Clients often ask, “When is the right time to talk with my children about wealth?” Truth be told, there is no one right answer to this question. Many parents are uncomfortable sharing information about their wealth with their children out of fear that such knowledge may stifle a child’s ambition or willingness to work, concern that children will share this information with others, or simply because they don’t know how to best broach the topic. However, it’s important to remember that the better you prepare your children for the wealth they will one day inherit, the greater the likelihood that they will have the skills, education and values to appropriately manage the wealth for themselves and future generations.

In starting this conversation with your children, consider CIBC Private Wealth’s three guiding principles for discussing wealth with the next generation:

1. Provide age-appropriate transparency
2. Create a learning environment
3. Encourage opportunities for involvement

Principle 1: Provide age-appropriate transparency

Your children may know more about your wealth than you think. Many items that indicate wealth—for example, the value of your home, your job title/position, the company you work for, the gifts you give or vacations you take—can often be valued or monetized online. Even younger children can recognize their relative wealth based on the size of their home, the schools they attend or the benefits available to them. Accordingly, providing age-appropriate transparency can help put your wealth into perspective and begin conversations about what it means to earn and maintain wealth.

Age-appropriate transparency does not necessarily mean sharing financial statements with your children—unless you want to. Instead, transparency is more about providing guidance around how to think about wealth and how wealth is earned and maintained. When the time is right, it is also about educating the family on your estate plan and your expectations and wishes for how the money will be used.

Some steps to provide age-appropriate transparency include:

• Discuss the type of work and discipline that is required to support the family and the family’s lifestyle. This can be a great primer, even for younger children, to understand what it might require to sustain or build a child’s own wealth.   
• Explain what you expect to provide in terms of financial support as your children start to gain more independence, and what you expect your children to contribute themselves. This type of discussion can provide important insights as to future expectations. For example: 
  • Is an allowance contingent on helping around the house? 
  • Is your child expected to work in high school or college? 
  • Are there any expectations for grades or other contributions if you are paying school tuition?  
  • Will any support be provided once the child is no longer living at home and, if so, are there any requirements to receive this support?
• When the time is right, provide transparency and education around your estate plan to offer additional opportunities to discuss values about wealth preservation and vocalize your expectations for how the wealth should be used. If you also plan to name a child as an executor or trustee (or co-fiduciary), these conversations can be critical to helping a child make important decisions related to these positions.  

Principle 2: Create a learning environment

To help better prepare your children for wealth, create a learning environment where financial planning essentials and investment fundamentals are modeled, discussed and taught. There are lots of ways to do this, but consider some of the following ideas:

• For younger children: Having money in hand is a good way for children to begin a financial education, whether it’s received through gifts, an allowance or the neighborhood lemonade stand. Talk to them about what they can do with this money, and introduce the idea of savings. 
  • Encourage your children to save a regular amount of their money in their piggy bank, because it helps children develop financial discipline. 
  • Incorporate the “rule of three” by asking your child to divide money into three categories: saving (for longer-term goals, like a new bicycle), spending (for short-term wants, like a toy) and giving (for someone in need or a contribution to a local cause). 
• For middle and high school-aged children: At this stage, your children will have interests that become more expensive. Whether it’s electronics, musical instruments, movies or concerts, your children will likely be spending more and looking for financial support. 
  • Begin talking about the ways you will (and will not) support their spending and introduce tools, such as a budgeting app, to help them learn responsible spending and money management. 
  • Introduce the basics of investing and finding real-world opportunities. For example, have them set up their own brokerage accounts and pick investments to get a jump-start on their financial literacy.
• For college-aged children and young adults: As young adults, your children will likely have many financial questions that arise as they navigate living independently, starting internships or jobs, paying taxes, and so on. This is a great time to introduce your child to advisors who can help them navigate the often-confusing world of W2s, 401(k)s, mortgages and investments. 
• For adult children: No matter how old your children are, there are always opportunities for learning and growth.  
  • Consider sharing lessons about your own financial successes and failures. What do you wish you had done differently? What were your biggest financial successes and failures? These discussions might prove very helpful to children who have more life experience and can appreciate these insights.  
  • As children marry and have families of their own, they may need more assistance thinking about their own long-term financial planning and support of their families. This is where transparency to your wealth and plans for that wealth can help your children devise their own financial and estate plans.  

Principle 3: Encourage opportunities for involvement

This last principle considers opportunities to involve your children in financial or investment decisions that can help demonstrate important family values and foster an environment of cooperation among your children or additional generations. Involvement can come in many different forms, but some examples include:

• If your family regularly gives to charity, consider allocating a yearly amount for the younger generation(s) to decide together which charities or causes to support.
• If you hold an annual family meeting, consider having your children and grandchildren participate in for all or a portion of that meeting.
• Set aside some funds (small or large) and ask family members to offer suggestions for investment opportunities that are aligned with expressed values. If you have not previously had a conversation about values, this exercise can also open the door to initiating that discussion.

How can CIBC Private Wealth help? 

We understand that you are as concerned with preparing your children and future generations to receive wealth as you are with the mechanics of your wealth transition plan. To assist in these conversations, CIBC Private Wealth offers a variety of tools, workshops and opportunities to support the three guiding principles for discussing wealth with the next generation.

Early Risers: Our Early Risers material provides a collection of books, toys, games and apps geared toward financial understanding and education for children as young as four and continuing through high school.

Wealth Your Way podcast series: The Wealth Your Way podcasts offer discussions on financial concepts for young adults as they make their way from college to first jobs, first homes and beyond.  

Education materials: We have many educational materials for young adults with information on topics ranging from understanding the importance and power of saving to estate planning. 

Social media: Our social media feeds on Twitter and Instagram produce focused insights on the basics of financial planning topics.

Legacy workshops: Legacy workshops can involve many members of the family in engaging sessions around financial education, family wealth stewardship and philanthropy. They include:

• Abridged wealth plan review workshop: Discuss the family’s current wealth plan and wealth goals with younger family members. The level of transparency and information the client is comfortable sharing can range from complete disclosure to sharing only the big picture (without numbers).
• Trust fundamentals workshop: Educate the younger family members on how a trust works, what it means to be a trustee and a beneficiary, and the roles and responsibilities of each.
• Planning essentials workshop: Educate younger family members on financial planning, investment fundamentals and estate planning with topics such as credit and lending, basic investing and revocable trusts.
• Effective philanthropy workshop: Articulate a vision and design a path that will allow the family to achieve their philanthropic goals. 
• LLC planning workshop: Educate the family on LLC planning basics and how they can be an excellent hands-on vehicle to allow younger family members to get involved and share ownership in investments. 
• ESG fundamentals: Educate participants on environmental, social and governance (ESG) investing and how it allows a family to align investment decisions with their unique values, goals and preferences. 

Virtual events: Virtual events allow family members to gather to hear world-renowned speakers on topics of universal importance, as well as more intimate events that combine entertaining activities and investment topics.

Our tools, workshops and opportunities are designed not only to help start and facilitate conversations with your children about wealth, but also to give you steps to begin your family’s legacy planning. Engaging in these conversations with your children is not necessarily a linear exercise—it’s a continuum—and we are ready to work with you and your family at whatever point you find yourself.  

Beth Mayfield is a senior wealth strategist for CIBC Private Wealth Management in Atlanta, with more than 25 years of industry experience. 

Caroline McKay is a senior wealth strategist with CIBC Private Wealth’s Boston office, and has 13 years of industry experience.