As trusted financial planners we take good care of our adult clients through holistic long-term financial planning while building strong relationships. In addition, there are many of us delivering added value by taking it a step further to include all family members in the conversation, including children. Doing so opens up the possibility to build a long-term pipeline with our clients’ children who could be our clients of the future. This also provides crucial education and drives awareness of the importance of financial planning.
A holistic financial plan should aid in promoting financial literacy to our clients’ children as well. With children, the goal is to create strong financial habits as they move through each life stage, categorized to the following age categories: four to eight, nine to 13 and 14 to when they earn their own income or leave the house. At each stage, it is all about age-appropriate systems and disciplines to instill better money practices with children. My saying is, it’s better to bend the little tree while you can in its young stages, before it is older and no longer pliable.
Use the Communications Vehicles Kids Already Use
There is no doubt that we all develop beliefs and attitudes towards money from observing the way our parents and peers use money. The problem is that a lot is changing with major disruptors in the industry, changing the ways we can access and plan our finances. For one, technology can be used to our advantage. As advisors, having constantly accessible smartphones and social media we can guide our clients and their children with an app or web resources. These tools provide the opportunity for continuous open dialogue within the family, as well as strong money management habits formed over time. Using the communications vehicles that children are already using makes it easier to encourage the use of suggested resources, versus lecturing them.
When you do need to use reading material, make sure it is something with an overall story to keep their attention, versus purely educational content. I prefer to use YouTube clips that bring the message to the new generations. However, if the generation gap is simply too big, then use a younger advisor as a resource to connect with the children and who can suggest where to find the most interactive tools.
Long and Short Term Goal Setting
From a young age, using the children’s allowances as an opportunity to teach the benefits of budgeting and savings. In their own planning, let them keep track of details on each spend. This is especially important since these days children have debit cards and the real feel of money is non-existent in so many cases.
Education with the whole family should include goal setting for special short- and long-term objectives. Through this, you can help your clients show the children what is possible if they were to save a portion of their allowance, or learn how their parents plan for the Disneyworld trip for the family in five years. Involve them in this discussion so they can see what needs to be sacrificed or controlled to make a dream family trip a possibility with savings.
There should be a monthly meeting with client’s children to help them measure against the objectives they set. It’s also good to have pictures of the objective throughout the family’s house or the meeting place. This provides a visual to see what you’re saving for and keeps everyone in the family-controlled on spending without always having to cut back on something. The goal is to show children how using money effectively can lead to short- and long-term goals, whether that be with the monthly groceries and cutting down on the “must have” versus “nice to have.”
My professional organization, The Financial Planning Institute of South Africa, also has a “MyMoney123” program for the community which we as financial planners and members, can use to educate our clients’ children. Through this, we provide piggy banks to ensure young generations can learn and be interactive. The program opens the opportunity for families to educate each other and friend’s children with a “children’s day” at a friend’s house where we present to multiple children at once. This also gives parents the opportunity to connect with new prospects while at it.
Increase Involvement as Kids Get Older
As the children get older, have them join your annual review meetings with the parents and focus on simplistic ways to grow their knowledge. If you propose an element of the family’s plan that is related to the children, such as an education plan, get the kids involved. They can work the calculations out for you with an app or calculator, allowing them to learn more by way of involvement and see the direct impact it has on them and their parents.
Another fun way to boost children’s involvement is to get multiple family clients together and start an investors club. You would manage and host at a family’s house or if a bigger venue is required, at the local community center. This is a great way in building up an interactive group of adults and teaching the very basics of shares, bonds, asset classes, buying and selling shares and units. Most of this can be done with virtual money through share platforms and apps as well. It has to be fun, interesting and interactive, maybe even include young speakers who come in and use technology to grab the attention of the children.
I really believe it should be a process rather than a one-time meeting. The sooner, and the younger the kids are, you and the family should start with education and awareness. The stronger the value proposition and added value will become to your clients and their children and create so many other opportunities for you.
Latest posts by Kobus Kleyn, CFP (see all)
- Helping Clients Teach Their Children About Finances - October 24, 2017