Our Views

Are your adult children financially astute?

Adult children of wealthy families are not prepared to handle wealth. That is one of the most common concerns among Newport Private Wealth’s hundreds of wealthy clients. Wealthy baby boomers are moving into their golden years, planning for the succession of assets and realizing their adult children don’t have the necessary skills to effectively manage wealth.

A U.S. Trust study last year confirmed that very few high net worth individuals believe their children would be mature enough to handle wealth before the age of 25 and more than a quarter think they won’t be ready before the age of 40. (1)

Why is this so? Financial planning, risk vs. return, asset allocation, budgeting and tax minimization aren’t concepts that are taught in our schools and universities. Discussing the family’s wealth isn’t something most families raise at the dinner table. Yet, ironically, parents want to ensure their children, as heirs, (1) don’t squander inherited wealth; and (2) don’t lose sight of family values because of it.

We recognize there’s a knowledge gap among younger adult children and we’ve designed a dynamic wealth management relationship across generations that works like this:

Newport Private Wealth would manage at least $1 million of your family’s investments. You would decide how to divide the assets between you and your children (which can be done tax effectively). Your relationship would be with our senior team of portfolio managers; whereas your children would build a relationship with one of our younger associates to whom they would relate and build a long term relationship. They would also have the opportunity to become part of Newport Private Wealth’s Nextwave group of young adults learning about investing and how to better manage their finances.

We would introduce your family to some of the best practices of successful families and continually bring effective wealth management strategies to you and your children’s attention as part of our evolving and dynamic relationship.

The benefits to you and your family are to:

  • educate your children on how to better manage their finances
  • better prepare your adult children for the transfer of wealth
  • offer a platform for your children to network among their peers
  • reduce the “family” income tax bill through effective inter-generational tax planning
  • implement a comprehensive wealth management plan for you and your family
  • help to reinforce family values

For more information, feel free to drop me a line at dlloyd@newportprivatewealth.ca, or call 416-867-8573.

(1) Source: 2012 U.S. Trust Insights on Wealth and Worth