Philip Marcovici has spent more than 40 years working with wealth and business-owning families, as a tax lawyer in Hong Kong and Zurich and, more recently, as a writer and teacher. The lesson he draws from that career is blunt. The scale of a fortune offers no protection against what money can do to the people around it.

And sadly, I have to say that no matter what level of wealth, any amount of wealth is enough to destroy a family.

— Philip Marcovici, Wealth Office

That observation shaped his first book, The Destructive Power of Family Wealth. His second, The Transformative Power of Family Wealth, starts from the same place and asks what families can do about it. In conversation with Michael Macfarlane, Marcovici makes clear that part of the answer lies in being honest about psychology.

Everyone in the family is affected

Marcovici's description of the psychological terrain is deliberately unvarnished. He says the first step is to recognise that money makes people nuts, and he applies that to every level of the family. The founder who made the money is affected. So are the children and the spouses.

He sees particular patterns among wealth creators, including difficulty letting go, a desire for control and the temptation to use money to control the family. He goes further, saying that wealth creators are very often narcissistic, and points to the work of a psychologist friend who specialises in the psychological issues of wealth owners. The younger generation, in his account, carry different burdens. They inherit expectations set by a parent who built everything, and many feel pushed towards roles they would not have chosen. Differences between siblings add another layer.

What makes this significant is that Marcovici, by his own description, works mainly on the legal and tax side, including family constitutions. Yet he interviews each family member individually, children and spouses included, to understand what is really happening before a plan is put forward. He calls psychological issues huge derailers for families who want their wealth to be a positive factor. He also puts the stakes plainly. Wealth should not destroy a family's children, he says, but it too often does.

Preparation for everyone, including those who inherit last

A recurring theme is that families tend to prepare only part of the family. Marcovici describes patriarchs and matriarchs who concentrate on the children who come back to Hong Kong, Dubai or Saudi Arabia to work in the business, and neglect those who live elsewhere or pursue their own careers. He regards this as a waste of resources.

He applies the same logic to women. Marcovici is sceptical of the claim that women are inherently better stewards or philanthropists, saying that both women and men can be good or evil. His point is practical. Women, he says, always end up with the money, because they live longer than men, or through divorce. He has seen cases where an elderly widow was placed under undue pressure to change the letter of wishes in a trust because she had been given too much power in the succession process. Unprepared family members, in his experience, become dependent on advisers or on their spouses.

This leads to one of the more memorable principles in the conversation.

No one should be trusted, not because they can't be trusted. But if you take the approach and ask yourself, what are the things that can go wrong and you are really operating from that basis, it's a much safer way for everything to be planned.

— Philip Marcovici, Wealth Office

The principle is less cynical than it sounds. Marcovici frames it as a planning discipline. Arrangements built on the assumption that everyone will behave well can fail when circumstances change. Arrangements built by asking what could go wrong are designed to withstand it.

Culture is no excuse for silence

Marcovici has heard many families explain why their succession will be different. Chinese families have told him they do not fight. Indian families have said they all live together in the same compound. Middle Eastern families have pointed to Sharia law. His response is that culture matters but is overplayed, and too often used as an excuse to avoid the work of planning for succession and transition. He notes that the wealthiest families in Hong Kong, Taiwan and Singapore, and Indian families too, have been at each other's throats, with fights and litigation.

The bottom line is culture is important. However, it's way overplayed and it's way used as an excuse to not do the work necessary within families to really think about succession and transition.

— Philip Marcovici, Wealth Office

His alternative is open communication. Because success in succession is dictated by the next generation, he argues, the next generation needs to be involved in the process. That means older generations sharing the plans they have in mind and listening to what their successors believe they can make work over the long term, since the outcome will be in their hands.

Purpose as a stabiliser

Marcovici does not treat the psychological problem as permanent. He describes a virtuous circle that begins when a family focuses on the purpose of its wealth and how it can benefit the communities around it. In his account, that focus supports the mental health of family members, strengthens their resilience to guide the family across generations, and spurs them on to grow the family's business and wealth engine. Macfarlane adds his own observation that the satisfaction of material possessions fades quickly while the responsibility of wealth remains.

Marcovici gives an example from his work. A daughter who was receiving a couple of hundred million US dollars from her father intended simply to give it away. Marcovici suggested that stewarding the money and using it over generations to do good might magnify the benefit to society. The idea resonated. She became more interested in impact, and also in helping to steward the larger assets the older generation would eventually pass on.

The lesson extends well beyond the very wealthy. Marcovici insists that how parents decide to leave a family house or a few hundred thousand pounds can matter even more to their children than the decisions of a far wealthier patriarch. The psychology is the same at every level. So is the need for preparation and honest conversation.