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How can my advisor help my children build a sound financial future?

How can my advisor help my children build a sound financial future? © iStock

Fiscal and child-development experts say that a person’s financial philosophy is formed at a young age. That said, there still is much parents can do for their children at any age to help them build a secure financial future.

Parents, however, may face many challenges in educating their children about the family’s financial circumstance and how to successfully manage it. In these situations, a wealth advisor can be a valuable “teacher’s aide.”

What follows is a curriculum for parents to use in educating their children about family financial affairs, and suggestions for how your advisor can help impart these important lessons.


Parents can set the tone for their children’s financial development by encouraging them early to save, especially to tax-advantaged accounts. As soon as a child has earned income, help him or her make deposits to a Roth IRA. This retirement money can eventually be withdrawn tax free. Earning limits, however, mean that a child may qualify for a Roth only for a few short years, so it is important to take advantage of that window.

Similarly, encourage your children to contribute to workplace savings accounts such as a 401(k) as soon as possible. A Roth 401(k), if available, is ideal while the young earner is in a low tax bracket. Get specific. Do not simply tell your children to save. Give them a number.

Your financial advisor can help you model the savings that a young earner can accumulate by regularly putting away 10 percent to 15 percent of income as soon as possible.

Get specific. Do not simply tell your children to save. Give them a number.


Beyond retirement accounts, teach your children about general investing. You financial advisor definitely should be involved in this lesson. If your children’s custodial or trust accounts are distributed to them, or if they become their own trustee, they need to understand investments and how to engage with professionals who can help. This money also could have an effect on any taxes these young persons will eventually owe.

Discuss how inherited or gifted assets also can have different tax consequences. If one of the gifts is a concentrated stock position, your children need to understand the risk of having a non-diversified portfolio. Also help them understand the importance of aligning a portfolio with their personal goals for the future. Those goals could entail a down payment on a home or preparation for children of their own.


The most challenging component of your children’s financial education is helping them understand your complex estate plan. By working with your wealth manager, you have established a sound strategy to maintain and pass along wealth to future generations. This is accomplished through gifts, trusts, family limited partnerships and other financial tools.

However, in many cases, the parents who establish these plans are not comfortable communicating the details to their children, even though the parents are often the ones ultimately charged with carrying out these plans. As a child’s maturity and knowledge increases, start involving him or her with the specifics of your estate plan. Your advisor can help fulfill the critical role of communicating your intentions, as well as the action plan to implement them.

Your advisor can help explain the estate plan structure and provisions, as well the tactical steps that will be necessary to implement it as trustees, executors or beneficiaries. Your financial agent also can make sure your estate plan interfaces well with your children’s personal financial plans. By making the early and continuing financial education of your children a priority, you can ensure that they and their own families will be secure. Including your wealth manager in the teaching process will help drive those lessons home.

This article was originally published in the June/July 2016 issue of Worth.


Disclaimer: Worth magazine is a financial publisher and does not recommend or endorse investment, legal, insurance or tax advisors. The listing of any firm in the 2019 Worth® Leading AdvisorsTM Program does not constitute a recommendation or endorsement by Worth magazine of any such firm and is not based upon Worth magazine’s experience with, or prior dealings with, any advisor. The information presented for each advisor, including but not limited to any related profile, statistical data, presentation, report, commentary, recommendation or strategy, has been provided by such advisor without review or independent verification by Worth magazine. Any such information is the sole responsibility of the advisor. Worth magazine makes no representation or warranty as to the accuracy or completeness of such information, assumes no liability for any inaccuracies or omissions therein and disclaims responsibility for the suitability of any particular investment recommendation or strategy for any person. Nothing contained in Worth magazine constitutes or should be construed as any form of investment, legal, insurance or tax advice or as a recommendation to buy, sell, hold or trade any securities, financial instruments or assets. Readers are advised to consult their legal, financial, insurance and tax advisors prior to making any investment or pursuing any investment strategy. Past, model or hypothetical performance is not indicative of future results.

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