Three Ways for Gen X, Y, and Z’ers to Get Educated About Family Finances


Three Ways for Gen X, Y, and Z’ers to Get Educated About Family Finances

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Lucy D. Bickford

You’ve heard it before: successfully transitioning family assets from generation to generation is hard work. And for many families, talking about money or family wealth can be awkward and uncomfortable, or simply delayed. This can hinder you – the next generation – from absorbing the critical information and know-how that is necessary for a smooth transfer of wealth and responsibilities.

There is no doubt that your elders want to empower you to be good stewards of your inheritance and of your family office. At a more basic level, they also surely wish for you to experience personal fulfillment and meaningful relationships – to be happy and to live up to your full potential. Some families are reluctant to discuss wealth at all because they are afraid of ruining their children’s ambition, a source of inner contentment, but there are ways for you to encourage open discussions while being respectful of that fear.

Here are three ways to encourage communication with your family and advisers to help you learn the skills and elements of your family history that will serve you well in the future.

1.  Start a dialogue. Initiate conversations with your elders and your advisers about your family’s situation. Can they share a framework that you can use as a road map to educate yourself in all of the key areas that are relevant to you? Ask them for resources to learn more about the elements of the overall structure that interest you the most. Following your curiosity on these topics will provide you with a deeper and more meaningful self-education. Over time, in addition to knowledge that is specific to your family assets, family company, or family office, aim to equip yourself with these basic skills:

  • Understanding investments
  • Being able to generate income from employment if necessary
  • Living within your means, and avoiding wasteful spending
  • Managing credit and debt, and avoiding excessive debt

Inquire about your family members who created the wealth and what motivated them. How did their work help them pursue personal interests, solve problems, be creative, be philanthropic, and create jobs? What elements of their work and legacy makes them proud?

Depending on your family dynamic, you may be comfortable asking senior family members to articulate to you their intentions for the wealth (including the family office, family company, or family properties, etc.) as they evolve over time. Or you may prefer to have your advisers help initiate those conversations.

Ask your advisers to share stories about how other families have engaged younger generations successfully. How have they seen families ensure that shared values pass through the generations along with the wealth?

2.    Anticipate new opportunities for engagement. Recognize everyday occasions that you can use to initiate more conversations with your family and advisers for a deeper personal understanding of wealth preservation topics, such as these:

  • Purchases: Is there an opportunity for you to research alternatives and make choices about family purchases, like a car or an apartment? This is a chance to learn about negotiations as well as maintenance, insurance, and financing considerations. More significant purchases come with more significant considerations, and all of them provide valuable practice for the next one.
  • Outright Transfers and Other Gifts: When a Uniform Transfers to Minors Act (UTMA) account is transitioned to a young adult, a gift trust is created, or an annual exclusion gift is made, use these opportunities to discuss the purpose of the gift, the tax objectives and expectations of the donor, and the investment principles that apply specifically to that gift.
  • Engagement and Weddings: It is wise to find an opportunity to discuss asset protection and estate planning with your elders, preferably before you intend to get engaged to be married. You may benefit from their long-term perspective and knowledge of family history. Every new couple has to make decisions about how to manage household finances, and with advice from your advisers, you can both make informed decisions.
  • Charitable Giving: Is there an opportunity for you to participate in the family’s philanthropy? This activity provides practice for managing investments and making decisions with other family members. Helping to solve real world problems can also provide a sense of purpose, personal gratification, and connection to the community.

3.    Lean on your adviser team. Your advisers have a solid understanding of wealth management and inter-generational wealth transfers. But they rely on you for input about your own interests, your goals, your priorities, and your vision for your future. With this full picture they can tailor their advice to meet your needs, and in turn, you will learn how your advisers can be useful to you as time goes on. To ensure you are getting the most of your team, in addition to the opportunities listed above, consider reaching out to your advisers in these pivotal moments:

  • Life events like engagement, divorce, babies, and serious health issues
  • Relocation to a different country or state
  • When you have a new venture idea or wish to pursue educational opportunities
  • When you or a family member is facing private or sensitive issues such as fertility issues, addiction, or financial responsibility issues

Open communication at appropriate intervals is the best way for the next generation to learn how to steward family wealth and responsibilities. The suggestions above are meant to encourage you to seek out those opportunities and empower you to embrace your own education in this realm.

*Thanks to Schiff Hardin Associate Anthony Sarna for contributing to this article.