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September 8, 2022
Teaching young adult children about wealth can be a challenge. Many of the ultra-high net worth clients we work with have thoughtful ideas on how to take on this process. Although circumstances may vary, most families want to impart on their children a solid understanding of their wealth, creating opportunities for younger generations to continue growing the family’s resources while embracing the responsibilities associated with acting as stewards of intergenerational legacy.We have all witnessed the consequences of young adults inheriting wealth without this foundational guidance, and yet we lack universal agreement on how to best teach the next generation of young adults about their assets. When managed well, conversations about wealth can facilitate its passing from one generation to another while strengthening family ties.
To start, we recognize that talking about wealth is uncomfortable. Many people would rather discuss religion, politics, or literally any other charged topic, than talk about their net worth and bequests. In fact, a research study by the U.S. Trust Survey of Affluent Americans (Volume 19) shows that families fail to successfully transfer wealth for two primary reasons: a lack of communication and trust (60%) and inadequate preparation (25%). All other reasons comprise a meager 15% of failure points, which shows the importance of communication and preparation.
Furthermore, A 2018 Young Adult Financial Literacy Survey from Charles Schwab showed 53% of millennials anticipated their parents leaving them an inheritance, but a 2019 BECU Credit Union study noted that 82% of parents they surveyed were fearful of talking with their children about finances. Bridging this gap – that the majority of millennials are expecting a future inheritance but overwhelmingly, their parents don’t educate them on responsible financial management – is imperative for families who want to ensure that their hard-earned wealth is a foundation for family growth and harmony.
Here are a few suggestions from our clients that might facilitate productive discussions with inheriting generations: (Note that these points apply to “children” of all ages, in age-appropriate language)
Managed thoughtfully, conversations about family wealth can pave the way for collegial and cohesive family dynamics for generations to come. And that’s where we come in: if you need help creating or executing a strategy to develop the next generation as steward of your family legacy, the first step is simple: contact us to get started.
Please read important disclosures here.
Mimi is a Partner in the Pennsylvania office. She is a member of the firm’s National Partner Development Committee. Prior to joining Cerity Partners, Mimi...
EmJay is an Associate in the Pennsylvania office. Prior to joining Cerity Partners, EmJay served as a Client Relations Associate at Permit Capital Advisors, LLC...
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