Todd Rhine

Hilton Head Island financial advisor Todd Rhine has been thinking a lot about the stability of the American family in the wake of the coronavirus pandemic. He is one of a growing number of professionals who apply centuries-old techniques to help families get stronger and more united now, and then stay that way for generations.

Those techniques are a response to the 90% rule that has devastated families around the world since recorded history began.

“In families where wealth is created in the first generation, the money is blown by the second generation, in 76% of all families,” Rhine said, “and, by the third generation, the wealth vanishes in 90% of families. Even worse, the family itself is often torn apart.”

For hundreds of years, professionals focused on the reasons that families fail, and then tried to save their clients from those disasters after they happened.

Today, advisors ask a far more important question: “If 90% of families fail, what do the successful 10% do differently?” How do they pass their family unity, values, life lessons and assets successfully from one generation to the next?

For Rhine, that question has become more than an academic exercise. In addition to his advisory business, he is also the owner of Rick Bent Flooring, a family business that three generations of his own family work in. “It has taken the legal and financial professions decades to figure out how successful families manage to thrive across generations,” said Rhine. “I have applied those lessons with clients, and now I’m applying them with my own family.”

What researchers discovered is that families who remain strong over time share 12 elements of success in common. Different families practice the elements in their own ways, but virtually every successful family studied through history follows all 12 to some degree.

“None of these practices have anything to do with money,” says Rhine. “That’s because planning for the future of your family is not the same as planning for the future of your money.”

According to the research, the single most critical element for sustaining family wealth and unity is fostering strong and effective communication, and building trust between generations. Most people assume that families fail because of poor planning and investments.

In fact, in a study of 3,250 families who actually lost their wealth, 85% said it was because of a combination of poor family communication and trust, and a failure to prepare the children not just for their financial inheritance, but also for their far more important emotional inheritance.

Rhine understands that the 90% rule can impact his family flooring business as much as any other business. But, as a financial advisor, he also knows that while there might be bad times to invest in markets, there is never a bad time to invest in your family – including in the middle of the COVID-19 pandemic.

“It may sound simple, but it is true,” Rhine said. “The only proven way to keep your family and your assets strong and united across generations is by putting your family first.”

B.R. Haga focuses on issues that impact families across generations.