Recent labour data from the Office for National Statistics confirms a trend advisers cannot afford to ignore:
unemployment has climbed to 5.2%, the highest level in nearly five years, while wage growth is cooling.
Young adults are disproportionately affected. In practical terms, that means more families quietly facing a reality many planners haven’t prepared them for:
Their children may not step into stable careers as expected.
For financial planners, this isn’t just an economic statistic. It’s a planning conversation waiting to happen.
The Question Advisers Should Be Asking Clients Now
Not
“How much are you leaving your children?”
But
“How prepared are your children to build their own wealth?”
Traditional planning models focus heavily on transferring financial capital. Yet history repeatedly shows a pattern often summarised as:
“Clogs to clogs in three generations.”
(or in the U.S., “shirt-sleeves to shirt-sleeves.”)
“Clogs to clogs in three generations” — what it really means
This proverb appears in many cultures:
- England: “Clogs to clogs in three generations”
- United States: “Shirt-sleeves to shirt-sleeves in three generations”
- Japan: “Rice paddies to rice paddies in three generations”
- Italy: “From stalls to stars to stalls”
They all describe the same pattern:
Wealth created by one generation is often lost by the third.
The Three-Generation Pattern
Here’s the typical progression observers have documented for centuries:
1️⃣ The Builder Generation
Creates wealth through effort, sacrifice, discipline, and risk-taking.
They understand struggle and value resources deeply.
2️⃣ The Inheritor Generation
Grows up with comfort and opportunity. Often maintains wealth but doesn’t fully understand how it was built.
3️⃣ The Dissolver Generation
Inherits assets but not the skills, mindset, or financial discipline required to sustain them. Wealth dissipates.
Why Wealth Disappears
It’s rarely markets or taxes that destroy family wealth. The real causes tend to be:
- lack of financial literacy
- entitlement psychology
- absence of purpose or direction
- poor decision-making skills
- no exposure to work or responsibility
- weak resilience when setbacks occur
In short: financial capital was passed down, but human capital wasn’t.
What Most Families Miss
Families often focus estate planning on:
- wills
- trusts
- tax efficiency
- asset allocation
But very few create a structured plan for developing:
- capability
- judgement
- work ethic
- adaptability
- self-direction
Those are the traits that actually preserve wealth.
The Strategic Insight
The proverb isn’t really about money.
It’s about capability transfer.
Families that intentionally develop the next generation’s human capital tend to break the pattern. Those that don’t often repeat it — regardless of how large the inheritance is.
✅ Practical takeaway:
If you want wealth to last three generations, invest in your children’s capacity, not just their capital.
The reason wealth disappears is rarely poor investment performance. It’s usually underdeveloped human capital.
Why the Job Centre Isn’t the Solution
Institutions can help with job matching. They cannot solve structural shifts such as:
- AI-driven labour displacement
- Skills obsolescence cycles
- Portfolio careers replacing single professions
- Delayed financial independence
- Rising competition for entry-level roles
These forces mean that employability is no longer a one-time achievement. It’s a lifelong asset that must be designed, monitored, and actively managed.
That is a planning problem — not a labour-office problem.
Human Capital: The Missing Asset Class
Most financial plans model:
- investments
- pensions
- tax wrappers
- protection policies
Very few model:
- skills trajectory
- adaptability
- learning velocity
- resilience
- earning optionality
Yet these are the assets that determine whether financial capital grows or vanishes.
Advisers who ignore this dimension risk delivering technically accurate plans that fail in real life.
The Conversation Framework You Can Use With Clients
Here is a simple opening dialogue advisers can adopt:
“We’ve planned your finances. Now let’s plan your family’s capability.
If markets fell, your portfolio could recover.
If your children struggle to earn, your legacy might not.”
That question shifts planning from inheritance to empowerment.
Succession Planning Is No Longer About Money Alone
Modern succession planning must include structured development of:
- mindset
- skills
- purpose
- adaptability
- networks
In other words: human capital compounding.
Families that intentionally develop these capabilities dramatically increase the probability that wealth survives beyond one generation.
Where Advisers Gain Strategic Advantage
Planners who incorporate human capital planning don’t just serve clients better. They also:
- differentiate their proposition
- deepen client loyalty
- expand intergenerational relationships
- future-proof their relevance
Because when labour markets change, clients don’t just need portfolio guidance.
They need life architecture.
A Practical Tool You Can Use Immediately
The Total Wealth Plan diagnostic was designed precisely for this moment.
It allows individuals and families to:
- identify strengths and gaps in human capital
- assess life direction and earning resilience
- understand risks beyond markets
- build a structured development strategy
It’s free to use.
Advisers can also explore white-labelling it for their own practice — giving clients a powerful planning experience without building new infrastructure.
Why This Matters Now
When labour markets weaken, interest rates may fall — something policymakers like the Bank of England often consider in response to slowing wage growth. But lower rates don’t solve employability risk.
Families who rely solely on financial assets are exposed.
Families who build human capital are resilient.
A New Responsibility for Modern Planners
The profession is evolving. The planners who thrive will be those willing to widen the definition of wealth from money alone to capability plus money.
Because the true legacy clients want to leave is not just assets.
It’s agency.
✅ Invitation
Try the Total Wealth Plan yourself.
Share it with a client, friend, or family member whose children may be caught in today’s employment squeeze.
Then consider how integrating human-capital diagnostics into your advice process could transform your practice.
The next generation’s future may depend on it.
Academy of Life Planning 