Thought PiecesJune 8 2020

The Wigmore Association: Encouraging financial literacy across generations

5 mins read

Written by Wigmore Firms

In this article, Wigmore firms approach the topic of financial literacy in family wealth. We interviewed member firms and collected advice and guidance from across the globe. Our goal is to help family members be better prepared and make decisions that are financially sound.

From Turim Family Office, in Brazil

When should you start educating the next generation?

As a Family Office, we assume the responsibility of investing our clients’ liquidity, independent of their age. It’s important for each clients to understand the factors that lead us to make investment decisions.

How do you make it a priority for your clients to understand the factors?

We deliver financial education courses, customized to what each family member wants to learn. Our goal is to prepare young investors for the day that they have the final say on their investments.

Financial education can sometimes be perceived as boring or complicated. How have you made these classes motivating?

Over time, we realized that for these financial classes to be motivating, the younger generation family members had to have their own investment portfolio.  Thus, we encouraged their parents to transfer an amount of money (large enough to bring responsibility to the table, but small enough so it would not damage the overall family’s wealth) for the next generation to manage.

Turim developed a financial course with different modules, delivering classes with the family’s desired frequency and availability (one full week, or once a week for three months or once a month for a year). The last module is the analysis of their own portfolio.

We have received positive feedback on how our Education program has helped to develop a new common ground between generations. Eduaro Almedia, CEO For Turim, states “it has helped us forge a new communication channel and open new doors with the family’s decision makers of tomorrow.”

Why are financial courses more important now?

It is critical to ensure our families are educated on the factors influencing their investment portfolios, especially during a global crisis. These financial courses help not only our clients, who will have access to tools to better grasp what’s happening, but also our own ability to effectively navigate portfolio management in challenging times.

From Mutual Trust, in Australia,

How important is family financial education?

“We strongly believe family education should be a priority for all members of the family and not limited to the younger generations”, Jeff Steiner, Head of Family Office. Families are dynamic as are the roles various family members play. Our clients continue to grow and learn, whether as an individual or as a family.  Families are using this time of crisis as an opportunity to implement or discuss broader learning programs. 

Do you provide financial literacy courses for your clients?

Yes. Whether our families are looking to learn together or individually, we provide education and awareness on investments, ownership structures and philanthropic foundation requirements.

Why are financial courses of increased importance during a crisis?

The current crisis has provided an ideal case study to apply knowledge, such as learning about the importance of an investment strategy, saving for a rainy day, being adaptable and equally importantly, learning about how to help those most vulnerable in society. We are helping educate our families by assisting with the documentation of their family values and capturing shared family stories and histories. 

It would appear the global pandemic has not hindered our clients’ need for family education and we continue to provide support through tailored ‘family learning pathways’ and personal development plans, conducted via online surveys and virtual one on one sessions

From Pitcairn, in the United States

How do you recommend families increase financial literacy and have fun at the same time?

The benefits of play for both children and adults are immense, so try clearing off the kitchen table and getting hands-on with the family! We have compiled a list of games that weave in financial education and can be played with many age groups. It’s often hard to get ‘face time’ with our loved ones, due to work, managing the household, and busy schedules, Staying at home during the pandemic gives us the perfect opportunity to make those connections.

Additionally, you might consider starting a storytelling project to bring the whole family together. Encourage everyone to come up with questions and ask younger generations to interview their elders. Tap into their tech savvy skills with the latest video apps to bring the family’s story to life. With everyone’s contribution, a family can knit together a montage of stories that will last for generations.

With most schools closed due to COVID-19, how do you help parents that have found themselves in a new role of substitute teacher?

Through our experience developing family curricula, our expert team has established innovative best practices to make family learning more impactful, relevant, and meaningful for children and future generations. We have developed top tips specific to family learning among generations on our website.

From Sandaire, in the United Kingdom

Why is it important to help nurture human capital?

Investing in an effective education strategy is critical to the management of your family and its  multigenerational wealth needs. Equipping family members with the training they need to be responsible shareholders and stewards of family wealth will improve communication, build cohesion and help provide the appropriate skills needed to make informed decisions.

What about getting the rising generation ready?

Every family wants their wealth to be a source of satisfaction and opportunity for the next generation, so ensuring that children and young adults are prepared for the responsibilities that come with great wealth is a critical task. It is also important to impart an understanding of the family and its values, alongside learning strategy that helps them find purpose with wealth..

Should education be a one-time event, such as now while we are in a crisis?

Of course not. Educating your family members should be viewed as a life-long process rather than a one-time event. However, a crisis may be a  very good opportunity to look to outside experts to “steady the ship” and help provide the education and preparation the next generation needs for the future. While an advisor can never replace the role of a parent, they can play a valuable role (even virtually!) in providing insight on the practicalities of managing significant wealth and helping curate a plan to match their life goals.

From Northwood Family Office, in Canada

Tom[1], as a professor of Private Wealth Management at the University of Toronto’s Rotman School of Management and author on family wealth, what importance do you place on financial literacy?

Over many years of working with families of wealth, it is abundantly clear that ‘responsibility without preparation’ is a disastrous combination. Without intentional training in this important area, it should be no surprise that rising generation members can make poor choices.  There are many excellent programs and books available to help families with this educational process, which should begin in the early elementary years. This is an important ongoing learning process and exactly the reason we wrote Wealth of Wisdom: The Top 50 Questions Wealthy Families Ask. Our idea was to compile all of the ‘most asked’ questions from families of wealth to create an educational ‘user guide’, including case studies and expertise from each contributor in their relevant field.

What is the role of parents and grandparents in training the rising generation?

Children pick up many of their money habits from observing how their parents deal with money. It’s often said that “values are mostly caught, not taught”, so it is important for Mom and Dad to honestly look at what lessons regarding money their actions may be demonstrating. In addition to teaching and modeling financial skills, parents may also want to consider creating traditions and habits to instill core money behaviors, including saving, budgeting and charitable giving. For instance, it can be a good experience to help children figure out how they might save for an important purchase—and consider matching whatever they can earn.

[1] Tom McCullough, Chairman and CEO of Northwood Family Office