Many family offices evolved the thirds rule into a 40-30-30 model.
The Structure
Category | Allocation | Reason |
|---|---|---|
Growth Assets | 40% | Equities, private equity, venture |
Hard Assets | 30% | Real estate, infrastructure |
Liquidity + Defensive | 30% | Cash, bonds, treasuries |
This structure reflects the modern reality:
• equity markets drive global growth
• real estate provides stability
• liquidity provides protection
Why Family Offices Prefer 40-30-30
Three reasons:
1. Public markets replaced trade caravans
Historically wealth grew through trade networks.
Today it grows through:
• global equities
• venture capital
• private markets
2. Liquidity crises happen more frequently
Financial crises occur roughly every 7–10 years:
Examples include:
• the 2008 Global Financial Crisis
• the COVID‑19 Market Crash
Families with liquidity were able to purchase assets cheaply during these periods.
3. Real estate became too concentrated
Many wealthy individuals over-allocate to property.
The 30% cap prevents balance sheet rigidity.
3. The Founder Problem: When 90% of Wealth Is One Company
Entrepreneurs face a structural problem:
Their wealth is already concentrated in one asset.
Example:
Asset | Allocation |
|---|---|
Startup / Company | 90% |
Cash | 5% |
Other assets | 5% |
This is normal.
But it violates every wealth preservation principle.