Millennials are taking a greater role in financial planning among high-net-worth (HNW) families, according to a new advisor poll conducted by Key Private Bank, the wealth management arm of KeyCorp.
In a survey of 160 of advisors on how second- and third-generation HNW individuals are involved in financial planning, 36 percent said adult children are more proactive than their parents in initiating family finance conversations.
Eighty-two percent of advisors said financial transparency is critical to raising financially independent adult children.Over the past five years, 50 percent of advisors have seen increases in financial transparency.
The survey also found that 77 percent of financial conversations take place once a year, while only 5 percent of advisors say these conversations happen more frequently. Eighteen percent said they never happen at all.
“By studying our advisors, we gain vital insight that allows us to be thoughtful and purposeful about meeting our clients’ family financial needs,” Terry Jenkins, president of Key Private Bank, said. “With most family financial conversations only happening once per year, families can seek guidance from their advisors on being more deliberate in cross-generational financial conversations, provided Millennials’ clear appetite for more frequent money talks.”
Among suggestions given from the findings, 63 percent of advisors recommend that parents devote more time to educating their Millennial children about managing money, 60 percent said they should inform younger generations about caregiving preferences, and 58 percent said they should offer financial transparency to their adult children.
The factors that parents overlook in financial conversations are consistency of discussions (73 percent), active engagement (67 percent) and transparency (65 percent).
A top priority among 93 percent of advisors’ clients is instilling work ethic in their kids.
“Instilling work ethic and financial transparency in younger generations starts with a solid financial education,” Veena Khanna, director of strategy at Key Private Bank, said. “Only 32 percent of financial conversations start when children are in elementary school at ages 5-13. Families have the opportunity to work with their advisors to create a financial education plan that starts early, positively impacting children’s understanding of work ethic and the value of money.”
The poll also looked at financial topics that resonated most with male and female children. Male children are more likely to be involved with investment decisions (90 percent) and taxes (84 percent), while female children are more likely to be involved with charitable giving (89 percent) and travel planning (86 percent).