On February 23rd, Waldron hosted a Family Legacy Event at the Hotel Monaco, focused on addressing the sensitive issues parents face when talking to their children about family wealth. The event was moderated by the founding members of The Telos Group, Michael McGrann and Jonathan Habbershon, acclaimed specialists on the issues of communication and family wealth dynamics. The goal of the evening was to foster a constructive dialogue among the peers in attendance about the common challenges they face, and to provide actionable takeaways to facilitate the important conversations families of wealth must have to ensure the successful transition of wealth. The theme for the evening was: How, and when, to talk with your children about your family’s wealth?
To successfully integrate your wealth and your family, the moderators recommend as a first step, that parents take the time to understand what they really think about money and their wealth. People work their entire lives, and make many sacrifices to build up their family’s wealth, but few stop to think about why it is so important to them. Wealth can provide a variety of benefits and opportunities: A feeling of security for the family, the ability to live a particular lifestyle or to support a philanthropic cause, or perhaps the freedom to pursue what you are truly passionate about. Whatever your personal perspective is on the importance of wealth, you need to understand your feelings first, before you can impart your vision to your children. Once you have an understanding of how you view the value of money, you should identify opportunities to share your perspective with your kids. Young children, even as young as four or five, can benefit from discussing basic elements of money, such as the many different ways people earn their money, or the equally diverse manner in which they spend it. Simple discussions can open their eyes to bigger concepts like responsibility and independence, and can afford you an opportunity to define your feelings about these concepts. As kids get older, doors will open for other discussion opportunities, such as what it costs to attend private school, or how large purchases, such as a new vehicle, are evaluated and conducted. When they near the end of high school, you can broach more sophisticated topics, such as housing options and budgets. A crucial component for the success of all these discussions is honesty. If you have spent years expounding on the virtues of saving, but have filled up your garage with a collection of largely ignored exotic cars, you may have accidentally undermined your message. On the other hand, if you regularly demonstrate the consideration and prudence you extol, your words will have more meaning, and stand a far greater chance of influencing your children’s perspectives.
The determination of when to discuss the details of your wealth with your children should be made based on the relationships you have established with them. If you feel they have demonstrated a thoughtful, careful approach to financial responsibility, you may be comfortable discussing the details of your wealth at a younger age, perhaps right after college, or if you feel that a more incremental approach is appropriate, you might wait a bit longer. But wherever you are along this comfort continuum, a crucial component to engaging your children in these discussions, is asking them what they feel about your family’s wealth, and learning what their goals and expectations are. Asking these types of question may make a parent feel apprehensive or vulnerable, as the answers may not align with their own vision for the family’s wealth, but by listening to your children, and learning what they are passionate about, and what their goals are, you will deepen your relationship with them. And in the long run, that closeness and honesty will build and develop the trust and understanding you both seek, and which is necessary for a successful transition of wealth.
Interested in speaking with an advisor about multi-generational wealth planning? Click here to let us know what you would like to discuss.