And if they don't, if the child becomes an adult without the proper money education, the dangers are many for both the family and the advisor who expects to earn fees or commissions from administering the family's wealth. Harney believes the greatest danger is in the families that have been always wealthy-"Families in which money has always been taken for granted."
She says that in families in which wealth was slowly achieved, in which children saw their parents working for years to achieve wealth, there is less danger of the children developing unhealthy attitudes about money. "They probably won't take it for granted," Harney says.
Planners can cite many instances of children of the rich who grew up to become irresponsible adults who believed that wealth was perpetual. Delessert warns that gifting can be a dangerous business.
"I know of a client's child, who is now an adult, who got $10,000 a year from her mother," says Delessert. After a while, she thought that she should get it forever. It was the kind of thing that changed her; that made her dependent. When she didn't get it one year, she was outraged." She also has a client who was giving her son, a lawyer in his thirties with children, $25,000 a year, who was threatening, that if it were cut off something bad would happen. Besides the dependency problems, this man apparently thought his parents were much richer than they were.
"I had to have a very frank talk with him and tell him that his parents didn't have nearly the amounts of money he thought they did," she says.
Space, the New Hampshire financial planner, recounts the story of a 50-year old client whose parents had established a trust for him. That was a good idea, but unfortunately they made it too easy to start spending the principal.
"The trust was funded with $900,000 less than ten years ago, but since then it has been exhausted and closed," Space says. "This beneficiary was unstable as a teenager, developed a drug dependency as a young adult, and acquaintances used him for his money."
Space bemoaned that the trustee was restricted. Therefore there was no way for the advisor to stop this adult, who had never learned about money in his youth.
Advisors should tell their clients that money education must begin early says Eileen Gallo. "We want you (the parents) to talk to your children at an early age about allowances and credit cards," she says.
Delessert fears that some clients don't want to discuss the subject because they want their children to continue as perpetual wards. She says two parents recently told her that their daughter was in acting and was not able to support herself. They paid for all her expenses because "that's why we have money."