It’s safe to say that anyone who spends a lifetime building wealth wants to ensure that it’s managed well for generations to come, to have a plan in place not only for the next generation, but for the ones that follow as well.
For families with adult children — especially those who are transitioning into a new life phase, such as graduating, beginning careers, or even starting families of their own — it’s important to plant the seeds of financial planning early.
We have clients we’ve worked with since the mid-1990s when their children were tweens. As the children became adults, their parents brought them in and passed on a gift to work with our firm. These grown children now work independently with us and their families. It’s really special because now the third generation is growing up, and they know who we are and how we can help.
If you’re contemplating the best way to help a young adult in your family get started on financial planning, consider these following reasons:
1. STARTING EARLY GIVES YOU AN ADVANTAGE
The earlier you start planning, the higher the likelihood of success. Take two 22-year-olds — one who maxes out his 401(k) for 40 years and one who waits. The one who waits never catches up. Getting an early start provides an advantage no matter what kinds of recessions come and go.
2. SHARING A PLAN MAKES TRANSITIONS EASIER
When an entire family uses the same financial planner, it’s easier to move through the seasons of life together. As the older generation starts to age, you want an easier transition where everyone knows what the plan is for all the assets. Unfortunately, we have seen some children face unexpected parental loss and then struggle to pick up the pieces and navigate complicated financial terrain.
As our clients’ children became adults, their parents brought them in and passed on a gift to work with our firm. These grown children now work independently with us and their families. It’s really special because now the third generation is growing up, and they know who we are and how we can help.
3. IT’S GOOD TO HAVE EVERYTHING IN ONE PLACE
Think of your financial planner as a hub for all records, account access and measurements against goals — and during times of transition, there will be less upheaval. When we work with multiple generations of a family, we help manage the transparency, so people know what they need to know when it’s appropriate. There is usually no need for the youngest generation to have the whole picture, for example, until they’re more mature or when
the parents or grandparents want them to know.
The key is to have a financial plan, and it’s our role to help bring organization and continuity to each relationship.
4. YOU WILL NEED A NEUTRAL PARTY TO HELP YOU
As financial planners we are dealing with human emotions and the psychology of money, and our focus is on helping all parties make the right choices from an objective point of view. We didn’t earn your money, so we don’t feel the same way you do about it. We can act in a way that is not clouded by emotion. Sometimes, people have a hard time making investment decisions on their own when family is involved, and we can help in this process.
At BWFA, we always tailor our approach to each person or family with transparency, objectivity and thoughtfulness.
ROBERT G. CARPENTER
President & CEO