Financial Planning: A Family Affair

As financial advisors, we take care of our adult clients through holistic, long-term financial planning, but have we each thought about the impact including the client’s family in the planning dialogue might have for our business? By bringing our client’s children into the conversation, we can help instil crucial education about money management, drive awareness of the importance of financial planning, and potentially extend the relationship with our clients to additional generations.

Creating sound financial habits in children helps provide a foundation of good practices upon which they can build. We can do this most effectively by providing age-specific educational materials. Children aged four to eight will benefit from one type of information while children nine to 13 and 14 to when they earn their own income benefit from different information. There are excellent resources for each stage and starting sooner rather than later allows us to bend the little tree before it is older and no longer pliable, so to speak.

Choose your method of communication wisely
Research has proven beliefs and attitudes towards money develop by observing the relationships our parents and peers have with it. But even the most responsible role models cannot foretell the way we will access and plan our finances in the future due to constant changes in technology and the financial world. By using the technology our clients and their children use daily helps us as advisors stay connected to the technological disruptions they are encountering and can help us meet them where they are and more easily educate them on financial matters.

Consider using smartphone technology and social media outlets to solidify money management habits and provide a continuous, open dialogue within the family, reducing or eliminating the feeling of being lectured or judged. I prefer to use YouTube clips to engage younger clients and have found that reading material with an overarching story is much better at maintaining the readers’ attention than material without a storyline.

Long- and short-term goal setting
Education with the whole family should include goal setting for special short- and long-term objectives. I encourage clients to include their children in financial goal setting discussions, so they see first-hand how their parents take care of the family necessities like food and bill payments and understand how the choices made affect, positively or negatively, the planning of the family Disneyworld trip in five years.

Using the child’s allowance as a tool to teach budgeting and saving builds confidence for achieving their own financial goals and using real money lets children see physically what spending and saving looks like. The goal is to show children how using money effectively can lead to short- and long-term goals, whether that be helping with the monthly groceries or cutting down on the “must haves” versus “nice to haves.”

Programs and initiatives to educate kids
There are many ways advisors can encourage financial education and child involvement in finances. My professional organization, The Financial Planning Institute of South Africa, has a “MyMoney123” program to educate our clients’ children. We provide piggy banks to promote learning and interactivity and invite families to a “children’s day” in which we present educational topics.

As children get older, have them join your annual review meetings with their parents and focus on simplistic ways to grow their knowledge. If you propose an element of the family’s plan related to the children, such as an education plan, get the kids involved. For instance, they can work the calculations out with you, which builds their knowledge and demonstrates the direct impact 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, an interactive group that gathers to learn the basics of shares, bonds, asset classes, and buying and selling shares and units. Most of this can be done virtually through shared platforms and apps that can make it fun, interesting, and interactive.
Building financial literacy should be a process rather than a one-time lesson. By making financial education and awareness a priority for our clients and their families, we can not only demonstrate our value, but create lasting impacts for multiple generations.

Kobus Kleyn, CFP, is a 9-year Top of The Table MDRT member and a Certified Financial Planner at Kainos Financial Services. Kobus is the author of three books and will soon be launching his 4th book, Accelerate Your Brand.