Wealthy Parents Enlist Financial Advisers for Money Talk

AP ^ | AP-ES-07-31-05 2020EDT

[TheOtherOne]

Wealthy Parents Enlist Financial Advisers for Money Talk

By Colleen Debaise The Associated Press
Published: Jul 31, 2005 NEW YORK (Dow Jones/AP) - For financial planner Peg Eddy, work is sometimes child's play - literally.

In her sunny San Diego office, Eddy serves lemonade and cookies to clients as young as 8, talking to them about their parents' money and using a favorite prop - a four-slotted piggy bank - to teach them about saving, spending, investing and donating.

"If anyone is uncomfortable with a topic they can put up the time-out sign," she says. Laying out the rules of the meeting along with the agenda helps children feel safe. And, "I tell them where the bathrooms are," she adds.

Call it the softer side of money management. Parents worried about the effect of wealth on their children are increasingly turning to their financial advisers for help.

The professionals who manage the family's money say the financial lesson sometimes blends Sesame Street with Wall Street. Picture-drawing, board games and field trips are used to explain market terms and teach responsibility - all, if done right, without sounding preachy.

Merrill Lynch & Co. earlier this year launched its Family Wealth Services unit, which has an educational division for teaching financial basics to children of wealthy clients.

Like many firms, Merrill wants to keep a family's wealth under its auspices, and doesn't want to overlook a chance to bond with the younger generation. But the impetus to create the new division came from the first meeting last fall of Merrill's new client advisory board, made up of top clients whose average net worth is about $80 million.

"What they wanted to talk to us about was their children, and what we can do to help educate their children," says Karen Klein, co-director of Family Wealth Services. "With the extraordinary growth in wealth over the past 10 years, parents are very in tune to the challenges."

The ranks of U.S. millionaires continue to grow, making up a record 8.2 million households in 2004, according to TNS Financial Services' annual wealth survey. Many affluent parents want to raise kids without a sense of entitlement, but are uncertain how to do that. Part of the problem is that they themselves never received financial lessons from their parents.

"It's easier in many families to talk about sex than it is money," says Jon Gallo, an estate-planning attorney who is co-author of the newly released The Financially Intelligent Parent.

Meetings between financial planners and children have become more common in recent years, as the industry shifts away from balance sheets and toward so-called "value-based" planning, he says. "There is an increasing psychological awareness in the profession that people are concerned about the effects of their wealth on their kids," he says.

Merrill recently hosted a one-day program for clients' children between the ages of 16 and 25 in New York, and plans similar events in cities such as Los Angeles, Chicago and Dallas. The program, an overview of the financial markets, included a field trip to the New York Mercantile Exchange and a turn at an interactive stock market game.

Klein says she learned from a less-than-successful test program that kids need a short, snappy format. On the first try, the firm planned a daylong event in one spot, and "by 2 p.m., we were losing them," she says. This time, "every half hour of so we were getting them up and moving," she says.

Financial advisers say short, interactive sessions of 20 minutes to a half-hour are good for young children, and can stretch longer as kids grow. For children younger than high school age, the sessions generally focus on topics such as "what is a stock?" or "what is a bond?"

Eddy uses a pitcher to explain diversification, pouring some "money" into the stock glass and some into the bond glass.

In high school, when children either start jobs or begin thinking about college and first cars, the focus generally shifts. Parents often arrange the first one-one-one with the family's adviser so young adults can get a sense of the family's wealth, and know what's expected of them.

"We try to tell people to raise kids like money is something you have, not something you are," says Gallo, the estate-planning attorney. "If you are able to view money from that viewpoint, you'll have a much healthier relationship with money."

While financial advisers can help with the process, parents can't pass the buck when it comes to preparing their children to live with affluence, says Susan Hirshman, wealth strategist at J.P. Morgan Funds.

"I talk to clients, and they say, 'How do I start talking to my kids about responsibility?' and I say, 'How old are your kids?' and they say, 'Oh, they're 35,'" she says. "It doesn't happen magically."

AP-ES-07-31-05 2020EDT

[TheOtherOne]

[Frank_2001]

SHE doesn't need anyone's advice!;)

[B4Ranch]

All People Should Enlist Financial Advisers for Money Handling Advice!

These are the professionals who know the tricks, learn from them!