Five Ways to Help Sustain Wealth for Generations

Published: June 1, 2018

Discussing finances with one’s children is often a delicate topic. Parents typically want their children to be prepared for a lifetime of financial responsibility. However, they may fear that a frank discussion about wealth could foster an unwanted sense of entitlement. In addition, parents often think that until their children become adults, the family’s total financial picture is, quite simply, none of their concern. Our clients frequently consult with Klingenstein Fields Advisors (KF Advisors) on when, and how, to engage with the next generation regarding money. Because we often serve our clients through multiple generations, we have seen a broad range of approaches. While there is no “one size fits all” method, through our experience, we have identified five key tips to help our clients ensure future generations are aware of the responsibilities of wealth, and the need to plan:
 
Start early. Start the dialogue and education about wealth early, at an age-appropriate level, and keep reinforcing the message.
 
Involve your kids. Solicit their ideas and opinions so they feel “invested” in the family’s mission and goals.
 
Impose limits. Don’t treat wealth like a limitless tap; establish budgets against spending and maintain an emergency pool of money.
 
Protect your wealth. Sometimes, despite everything, you may decide that additional control, through a fiduciary structure, is needed. A third-party fiduciary may be the best way to meet philanthropic goals, control special circumstances, and ultimately, avoid wealth deterioration.
 
When you say it, mean it. It’s easy to set budget constraints and spending rules. The difficulty is in consistently enforcing them. Letting your children flout the rules without consequence will undermine any foundation of financial responsibility you’ve managed to build with them. So if you set them… don’t forget them.       
 
We encourage you to educate your children about the responsibilities, as well as the benefits that come with wealth. We are always here as a resource to assist you and your family in understanding and managing your assets. We welcome the opportunity to meet with you, and your family, to help develop a plan to sustain your wealth for future generations. 

Important Disclosures

This material is provided for informational or educational purposes only and should not be construed as investment, accounting, tax or legal advice. Always consult a financial, tax and/or legal professional regarding your specific situation. This communication is not intended as a recommendation or as investment advice of any kind. It is not provided in a fiduciary capacity and may not be relied upon for or in connection with the making of investment decisions. Nothing herein constitutes or should be construed as an offering of advisory services or an offer to sell or a solicitation to buy any securities or a recommendation to invest in any specific investment strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future returns. The views expressed herein are as of a particular point in time and are subject to change without notice. The information and opinions presented herein are general in nature and have been obtained from, or are based on, sources believed by Klingenstein Fields Advisors (“KF Advisors’) to be reliable, but KF Advisors makes no representation as to their accuracy or completeness. Although the information provided is carefully reviewed, KF Advisors cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided. KF Advisors represents two investment advisers registered with the Securities and Exchange Commission: Klingenstein, Fields & Co., L.P. and KF Group, LP. If you are a KF Advisors client, please remember that it remains your responsibility to advise KF Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.