CPDOct 20 2016

Communicating the need to save

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      Communicating the need to save

      How can advisers help clients to pass on knowledge about the value of saving to their children?

      Advisers spend much time with parents and grandparents, helping them to understand the importance of long-term planning, but how much of this wisdom is passed down to the next generation?

      While no adviser is likely to sit down with the seven-year-old recipient of a Junior Isa and discuss the relative merits and demerits of compound interest, there are ways that good financial education and knowledge can be passed onto the eventual beneficiaries of your clients' investment portfolios.

      After all, there is no point saving to send them to a good school or funding them with a pot of money to take control of at 18 unless they have some basic knowledge of how to manage money.

      Watching money build up is a great life lesson in the virtues of saving. Annabel Brodie-Smith

      As Alan Lakey, adviser for Highclere Financial Solutions, states: "Financial capability is improving yet the financial mechanics of life are alien to most school leavers. Parents should ensure children obtain an awareness of the need to save and insure, and of the dreadful burden that pensions have assumed."

      Start young

      Advisers should encourage new parents to start early, as Alistair McQueen, savings expert for Aviva, comments. He says: "For most children, their parents will be their first port of call for financial education, although financial education among many parents is not strong.

      "Boosting this confidence is where a financial adviser can help."

      "Talk to them about it", says Rob McCurrich, head of investment and pensions at Roxburgh Financial Management. "Explain to clients how they can show their children the effects of what they are doing to build up funds on their children's behalf."

      "Once children have learned to count money, they are in a good position to start the process of understanding the real value of it. Watching money build up is a great life lesson in the virtues of saving", says Annabel Brodie-Smith, director of communications at the Association of Investment Companies.

      Mr McCurrich adds: "If the myths can be busted at an early age and good disciplines instilled, there is every hope these good behaviours will be carried through adult life."

      Encourage clients to "talk to children about the benefits of saving", should also be accompanied by allowing children some element of responsibility. "Show them how, from an early age, to manage a small amount of money themselves", says Helen McCormick, adviser for Beaufort Asset Management.

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