Advisors Need to Bring Clients’ Kids into the Conversation

As parents, we are always trying to give our children advice on how they should live their lives. Most times that advice or those pleas to sit down and talk fall on deaf ears. But as parents age, the conversations that need to take place with their children become increasingly important.

Key Takeaways

  • As a financial advisor, you are not only advising your client's individual finances, but also their entire family's by extension.
  • Advisors need to seek out information on family structure and how that plays into overall goals—like college savings and life insurance.
  • While it might be awkward at first to broach the subject of family matters, advisors are doing their clients a disservice by avoiding the topic.

Household Finances

Family conversations often cover issues such as health care and end of life, but money must also take center stage. The right money topics can be dependent on the age of the child, but should concern budgeting, debt and other, more basic financial literacy topics. The older the child and the parent, you approach more serious topics like the transfer of wealth upon the death of the parents. Starting early talking about money will make these more serious conversations less painful.

New research conducted by Janus Henderson Investors, the Financial Planning Association and Investopedia shows that parents want to do a better job of communicating about money with their children. Conversely, it seems that advisors don’t often talk about how clients can have money conversations with their kids. Only 35% of advisors say they proactively bring up the issue—and 71% of investors say they have never discussed the topic with their financial advisor.

Why You Should Bring up Children

If clients want to talk about children and money, why don’t advisors bring it up? Or better yet, how can advisors bring children into the financial mix in a way that adds to the existing relationship but isn’t a major drag on productivity or time?

Answering these questions is especially important for advisors and families given the amount of money that is set to change hands over the next few decades. The Boston College Center for Wealth and Philanthropy estimates that $59 trillion will transfer from 93.5 million estates between 2007 and 2061. Obviously, families want to prepare the next generation to receive and preserve this wealth.

Advisors want to make sure they continue to manage those assets. Developing a relationship with clients’ children is key to ensuring this, because once parents die and transfer money to their children, there's no guarantee they won't want to find a new financial advisor.

How to Broach the Subject

So how might advisors meet the expressed needs of parents to talk to children about money while also developing these relationships with younger generations?

  1. Facilitate an annual family money meeting that includes not only parents but children, grandparents or others deemed suitable as well. This meeting could serve as a way to introduce topics important to parents; answer questions about finances, the estate, or documents like wills and trusts; and begin an ongoing conversation around the family’s wealth.
  2. If you’d like to start meeting with your clients’ children, first make sure you have the time to do so without detracting from your relationship with other clients. If time is a serious concern, perhaps have a more junior advisor in your office handle the logistics of scheduling the meetings. If the goal is to build the relationship, you should take responsibility and be present during those meetings. If that’s too much to ask, then it might make sense to think about your book more holistically and trim existing relationships that don’t make sense. Be intentional about the process. 
  3. Consider developing a packet of information for younger people that can be helpful in understanding the issues they are facing. This could include topics like student loan repayment options, career-related information like negotiating salaries, ESG investing and budgeting templates.

The Bottom Line

However you do it, it’s vital to foster a relationship with your clients’ children. Not only are your existing clients—the parents—concerned about these topics, but their children will also be the main recipients of their wealth in the future. Making sure you start the money conversation with children helps meet the needs of your existing clients, ensures a smooth transfer of wealth and solidifies you as the family’s primary wealth manager.

The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a professional advisor. Federal and state laws and regulations are complex and subject to change. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus Henderson does not have information related to and does not review or verify particular financial or tax situations, and is not liable for use of, or any position taken in reliance on, such information.

Article Sources

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  1. Financial Planning Association. "Study: The War on Stress 2019," Pages 12, 13. Accessed Jan. 12, 2021.

  2. Boston College Center for Wealth and Philanthropy. "New Report Predicts U.S. Wealth Transfer of $59 Trillion, With $6.3 Trillion in Charitable Bequests, from 2007–2061," Page 1. Accessed Jan. 12, 2021.