Charting the Course

One of the great tragedies of wealth is that it can be short lived. Families can work very hard over many years to accumulate significant wealth, only to have it lost by subsequent generations.

Believe it or not, about 70% of families lose their wealth by the second generation and 90% lose it by the third generation. That’s a sobering reality to think about as we watch our children grow up. It’s bad enough to think the benefits of all that work could be lost, but it’s even worse to think our children could be left without the enormous financial opportunities we are passing down to them.

While the statistics may not be in our favor, parents can be proactive, teaching children the basics, and there is nothing wrong with starting when they’re as young as 3 years old. There is plenty of information in books and online with multiple perspectives and opinions, but experts agree that parental education is far better than leaving kids to figure out money on their own.

Many of us may remember our parents telling us that money doesn’t grow on trees. For some, that may have been the extent of their financial educations growing up. But why not teach children exactly where money comes from, how they can get it and what they should do with money once they have it?

At an early age, children can learn that the toys they want and the candy they like cost money, and even a 4-year-old can participate in the transactions, handing mom’s cash to a store clerk before walking out the door with their bag full of loot. But that’s just step one. By the time kids are in school, they can begin to learn the value of money and the best way to do that is by working for it.

Whether they’re getting an allowance for chores at home, earning through a babysitting gig or mowing a neighbor’s lawn, children can learn first-hand that dollars come from work and sacrifice. But the lessons should not stop there.

Once young people have money, parents can teach them to make good choices, such as establishing savings accounts, giving to charity, and making sensible spending decisions. If young people can learn to avoid impulse buying, budgeting skills, and how to be content with what they have, they can reap financial benefits far into the future.

After they get jobs, learn to save, budget, and experience the joy of giving, why not teach young people about investing? They can open college savings accounts, see the power of compound interest, and have a stake in their college educations. More importantly, they will have begun a journey of money management, saving, and investing that could last a lifetime.

In the end, this childhood education could help save the family fortune.

Everybody needs a coach. We all know about OU’s Brent Venables and OSU’s Mike Gundy, but you don’t have to be an elite athlete to need a coach. A lot of people have coaches to help with a variety of things.

There are golf coaches, fitness coaches, executive coaches and even life coaches. They assess our needs, help us set goals, teach us how to reach them and guide us through adversity.

Wherever there’s a goal to be achieved, there’s a coach to help us get there, even in the financial world.

You could say that coaches who make the biggest long-term impact on people’s lives are financial advisers. They’re not the kind of coaches who get glory or many pats on the back, but they may be the most committed, sticking with clients for years, even decades, to ensure they successfully reach comfortable retirements.

Make no mistake, financial advisers are not cheerleaders. Sure, they deliver the good news, but they also give the bad news, and, like any good coach, they’re not afraid to have tough conversations.

Saving is at the foundation of any financial plan, and it’s never too early to start, but most people begin seriously considering planning when they reach their 30s and 40s. By then, they’ve established careers and have accumulated savings, assets, and liabilities. From time to time, they encounter financial obstacles that can knock them off course.

To start, advisers sit down with clients and talk about their salaries and other income. They go over IRA accounts, 401(k) plans, pension plans, private investments, taxable accounts and so on. They discuss mortgages and other debt, then look at future Social Security income. It’s a little like the first day at the gym with a personal trainer.

Once the evaluation is complete, the journey begins with the financial adviser serving as investment manager and financial planner. Remember, it’s a marathon, not a sprint. Reviews might be once a year or twice a year with some emails or phone calls in between. Life changes are inevitable, and the financial planner is there to help with adjustments to ensure clients stay on track.

Fees a client pays can vary for financial planning. The service comes standard with accounts at some wealth management firms or is considered an a la carte option at others. Even large custodial firms that manage 401(k) programs offer financial planning through interactive websites.

The financial journeys we take are too important to travel alone. Just like the Sooners and Cowboys, we need people to help us with our game plans and to advise us when it’s fourth and long. In life, we make a lot of decisions on our own, but when our financial futures are at stake, it helps to have a coach.

Kyle Ray is a licensed financial adviser, serving individuals and families.