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On Helping Clients and Their Children Prepare for Adult Life

Adviser Voices: Gregory Sarian, managing director and partner at Sarian Group at HighTower, says clients tend to overlook key planning issues and saving strategies when it comes to their children. But he has some simple ways to help both parent and child succeed.

Gregory Sarian is managing director and partner at Sarian Group at HighTower in Wayne, Pa. Voices is an occasional feature of edited excerpts in which wealth managers address issues of interest to the advisory community. As told to Jacob Meade.

Mr. Sarian recommends that clients establish power of attorney for children over the age of 18 who are leaving home for school or work. Photo: Brenda Carpenter Photography

Many families overlook key planning issues and savings strategies when it comes to their children entering adulthood. These oversights open the door for advisers to help clients by encouraging them to take measures for better financial security for them and their children.

If a client’s child is over the age of 18 and leaving home for school or work, recommend that they establish power of attorney. Otherwise, entities such as a hospital or university may limit the information shared with your client in the unfortunate event of a medical emergency. Power of attorney makes it easier for these entities to disclose the information clients need while enabling them to make important financial and medical decisions on behalf of their child.

While they are in school, college and graduate students may take on internships or work opportunities where a company auto-enrolls them in their 401(k) plan. If your client’s child is in this position and accumulating retirement assets, suggest that they designate a beneficiary. Young people aren’t prone to naming their 401(k) beneficiaries, but the reality is if something were to happen to them and they don’t have a beneficiary listed, funds could take a long time to be distributed out of their account.

It may seem uncomfortable to broach these what-if topics with clients. But you’ll find many clients are relieved to address “God-forbid scenarios” that have been in the back of their mind all along.

My firm also encourages clients to help their children get in the habit of saving. For children still under 18, my firm has found success getting them to think about saving money on clear timeframes. We bring out three jars to represent a short-term cash reserve, a one- or two-year goal such as a new car, and a long-term objective like retirement. The visual and physical separation of the three containers helps drive home the point that clear goals promote financial success.

For children 18 and older who can open accounts, we suggest a local bank account with ATM/debit card for jar one; a brokerage account with a low-cost exchange-traded fund or target-date fund to dollar-cost average into for jar two; and, if they have earned income, a Roth IRA for jar three.

Another suggestion my firm makes for 18-year-old children is that they open a credit card to help establish a credit rating. Opening a credit card doesn’t just allow young people to build credit, it also instills discipline about money that will stay with them and help them stick to a stable budget in the many years to come.

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