Motivating Clients Through Financial Parenting.

AuthorGOLDHIRSH, JOEL B.

From the outside, my clients looked like they had it all: three great kids doing well in school, a business headed for the stratosphere, a beautiful home, a large stock portfolio, great family vacations and lots of toys. But something was missing.

I had covered the financial planning basics: set money aside for college, convinced them to execute wills and trusts and purchase substantial amounts of life insurance. But every time I tried to talk with them about more in-depth planning strategies--business succession plans, sophisticated estate-planning techniques, early-retirement goals--our conversations mysteriously stalled.

Sound familiar? This pattern may signal a client's hidden concern over their children's ability to handle the substantial sums of money that they will inherit someday. It's a scenario that plays itself out more often today than ever before, thanks to the tremendous amounts of wealth produced in the last 20 years. And reluctant clients have every right to be concerned. Too often, the financial free ride of a hefty inheritance can create "trust fund babies"--heirs who find this easy money a ticket to self-indulgence and irresponsibility.

The solution: a healthy, early dose of financial parenting.

FINANCIAL FACTS OF LIFE

Financial parenting is the process of clients taking the time to educate children and grandchildren about the financial and social responsibilities that come with money. Yet too often, it's exactly these financial facts of life that successful parents fail to communicate to their children. This lack of communication can be attributed to many things. It may be the result of a geographic separation among family members or old-fashioned privacy concerns. Some parents just don't know how to get started, while other parents can't or just don't make the time to communicate with their kids.

Financial parenting isn't easy, but it's one of a parent's most important legacies to their children. Ask your clients to start by reflecting on their own value system and what's important to them about money. You'll probably find that their value system spans three basic categories: spending wisely, saving for the future and giving back to the community.

Following are some simple yet powerful financial parenting techniques that I regularly share with my clients to help them convey their own values as they educate their heirs. Some of these techniques are fairly sophisticated; others are really quite simple. But all may be...

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