Despite the fact that a family’s financial health is one of the greatest indicators of both children’s future success and a healthy retirement, too many families treat money as a taboo topic.
Frequently one person in the household takes responsibility for the vast majority of financial matters. While this can be fine and functional for the day-to-day needs, it is important to engage the entire family in the bigger-picture conversations.
As a financial advisor, understand that people may not naturally engage in these types of conversations because they don’t feel equipped or knowledgeable. By bringing the conversation to everyone’s shared level of competence, you can make them feel part of the process, which can lead to more holistic buy-in and appreciation of the financial advice.
By engaging everyone in the family you have the ability to see and construct a financial plan that fits the household’s needs and unique risks in a truly bespoke way. To help clients get started, have them focus on three topics that greatly affect most families: children gaining financial independence, late life planning and estate realities.
Preparing Children for the Real World
Look to tools designed for millennials, such as Mint and Capital, as these are easy starting points. Explain how investing and compound interest benefit the young, and start investment accounts at robo-advisors to build investment and market literacy. Parents can even have older teens or young adult children join the conversation when visiting their financial advisor.
In addition to investing, encourage children to invest into their own education and career development. Every college in the U.S. has some sort of on-campus employment office, and while some jobs might be earmarked for students on financial aid, there are invariably going to be some opportunities to make some money during free time.
One novel idea taps into policies employed by most employer-driven retirement savings plans. Much like some employers will match retirement savings contributions that employees make, advise clients to set up a plan with their children that matches a percentage of income that they make during the school year.
Planning for Late Life Care
For most individuals, preparing for retirement and later life care is the primary motivation for investing. It is important to keep in mind that any conversation around aging parents is inherently going to be emotional and necessitate a delicate touch. The thought of aging, potential long-term care and assisted living, and the passing of loved ones are all conversations that people will go to great lengths to avoid.