Best Practice #1: Provide age-appropriate transparency

“What do we tell the children?” is at the heart of the best practice on age-appropriate transparency. But it isn’t just what to tell the children — it’s also when and how.

We’ve often heard from clients that they have a fear of letting children, even adult children, know about money set aside for them. There’s the fear that wealth-in-the-wings can be a de-motivator in preparing for adulthood and that money will result in the child being unproductive. The problem with giving in to these fears, though, is that children will know about the wealth someday. So then, the question becomes: How and when are they going to learn about it?

The answer to “when” is very personal and specific to each family. Many parents pick an age or a milestone — such as graduating from college — and begin including the children in family meetings and discussions about the family’s wealth. A very general rule of thumb is that in their early 20s, as young adult children are beginning to understand how to live on their own and within a budget, the concepts of money, our financial system and the use of debt become less abstract and more of a reality. 

In working with clients, we have developed a method to help answer "how", by presenting the bigger picture of the family's overall wealth plan, with or without numbers. Additionally, where trusts are part of the wealth plan, we introduce the roles and responsibilites involved in productive trust relationships. It's important to remember that the 'what to tell the children' discussion really should not be a one-time event, but a series of conversations that on one another

Best Practice #2: Create a learning environment

We live in a complicated world, and wealthy families have complex financial lives. It can sometimes be difficult to understand one’s own total investment, financial and planning picture, much less teach that to a young adult child. Nevertheless, financial education of the rising generations is critical to helping them be well prepared for their roles in the family, their career and their community.

People learn in many different ways. For this reason, we have developed a series of ways to present important financial concepts in engaging ways, however one best learns. That may mean hands-on, through conversations with a member of the relationship team, visually, through an engagingly designed class setting or digitally, through a financial education podcast series.

By developing their financial competency, a family’s young adults will be able to gain insights into local and global investment opportunities and understand strategies for philanthropy.

Best Practice #3: Encourage opportunities for involvement

To go further into a learning environment that engages and empowers future generations, engaging in family philanthropy can help create a story of the future for a family that involves, inspires and empowers younger generation family members.

Sometimes, a family will have a unified passion. Often, it will have many passions. Working together in an exercise to identify big-picture causes, like education, the environment, faith or human rights can be a far-reaching philosophical exercise uncovering numerous opinions and opportunities for involvement within the family circle.

Strategic philanthropy is not a priority for everyone. For those families, there are other avenues for involving younger generation family members in the overall wealth plan. We have helped clients put plans into place to allow younger generations to share in wealth ownership and have a voice in investment decisions that are meaningful to them.