Advisors Need to Bring Children Into the Conversation

Parents strive to guide their children through life's challenges, hoping to impart wisdom that will serve them well. However, as time passes and roles shift, it becomes increasingly crucial for children and their parents to have meaningful financial conversations with their aging parents. These discussions, while often difficult to approach, are essential for ensuring our older family members are well cared for as they age and that the coming generation understands their financial role within the family.

The good news is more and more financial advisors are bringing children into discussions over their clients' finances. A vast majority, 89%, of financial advisors surveyed by Edward Jones and Morning Consult in 2024 say they have a wealth transfer plan in place with their clients. About two-thirds, 65%, say clients are bringing children or parents to meetings to discuss these plans. David Chubak, head of Edward Jones' U.S. business unit and branch development, said it's crucial for intergenerational wealth transfers, letting the younger generation know that they have someone "in their corner to help them navigate the financial, emotional and personal aspects that come in times of loss and change." 

By opening the lines of communication now, you can avoid a crisis later. "With most families, conflicts can be settled with family meetings. Letting everyone be heard can often resolve issues before they get too big," said Mitchell Kraus, a founder and principal at Capital Intelligence Associates in Santa Monica, California, which specializes in multigenerational wealth management.

Below, we discuss how these conversations can be broached and what's important to discuss when they are.

Why Bringing Children Into Financial Discussions Is a Must

Sudden events, such as illness, accidents, or untimely death, can leave families scrambling to make critical financial decisions during a time of emotional distress. By engaging clients' children early on, financial advisors can help ensure children are ready for such events while reducing the chance of family conflicts when they do.

Broaching topics such as long-term care, estate planning, and end-of-life wishes may be uncomfortable—they are notoriously the topics adults wish to speak about least—but failing to address these issues can lead to significant emotional and financial strain later. David W. Demming, the founder and president of Demming Financial Services in Aurora, Ohio, has been a certified financial planner for over four decades and has guided up to four generations of families. So, he knows well the problems that can arise. "In recent years," he told us, "we have made it a priority to involve beneficiaries of our clients before their parents die."

Yet, a significant gap exists between the number of U.S. adults planning to pass down wealth to their descendants and those discussing it with their families. The Edward Jones and Morning Consult study found that while just about half of adults plan to leave an inheritance, only 27% have had conversations about it with their loved ones.

There is an urgency to having these conversations. Researchers at Cerulli Associates estimate that by 2045, Baby Boomers (those aged 57-76) and the Silent Generation (those aged 77-94) will leave $72.6 trillion to their heirs.

Despite the increasing number of advisors having these discussions with their clients, the Edward Jones and Morning Consult study found that only 23% feel prepared to pass down an inheritance, and a mere 25% of younger generations feel ready to receive one.

Demming said by engaging clients' children early, financial advisors can help them understand their roles and responsibilities and make more informed decisions when the time comes. In addition, involving clients' children in financial conversations can help prevent family conflicts and help ensure, as much as possible, that everyone is on the same page regarding the family's financial goals and plans.

Avoiding the Mistakes of the Past

The advisors we contacted who had experience dealing with multiple generations of a family all said there's a good reason to bring their children into the mix, even before parents begin looking to their legacies. "We've seen generation after generation make the same money mistakes because one generation never teaches the next what they learned," Kraus said.

In the meantime, money can get wasted. "Children will save to help their parents at retirement when that money isn't needed by the parents and could be put to better use. Couples can struggle to save for their kids' education because the grandparent never mentions that they set up a 529 plan," Kraus said, adding that this was far from a rare occurrence.

By getting ahead and involving your clients' children in financial conversations and education, you can help them develop a strong foundation for managing their own finances and, eventually, their inheritance. It can also help advisors retain the coming generation within their firm. A 2023 Cerulli Associates report said that more than 70% of heirs say they are likely to change financial advisors after inheriting their parents' wealth.

When To Engage the Next Generation in Financial Planning

As a financial advisor, your role extends beyond helping clients achieve their financial goals. Including your clients' children in financial conversations is crucial for fostering long-term relationships and promoting financial literacy within families.

Of course, few kids don't hear their parents discussing financial matters often since they affect most family decisions. But that's different from learning the ins and outs of finance.

"We recommend clients start talking to their children about money in general as early as possible," Kraus said. "Money is a taboo conversation in most households, and the earlier you can bring it up, the more prepared future generations will be."

Kraus stressed the importance of having open discussions about money. "The best place to start is to have conversations about money in general. Lessons learned. Strategies that work. From there, it is easier to talk more about personal matters as you age."

Patrick Fontana, a financial advisor and founder of Fontana Financial Planning in Dallas, Texas, agreed that starting as early as possible is best. He said his firm teaches his clients' children about investing as early as middle or high school, and it's important enough that he has developed a mini-curriculum around it. "We begin by going through the 'Finance 101' introduction to investing that we have developed. During this time, we review what a stock and bond are, how compound interest works, and good financial habits to build early on." He then provides them with more material to learn from, including a book the firm has published for kids.

What Clients' Children Should Learn at Different Stages

To engage clients' children in financial conversations and help them develop a strong foundation for managing money, it's best to tailor the topics and lessons to their age and life stage. This way, you and your clients can help them develop the skills and confidence needed to navigate their financial lives successfully.

Young Children (Ages 5-12)

When working with young children, focus on basic financial concepts—and do so in a fun way. At this age, children can learn about the following:

• Earning, saving, and spending money
• The difference between needs and wants
• The importance of setting financial goals and making informed decisions

Use age-appropriate books, games, or apps to make learning about money enjoyable and interactive. "We recommend clients start talking to their children about money in general as early as possible," Kraus said. Encourage them to save some of their allowance or gift money to help them develop good financial habits early on.

Teenagers (Ages 13-18)

As children enter their teenage years, they can take on more financial responsibilities and learn about managing their own money. At this stage, you and your clients can focus on the following:

• Opening and managing a bank account
• Creating and sticking to a budget
• The power of compound interest and the benefits of starting to save and invest early
• The costs associated with college and the importance of planning ahead

Parents can suggest teenagers take on part-time jobs or start small businesses to gain hands-on experience with earning and managing money. Discuss the importance of setting both short-term and long-term financial goals and developing a plan to achieve them.

Young Adults (Ages 19-25)

As clients' children enter adulthood and begin to navigate farther into the work world and independence, they will need guidance on managing their finances effectively.

Nicole Sullivan, a co-founder and director of financial planning at Prism Planning Partners in Libertyville, Illinois, told us that the period after college graduation is an ideal time to bring young adult children more on board about a family's finances. "A 22-year-old often has to start thinking about how to pay their own bills for the first time, in conjunction with navigating a new workplace or demanding post-grad program. It's an overwhelming time of life. We want to reassure them that we can be a trusted resource when financial questions come up." Later, they might bring them more fully on board when they are "a little more established, say in their 30s or 40s."

There could be much work to do. The Investopedia Financial Literacy Survey found that only one in four Gen Zers (aged 18-25) thought they understood the stock market well enough to explain how it worked to a friend.

Financial advisors can help ensure they know the following at this point:

• Managing their first salary and creating a comprehensive budget
• Saving for retirement and taking advantage of employer-sponsored plans
• Understanding credit scores, debt management, and the responsible use of credit cards
• Renting an apartment, buying a car, and managing other essential expenses
• Building an emergency fund to cover unexpected costs

Offer practical advice and support as they make significant financial decisions, such as choosing a career path, paying off student loans, or saving for a down payment on a home. Below are survey results on what different age groups say are the most important financial questions for them.

Adults (Ages 26+)

For adult children, the focus should shift to more sophisticated financial topics and involving them in their parents' financial and estate planning, if possible. Here's what's on the menu to discuss:

• The importance of estate planning and their role in the process
• The family's wealth management strategy and how they can contribute to its success
• Buying a home, starting a family, and saving for their own children's education
• Navigating major life transitions, such as marriage, divorce, or career changes

Encourage open communication about financial goals, concerns, and expectations within the family. You can also guide them as they take on more significant financial responsibilities and plan for their own long-term security.

By tailoring financial education to the age and life stage of your clients' children, you can help them build a strong foundation for financial success and ensure a smooth transition of wealth and responsibilities across generations.

Need ideas for great resources? Check out Investopedia's Financial Education Resources for Kids.

How to Broach the Subject

Engaging clients' children in conversations about the complexities of legacy planning can be challenging. Here are some strategies for broaching the subject and creating a welcoming environment.

Family Meetings

Encourage an annual family money meeting that includes not only the parents but also children, grandparents, and other relevant family members. These meetings can serve as a platform to introduce important financial topics; address questions about finances, estate planning, and legal documents such as wills and trusts; and keep discussions going about the family's wealth.

Strategic Timing

It's essential to assess your availability and ensure you can dedicate enough time to nurture these relationships without compromising your commitments to other clients. If time constraints are a concern, consider delegating the logistical aspects of scheduling meetings to a junior advisor in your office. 

If your workload prevents you from fully committing to working with clients' children, you may need to reevaluate your book of business and make strategic decisions about which relationships to prioritize. Be intentional in your approach, ensuring you provide the attention and support needed to foster meaningful connections with the next generation.

Create Materials

As Fontana has done, you can develop packets of information for younger people that can help them understand financial issues. These resources can cover a wide range of topics relevant to their life stages, such as student loan repayment options, career-related advice like salary negotiation, and the fundamentals of budgeting and financial management. This also demonstrates your commitment to their financial well-being and positions you as a trusted advisor who understands their challenges.

The Bottom Line

However you do it, it’s a part of your business to foster relationships with your clients’ children. Not only are your clients—the parents—concerned about these topics, but their children will also be the primary recipients of their wealth in the future. You should start these conversations early, if you can, to later ensure a smoother transfer of wealth and help you remain as the family’s primary wealth manager.

You can also nip problems early that will only grow with time. "We find that small issues that are not addressed while the parents are still alive become bigger issues after they pass away," Kraus said.