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Financial Planning and Wellness for the Whole Family

Emily Koochel May 19, 2022

Multi-generational family in front of family home

Every client you work with has hopes and dreams for the financial lives they are building and how they can provide a richer life for future generations. But even if your clients manage to build wealth, it is estimated that 70 percent of that wealth will be lost by the second generation and 90 percent will be lost by the third.1

During a financial wellness roundtable discussion at the eMoney annual Summit, we heard from advisors that one of the barriers to the financial planning process is a lack of understanding of the family financial dynamic. As a financial professional working with clients to create wealth for their families, are you working with your clients—and their families—to help them take the necessary steps to protect that wealth and create a long-lasting legacy?

By focusing on family financial planning, you and your clients can identify the risks and challenges their estate might face and prepare a plan to avoid them.

Preparing Younger Generations

Financial Education

The U.S. has had difficulty establishing standards for financial literacy. While there have been attempts throughout our history to change this, we still fall short when it comes to ensuring people have the financial knowledge they need to make informed money decisions. Is it any wonder that younger generations don’t know how to manage an inheritance in a responsible way if they don’t receive the financial education to do so?

Financial professionals should talk with their clients about their children beyond the measures being taken to provide for them. And the younger, the better.

Financial professionals can get involved in the financial education of clients and their children by providing educational materials. They should also let clients know they’re happy to meet with children to help explain important financial matters.

Those conversations could include everything from helping a young child understand the basics of saving and spending to information about student loans and salary negotiations for adult children.

In fact, it’s been shown that children whose parents talk to them about age-appropriate money topics—like how they save or spend an allowance—have a better sense of financial responsibility in the long run.2

As a financial professional who helps families with ways to navigate these conversations, you can also help clients avoid the danger of financial enmeshment which occurs when parents involve their children in adult financial matters before the children are cognitively and emotionally ready to cope with the information, which could have a negative effect on the child’s development.3

Avoiding Financial Dependency

With wealth comes the opportunity to be generous. This generosity can have a positive impact on society when it is used for philanthropic purposes. It can also have a positive influence on generational wealth by providing children with enough money to get them started in life without such burdens as student loan debt.

But generosity can have a downside when it comes to the families of the wealthy. Children who are given unconditional financial gifts may begin to take advantage of that generosity and it hurts them–and the giver–in the long run if it turns into financial enablement.

Financial enablement occurs when financial assistance is provided to someone who is capable of working or financing their own lifestyle and the consequences can be extremely detrimental to the stability of a client’s wealth. Additionally, the support that allows adult children to live above their means can undermine their independence and create deep insecurities.4

Unfortunately, enabling financially dependent adult children is something many financial professionals have witnessed. Be prepared to have conversations with your clients when you witness this behavior to help them see that their financial assistance may actually be hurting their loved ones. Depending on the depth of the problem, a referral for financial therapy may be necessary.

Modeling Financial Transparency

Talking about money has often been considered taboo but these beliefs are becoming old-fashioned. Help your clients become comfortable with money conversations. The dangers of financial dependency become easier to avoid when there is open communication about the family estate and financial values.

And make sure your clients continue the conversations you have with their family members outside the financial planning setting. These continued conversations will give them a sense of where they might want your assistance with additional follow-up.

Having these conversations with your clients’ heirs will also expose them to the concept of wealth planning and set them up to continue to work with you as the estate moves to them to manage.

Safeguarding Wealth While Planning for Financial Futures

Protect Younger Generations

Having addressed protecting the younger generation from the pitfalls of not understanding how to manage multi-generational wealth, it’s important to also work with your wealthy clients to put plans in place to help them effectively manage their wealth by providing appropriate long-term support.

College is one of the things clients can begin to make plans for early in their children’s lives. Planning and saving for college sets children up to avoid student loan debt when they are starting their adult lives while also hopefully helping your clients earn interest on the savings and keep up with tuition rates as they increase.

If college isn’t part of their plan, work with your clients to determine other ways they can use their wealth to help set their children up for the future such as purchasing investment properties to manage or setting them up in the family business, or even establishing a new business venture of their own.

Beyond saving for future educational expenses, your client can also consider setting up individual trust funds for their children. These fiduciary accounts will allow your clients to support their children financially even after they are gone and can include special conditions on disbursement to ensure funds are used as the client wishes.

Protect Older Generations

In addition to protecting the next generation, your wealthy clients will also want to put provisions in place to see to the needs of older generations. An ill-prepared aging parent can be as much of a threat to accumulated wealth as mismanagement by later generations.

Help your clients prepare for the possibility of having to take care of aging parents or grandparents. Let them know that your expertise in guiding their financial plan is available to help older members of the family to ensure they are saving for retirement and have appropriate types of insurance in place.

And just as a trust can be established to assist the children of your clients, it can also be used to earmark funds for taking care of older generations who may not have saved and planned properly for their golden years.

Long-term Asset Protection

As a financial professional who works with clients to build their wealth, it’s important to help them navigate relationships with other professionals to help protect that wealth through trusts and estate planning. Having established collaborative referral partnerships with attorneys and estate planners will ensure you are ready to assist your clients should they pursue this avenue of asset protection.

With your assistance, your clients are working hard to build the kind of wealth that can give their families peace of mind for generations to come. Show them you understand what they are trying to achieve through your willingness to engage with them in guiding other members of their family to continue their legacy.

To learn more about how to work with the next generation, read our eBook The Advisor’s Guide to Building Financial Planning Relationships Across Generations.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.


1 Kleinhandler, David. “Generational Wealth: Why Do 70% of Families Lose Their Wealth in the 2nd Generation?” Nasdaq, 2018. October 19.

2 Bucciol, Alessandro, and Marcella Veronesi. 2013. Teaching Children to Save and Lifetime Savings: What Is the Best Strategy? SSRN Scholarly Paper ID 2275929, Rochester, NY: Social Science Research Network.

Kemnitz, R., Klontz, B. T., & Archuleta, K. L. (2015). Financial enmeshment: Untangling the web. Journal of Financial Therapy, 6(2), 32–48.

Bahney, Anna. “Why Wealthy Parents Who Bankroll Their Adult Children Are Hurting Them.”, 2019. August 19.

Image of Emily Koochel
About the Author

Dr. Emily Koochel is an experienced financial professional, academic, and researcher. She currently serves as a leader for eMoney Advisor’s Financial Education and Wellness initiatives in her role as Manager of Financial Wellness. Dr. Koochel’s PhD in Applied Family Science and Master’s in Financial Planning provide a multidisciplinary lens to inform her work where she focuses on understanding the effect of financial behaviors and financial decision making on personal and financial wellness. She serves as a subject matter expert in the field, reviewing and authoring peer-reviewed journal articles, book chapters, and contributing to public scholarship. Most notably, she served as a co-author for the CFP Board’s book – The Psychology of Financial Planning - and was awarded 2020 Outstanding Research Journal Article of the Year by the Association for Financial Counseling and Planning Education. She holds the Certified Financial Therapist – I designation and is an Accredited Financial Counselor and Behavioral Financial Advisor.

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