What Really Creates Problems in a Family Business? Unspoken Expectations, Not Inheritance
- Ian Macnaughton & Associates
- Nov 26
- 3 min read
For generations, people have repeated the proverb, “Shirtsleeves to shirtsleeves in three generations.” It lives in the background of many family businesses like a quiet warning. But what I often notice is this: the downfall of family wealth has far less to do with money and much more to do with the emotional expectations that lie beneath it.
The old myth comes from a misinterpreted study from the 1980s. Newer research—especially from Dr. James Grubman—shows something very different: when families communicate openly, prepare the next generation early, and address emotional tensions head-on, their wealth doesn’t evaporate. It strengthens.
The real destabilizer?
Unspoken or unreachable expectations.
Why the Third-Generation Myth Persists
The “myth” survives because money is still treated like a taboo topic. I see many parents trying to be protective—shielding their children from financial details so they’ll stay grounded, humble, and “unspoiled.” But silence doesn’t protect; it creates fragility.
When children eventually step into leadership or inherit assets, they often arrive unprepared, anxious, or unsure if they truly belong in the role.
A well-known Williams Group study found:
60% of wealth transfer failures occur because of poor communication and low trust
25% fail because heirs lack the preparation, knowledge, or skills to manage wealth
Those gaps become assumptions. Assumptions become stories—and those stories start shaping identity, belonging, and legitimacy.
Growing Up in Wealth: How Expectations Shape Identity and Dynamics
I often see people imagine that growing up with wealth or a family business is an advantage. And yes, resources help. But emotional dynamics around wealth are rarely understood from the outside.
Children inside business-owning families often carry labels long before they’re old enough to understand them:
The “responsible one”
The “heir”
The “creative outsider”
The “peacekeeper”
The “one who should be grateful”
The “golden child”
These roles take root quietly and shape how each person moves through adulthood.
A real-world example: Two siblings stepped into a succession discussion:
The eldest felt chronically overlooked.
The youngest felt pushed into a leadership role she never chose.
Neither had ever asked the parents why. When we finally gathered the family, the parents explained they had divided tasks simply based on childhood availability, not ability or preference. Yet years of silence had hardened into resentment on both sides. The issue wasn’t leadership—it was the absence of conversation.
Silent expectations breed identity quicker than anything else.
The Emotional Contracts No One Talks About
In my years of supporting family businesses, I’ve seen how many operate with unwritten rules—emotional contracts that guide decisions more than any strategic plan. They often sound like:
“Equal means fair.”
“If you grew up in the business, you should want to run it.”
“Talking about money will spoil you.”
“Hard work fixes everything.”
“You must honour the sacrifices before you.”
Individually, these beliefs seem harmless. But left unspoken, they create emotional pressure—the kind that quietly shapes decisions, alliances, and conflicts.
From a systems perspective, this is where old sibling roles, emotional triangles, and childhood loyalties begin running the show. Behaviour that seems irrational in a business context often makes perfect sense in a family one.
When Expectations Turn Into Emotional Gridlock
Family conflict rarely starts with something dramatic. I usually see it begin with something small: differences in work style, subtle feelings of unfairness, and discomfort about compensation.
When these aren’t addressed early…
communication becomes coded,
meetings feel rehearsed or on repeat,
And everyone becomes careful instead of honest.
By the time conflict surfaces, the presenting problem is rarely the real issue.
You cannot solve emotional gridlock with spreadsheets. Only once the emotional truth is understood does planning become effective.
What Actually Preserves Family Business Across Generations
After all these years of working with families, I’ve seen that the ones who truly thrive aren’t the wealthiest—they’re the ones with the most clarity.
They share certain core practices:
Regular family meetings
Early, open conversations about money and responsibility
Discussing values before discussing assets
Gradually involving and educating younger generations
Governance that reflects emotional, not just financial, reality
Addressing tension quickly
Bringing in a neutral facilitator when patterns feel stuck
These families build something more durable than wealth: shared purpose and connection.
Where Families Should Begin
Start with curiosity. Asking questions to check out your assumptions is better than making up a story about them that may not be accurate. Name expectations sooner rather than later.
In my experience, when families shift from silence to openness, trust rises, conflict softens, and decision-making becomes far clearer. If your family is navigating unspoken expectations, preparing for transition, or simply wanting healthier communication, I can help.