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Bal Nivesh When should you encourage clients to involve their kids in financial planning?

When should you encourage clients to involve their kids in financial planning?

Find out the right time to involve Gen ‘Z’ clients in the financial planning and investment process.
Rosevina Gonsalves Aug 19, 2017

IFAs impart financial coaching and investment lessons to their clients. However, advisors should also involve children of their clients in this process. This helps inculcate early the money management habit among children.

Cafemutual spoke to a few advisors to understand the right age to encourage the children of your clients to start investing. Here is what they have to say.

Jayant Vidwans, Founder, Vidwans Financial Advisories believes that IFAs should advice their clients to involve their children in the financial planning process whey they turn 8-10 years. “Children at this stage are eager to learn new concepts.”

He further said, “To start with, parents can start investing for their children for their higher studies while kids can start monitoring these investments. In addition, I encourage my clients to bring their children to  review meetings to make them familiar with the basic financial concepts like budgeting. In fact, I am planning to conduct investor awareness programs (IAPs) for children with relatively easier and fun concepts such as investing lessons from video games.”

Speaking about asset allocation, Jayant said that he recommends child plans of mutual funds to clients to save for their children as the beneficiary gets money at maturity. In addition, if investors have a long time horizon, he recommends investing in a mix of equity and child plans.

Another suggestion is to encourage their clients giving pocket money to children and keep a track of their monthly expenditure. This will help them understand budgeting and value of money.

Ranjit Dani, Co-founder, Think Consultants, too feels that the clients should encourage children to involve in financial planning process at the age of 8 to 10 years. “Though parents can inculcate savings habit among their children as and when they start receiving monetary gifts from elders, the ideal age to start involving them in basic money management is between 8 and 10 years since they can understand the concept of money by then.”

He further added, “My youngest client is a 4-year old child artist. Her parents have invested all her earnings for her higher education in mutual funds.

Shifali Satsangee, Founder, Funds Ve'daa, believes that there is no ideal age to start investing. “We always advice our clients to involve their kids in the investment process at the earliest to inculcate savings habit among them. We usually request our clients to get their children to the review meetings to help children get familiar with the concept of money.

Sharing her investment strategies for children she said, “As far as investing for a minor is concerned, we usually advice funds that are inherently sacrosanct for the child like children's gift funds. For a minor turned major, we build a core and a satellite portfolio which consists of a blend of majorly equity and a portion of fixed income for stability. We focus majorly on the SIP and STP mode of investing.”

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