic and ethical blueprints for their descendants.

Then comes the second generation, often tasked with the crucial role of wealth preservation. Educated in the best global institutions and brought up in the lap of emerging luxury, these ‘maintainers’ are handed down not just wealth but also immense responsibility. Their challenge is to sustain and grow the legacy within an ever-evolving global economic landscape, often having to navigate through the dot-com bubbles, financial crises, and the recent tensions wrought by geopolitical shifts.

This generation’s role is less about flashy entrepreneurship and more about strategic stewardship, balancing risk with the need to conserve the family’s assets. They refine the structures put in place by their parents, professionalising family businesses, setting up family offices, and sometimes, diversifying the inherited portfolios to protect against market volatility.

The narrative, however, begins to wobble by the time it reaches the third generation. Born into opulence and often featured on the covers of socialite magazines, these heirs are far removed from the gritty realities their grandparents faced. Their challenges are fundamentally different — not how to build or significantly grow the wealth, but how not to lose it. Yet, ironically, it is this generation that often falls prey to the perils of wealth — extravagance, entitlement, and a lack of the pioneering spirit that marked their grandparents’ era.

This generation’s trials are manifold. They grapple with maintaining relevance in a fast-paced world while staying true to their legacy businesses. The lure of quick wins, the glamour of high society, and sometimes a lack of rigorous financial acumen can lead to decisions that might not only stagnate the family’s assets but deplete them.

The societal perception of these heirs is often unkind, viewing them through a lens tinted with scepticism — are they true entrepreneurs or merely custodians of inherited wealth? This perception affects how these young heirs view themselves and their roles within both the family and the broader societal tapestry.

The craving for recognition as ‘entrepreneurs’ often pushes them to venture into new businesses, sometimes with disastrous outcomes if not adequately thought through or if pursued merely as vanity projects. The challenge is to strike a balance between innovation and the preservation of their family’s legacy, all while under the intense scrutiny of public and media gaze.

Breaking this cycle of generational decline requires a return to the core values of entrepreneurship and a robust emphasis on financial literacy and responsible wealth management. Families need to instill in their heirs not just the value of money, but the values with which money was made. This involves creating structured paths for the younger generation to earn their stripes — not just inherit them.

Moreover, there is a need for these families to engage in active philanthropy, not just as a means of tax planning or public relations, but as a genuine effort to give back to the society that has helped sustain their wealth. Such engagements can help ground the heirs, providing them with perspectives that their insulated upbringings might not afford.

The third-generation curse is not insurmountable, but overcoming it demands a deliberate effort to balance reverence for legacy with the demands of a swiftly evolving world. For the city’s economic dynasties, the future will hinge not only on the wealth they possess but also on their ability to shape the story of that wealth through generations.