But other young people, who developed healthy attitudes about money, are uninterested in what their parents have, Delessert adds. "They don't want to figure potential inheritance numbers in their financial plans. They want to make it on their own."
Farber, the Boston advisor, wants his children to fall into the latter category. He already is planning for his son Noah, who is not yet two.
"Whenever my son starts to have earned income, whether he has a paper route or has another part-time job, I'm going
to set up a Roth IRA for him. This will help him get in the habit of
saving and having all those years of compounding, which will be very
good for him," according to Farber. He also figures that, with the
power of compounding over so many years, someday his son will "look
back at his pop and be very, very grateful."
Children who have IRAs or savings accounts are also much more likely to contribute to their 401(k) plans when they take their first jobs, he adds. They're also more likely to use the 401(k) properly, ensuring that they obtain the full value of the employer match and put a proper percentage in equities, according to Farber. He also says that parents should also help children set up savings accounts at an early age.
"Why not tell your kids that if they save a certain amount each month that you will match it. With some of the older kids, you could also set up a monthly account to go into a mutual fund. This gets them involved in investments and possibly on the road to developing an interest in various funds," Farber says.
Someday, he hopes, his son will thank him for giving him a healthy
interest. "Advisors," he says, "need to encourage their clients to do
the same with their children, so they will one day thank their
advisors."