Let’s talk about mega-millionaires John D. Rockefeller and Cornelius “The Commodore” Vanderbilt.

Think of them as the Elon Musk and Jeff Bezos of their time, the richest of the rich during the Gilded Age, that two-decade stretch from the late 1870s to the late 1890s when America experienced massive growth, was modernized by such innovations as electricity, automobiles, and skyscrapers, and mesmerized by the super-rich “Robber Barons.”

Robber Barons were the glitterati of the Gilded Age – the rich-and-famous that everyday Americans read about, gossiped about and both loved and hated (often at the same time).

And if we’re talking about the top money tales of the Gilded Age, the story of the Rockefellers and the Vanderbilts is tough to beat. It’s a tale of two families whose fortunes both soared … then later diverged.

You see, the Rockefellers pioneered “generational wealth” strategies, in much wider use today, to protect and magnify their family fortune. Even now their wealth continues to make an impact.

The Vanderbilts went broke.

With parties and spending and mansion-building, successive Vanderbilt generations blew through their inheritances… and the family had to start over – with family heir and current media star Anderson Cooper finally rekindling some of what his family predecessors had squandered.

John D. and “The Commodore” were the multimillionaires of their day. And they demonstrated the “dos and don’ts” of generational wealth management – strategies that are surprisingly accessible today. What once was the province of the mega-wealthy can now apply to many ‘mass affluent’ investors, who’ve accumulated a million dollars in wealth … or more.

The Rockefellers did it right. The Vanderbilts did it all wrong.

These are the mistakes to avoid…

I’m sharing this story for a couple of reasons.

First, the tale itself is just super-cool – kind of a gossipy, must-see TV look back at the Gilded Age. The hit HBO dramatic series, The Gilded Age (just picked up for another season) proves that.

Second, and more relevant to folks like you and me (and to our money and our financial futures), this saga of fortune-and-failure is more than just a high-dollar “cautionary tale.”

For sure, you want to be a Rockefeller – and not a Vanderbilt.

And those “generational wealth strategies” that I mentioned … the ones the Rockefellers used … and are still using?

You don’t have to be Rockefeller rich to put them to work: You can likely use them, too.

If you’re reading this, you probably want to use them. At the very least, give them a careful look.

I mean… do you view yourself as a high achiever? Have you amassed a decent-sized nest egg – maybe $500,000… $1 million… $2 million… or more? When you look at the latest financial research, are you surprised (though maybe a bit skeptical) to see you’re considered “wealthy?”

Let’s say you answered “yes.” So, you have wealth… are building wealth… and want to share that financial windfall with your kids, grandkids and their kids to come…

You’re not alone: you’re at the leading edge of a generational wealth wave – an estimated $84 trillion that’ll be passed down to children, grandchildren and philanthropic causes.¹

As we approach the cusp of this historic transfer, lessons of the past can light the path forward … and keep us from repeating past mistakes (like the miscues of those Vanderbilt heirs).

And the lessons here are stunningly simple. By that I mean:

• The “wealth secrets” used by the Rockefellers are labeled as such only because they’re not widely known.
• You don’t need to be a billionaire – or even mega-millionaire – to make these “secrets” work- not even close.
• But you likely do need an expert to guide you – an experienced pro who can tailor those strategies to your specific goals.

More on that in a moment; let me first finish my story…

ALL THAT GLITTERS…

The term “Gilded Age” was coined by authors Mark Twain and Charles Dudley Warner in their 1873 novel “The Gilded Age: A Tale of Today.”

The players of that time included heavyweights like:

• Steel magnate Andrew Carnegie
• Speculator Jay Gould
• Financier J.P. Morgan
• Vanderbilt, who made his money from railroads and shipping
• And Rockefeller, who made his money from oil and who became America’s first billionaire during World War I.²

Rockefeller’s fortune grew to an estimated $1.4 billion at the time of his death in 1937 when it was equal to about 1.5% of America’s gross domestic product. In present-day dollars, that $1.4 billion would be about $426 billion.^{3 4}

To better understand just how rich Rockefeller was, compare his wealth with some of the other “Gilded Age All Stars,” including Vanderbilt. And see how big their fortunes would be in today’s money:

Most of John D’s fortune came from Standard Oil, the energy company he founded in 1870 that (at its peak) controlled 90% of America’s petroleum market.

The Rockefellers did wealth right – in a lot of ways.

Like fellow robber baron Andrew Carnegie, John D. and his son, John Jr., dedicated themselves to philanthropy – giving away more than $1 billion and creating the University of Chicago. John D’s grandson, David, was the world’s oldest living billionaire when he died at 101 in 2017 – 100 years after the oil titan first achieved billionaire status himself.

David Rockefeller willed most of his wealth to charities.

Fast-forward to the present day: The Rockefeller fortune, even when spread across more than 200 family members and all their spending, is still worth in the neighborhood of $10.4 billion, Forbes says.⁵

And here’s how they perpetuated the family wealth…

In the early going, the Rockefellers used irrevocable trusts – created by John Jr. i55n 1934 for his children and in 1952 for his grandkids.

These trusts, managed by Chase Bank, included stakes in Standard Oil and other investments, including real estate.

As the fortune grew – in both size and complexity – areas of specialization were created,⁶ including:

• Investments
• Venture capital
• Family businesses
• Family-liability insurance
• And risk-management

Some family money is run by Rockefeller Capital Management, which is owned by hedge fund Viking Capital Management, Canada’s Desmarais family and a Rockefeller family trust. It includes a unit known as Rockefeller Global – a “family office” that acts as a specialized money manager and legacy planner for just that family.

View this like a personal team to manage your money – using asset-building and tax-minimizing blueprints that are tailored specifically to your needs.

Over time, the strategies evolved to include:

• Life Insurance for Wealth Protection, which has an array of benefits.
• Irrevocable Life Insurance Trusts (ILITs) – where life-insurance policies keep the death benefits out of the insured’s estate, thereby avoiding estate taxes. The trust owns the policy, and the beneficiaries receive the proceeds tax-free.
• Long-Term Dynasty Trusts – which can be structured over multiple generations. They help protect assets from estate taxes, creditors and mismanagement. The Rockefellers use dynasty trusts to preserve and pass wealth down in the most-efficient ways possible.
• And Premium Financing – where wealthy families sometimes finance the insurance-policy premiums – using the policy’s cash value or death benefits to repay the loan.

There are very real potential benefits – tactical and strategic – to these wealth-management approaches, including:

• Tax Efficiency – since the policy proceeds are generally tax-free, a huge bonus when it comes to estate planning.
• Asset Protection – trusts and life-insurance policies shield assets from legal challenges and potential creditors.
• And Wealth Transfer – since smooth transfers (and continuity) are really the bottom line when it comes to generational wealth.

One example: The death benefits from insurance policies for each passing family member keep the trusts funded from one generation to the next, by paying off loans taken against the assets. Loans that don’t need to be paid back until that most unfortunate event. So they rarely need to touch the principal to live.

If we agree the Rockefellers are a family that’s done it right, it’s fair to say the Vanderbilts are the opposite.

And that’s the next chapter of our own Gilded Age tale…

REVERSAL OF FORTUNE…

When “The Commodore” died in 1877 at the age of 82, his net worth was estimated at $105 million.

His son, William Henry, more than doubled the family wealth – boosting it all the way to $230 million.

It all went to blazes from there.⁷

Lavish spending, new federal taxes in the 1920s and ‘30s, repeated divisions of that wealth and a lack of new wealth growth, scandals and family feuds (including divorces and custody battles) and the Great Depression eradicated what had been one of the biggest fortunes in America.

One historian talked about “Vanderbuilding” – the habit of family members in each generation to build mansions or palace monuments to themselves – which drained those dollars away.

And, in a stroke of irony, most of those have been leveled in the decades since. Even The Breakers – the Gilded Age mansion the Vanderbilts built in Newport, R.I. – was later ceded to a historical society.

That brings us to the present day – and CNN anchor Anderson Cooper, the great-great-great-grandson of The Commodore.

Anderson’s mother, the late Gloria Vanderbilt, was a prominent family socialite herself. But Anderson has often recounted his own observations of the Vanderbilts’ poor money habits – including his own mother’s lack of a financial plan – and the terror he experienced when he discovered that the legendary family’s legendary wealth was gone.

As Cooper once told reporters of his childhood: “I heard her on the phone saying to a friend of hers, ‘Well, I’ll always be able to make money.’ And I remember stopping and freezing when I heard that and thinking, ‘We are doomed’.”

In his book, Vanderbilt: The Rise and Fall of an American Dynasty, and his CNN podcast “All There Is,” Anderson even says his mom hit him up for a loan.

Gloria experienced her own Vanderbilt trajectory.

As a child, she was the subject of a scandalous court battle – where her mother and paternal aunt squared off over her trust fund.

An actress, author and fashionista, Gloria engineered a comeback of her own. In the 1970s, she launched a line of eponymous fashion items, including perfumes and home goods. She also created a very successful line of designer jeans – among the first specifically designed for women.

When she died at the age of 95 in 2019, her net worth, Anderson’s inheritance, was only $1.5 million.

Anderson created a new start – for the Cooper branch, if not the Vanderbilts.

He became a correspondent for ABC in 1995 – landing the co-anchor’s role on World News Now four years later. In 2001, he left ABC for CNN, where he reportedly earns as much as $20 million a year.

His estimated net worth: Between $60 million and $200 million, recent news reports say.⁸

Somewhere, The Commodore is smiling again – but only after generations of sorrow.

NOW IT’S YOUR TURN…

At WorthNet, we strive to help “Build Rockefellers.” And “Avoid Vanderbilts” – among us non-billionaires, that is, who probably won’t attract Chase’s private bank or can’t afford a dedicated family office.

Our network of independent, experienced adviser partners offers financial, investment and estate planning services tailored to each client they serve.

If you want to see how trusts, specialized insurance and other Rockefeller-inspired strategies might help preserve more of what you’ve built for future generations – while preserving the flexibility to use it if you need it – connect with a partner adviser today.

Whether you’re looking for help with estate planning, tax efficiency or risk management, you’ll be paired with the partner adviser best matched to your goals.

The consultation is free – no obligation – and might show you ways to enhance your wealth and find financial peace of mind. Get matched with one of our handpicked adviser partners.