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Neal Frankle
Neal Frankle
Serve Your Clients Better by Providing Life Advice to Their Kids

Your clients care about their children more than they care about anything else. Be of service to the kids, and you serve your clients at the highest level.

September 17, 2009
by Neal Frankle, CFP

Here's a letter from a young man who has been on the right path for awhile but has hit a fork in the road and doesn't really know which direction to take:

"I have been working the last few months and saving nearly everything. I currently have about $12,000 in accumulated liquid assets spread throughout various checking, savings and money market accounts. I have nothing that I am really using as a write-off currently, and am on track to continue to add about $900 per month to the savings. I know that there has to be better ways to save than a straight savings account at two percent, and I know that for tax purposes I should probably start spending on something to use as a write-off. I use Quicken, and have EVERYTHING documented, as well as keep receipts for ALL purchases in a binder by date. I don't know if this helps any for the purposes of investing or for write-offs, since everything is paid for through personal accounts, but, I have it, and I'm in the practice of keeping my records, so if it is something that I can do to help for the future I already have the habit formed.

I would love to figure out the best plan of action."

What advice would you give this young person?

While you're thinking about it … let me chime in with a few ideas of my own.

First, celebrate the good news.

Let's face it … this kid is a dream come true for any father of three daughters looking for a good match …

  1. He's got a job.
  2. He saves money.
  3. He has assets and no debt.
  4. He tracks his spending.
  5. He is thinking about his finances and is wondering what the best course of action to take. He is asking for help.

In my opinion, this is the most important and impressive thing about this young man. What's not to love about this guy? He's doing great.

What needs to be addressed?

Based on this letter, can you give this man some suggestions? Should he buy real estate? Should he invest in mutual funds? Should he pursue an advanced degree? Open his own business? Can you help him decide? I can't.

I can't because I have no idea what he wants to achieve. What are his goals? What does he dream about doing? What's important to him? Do you know? I don't.

And if we don't know that, we can't really help him. The best thing we can do now is to simply ask him more questions. We have to understand his ultimate goals in order to offer up strategic suggestions.

It sounds to me like this person is very focused on having financial security. That makes him really stand out among his peers and that's great. That kind of character will pay off in spades as he gets older. But if this young man was my son (or better yet, son-in-law) I'd suggest that he take the time to think a bit about what he wants to get out of life.

I could be wrong, but I just get the sense that he's navigating his life around his finances rather than structuring his finances to help him navigate the life he wants to lead. I know this sounds really weird coming from a financial adviser but my experience tells me that without absolute clarity on goals and values, it's impossible to make any headway towards financial success.

Why should you care about this?

If your clients have a 20-something child, this story is important on two issues:

  1. It proves that they can earn a modest income and still achieve financial success.
  2. It illustrates the critical role values and goals have on financial freedom.

I'm reminded of that movie — The Graduate. I was probably 12 when I saw it for the first time and I fell in love with it probably because I had a major crush on Ann Bancroft, but let's not go there.

Remember the opening seen when Benjamin comes home from college? A friend of the family tries to convince Ben to pursue a career in plastics, despite the fact that Benjamin demonstrates no interest whatsoever. Benjamin basically drops out of life because he can't figure out what he really wants — but that doesn't stop anyone from telling him what he should do.

I wonder if this young man has taken the time to think about what he really wants. Again, it might be a great time to invest in real estate or mutual funds right now … if that supports his ultimate goals.

The best thing you could do for this young person and for your client is to sit them down and try to figure out what they want to do with their lives rather than jump into a conversation on how best to invest that money.

Am I reading more than I should into this letter? What advice would you give him? Let Neal know.

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Neal Frankle, CFP, is the author of Why Smart People Lose a Fortune: 5 Steps to Restoring Your Wealth and Sanity.

The material in this article is general information and not meant to provide specific investment, tax or legal advice. Investing in the stock market involves risk.