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Why One Advisor Schools Clients’ Kids in Finance

December 30, 2014

This week FA-IQ interviewed Tim Hamilton, founder and managing director of Financial Families, a fee-only planning and investment-management firm based in Pickerington, Ohio. Hamilton recalls how a meeting with a client’s child helped shape his independent practice.

Several years ago, when I was working at a different firm, a client asked me if I could meet with her son. He was a junior in high school, she explained, and she wanted to help him become financially literate. I’d never had a client make a request like this before, so I was somewhat taken aback. I was used to working with people who were planning to buy homes or saving for retirement; what, exactly, would I say to a 16-year-old?

Despite my reservations, I told the client she could bring her son to our next meeting. She did just that, and I spent about half an hour chatting with him about basic financial concepts. I looked at his expenses, explained the difference between discretionary and non-discretionary spending, and talked about how compound interest worked. His mother clearly appreciated the lesson. And I had fun, too. Young people have an infectious energy. They’re so eager to learn — they don’t know all the answers, and they know they don’t know them. They’re open to asking questions.

The experience left me wishing I could do more. I wondered what it would be like to have an ongoing financial-education relationship with clients’ children. You could accomplish so much over time and really help them establish a strong financial foundation when they were starting out. There wasn’t really any structure set up for helping the children of clients in that particular firm, however. As with many firms, it just wasn’t a priority.

When I set out to found my own firm not much later, I decided to make working with clients’ children a cornerstone of my practice. These days, it’s a major part of what I do. From day one, I tell clients their children are welcome to attend every meeting with their parents — starting at age 13. They can learn a lot from watching their parents work through financial decisions. We also talk about topics relevant to the kids — including setting goals and saving for college. I have a lobby that’s fun to hang out in. We always address the children’s issues first, so if they get bored — or the parents want to discuss something confidentially — the kids can go out in the lobby.

Financial planners don’t tend to prioritize working with their clients’ children, presumably because there’s not much money in it. As a consequence, people in their teens and twenties aren’t getting a lot of good financial advice — even though that is often when they need it most. Offering these kinds of services to clients’ children helps fill in those gaps. The parents appreciate it, too — they really see the value in their kids becoming more financially savvy.

In the short term, it’s easier and more profitable to ignore a client’s children. And so far, none of my clients’ kids have become clients themselves. But it’s a huge value-add for their parents. And I honestly believe that, down the road, at least some of these children are going to turn into adults who will continue on as clients.