4 Family Engagement Strategies To Build Future Generations
The question of family wealth passing from generation to generation splashed across the headlines in September of 2022 when Patagonia founder Yvon Chouinard famously donated his billion-dollar company to environmental charity instead of leaving it to his kids. It was a bittersweet move that was met with both public applause and private astonishment.
An inheritance offers a profound opportunity for class mobility and a better quality of life, but without shared values of stewardship and an understanding of solid economic fundamentals, it can vanish nearly overnight.
One of the most important services any financial institution can provide for its clients is the development of family engagement strategies to build future generations of financially informed and experienced benefactors.
The challenges of trans-generational engagement in finance
The sustaining of financial health and wellness from one generation to the next is as much a matter of building good habits and instilling sound principles for the future as it is assembling a legacy today. Sadly, studies show that, of the 70% of families who fail to transfer wealth, 60% of those failures result from a lack of conversation and information.
It is estimated that Millennials and Gen Zers will be inheriting $3.2 trillion dollars from their parents over the next few decades, and what they choose to do with that wealth will form the substrate of America’s health, happiness, and socio-industrial future.
On top of that, there is an informational gap developing between parents and children. The ways in which young people are engaging the financial industry are fundamentally different than the traditional strategies of their parents. Digital banking, market investment tools, and E-commerce apps are unquestionably changing the future of banking.
Even how wealth is built is changing. 80% of younger investors are looking to tangible investments like real estate and private equity these days. They are putting three times more wealth in alternative strategies and half as much in stocks as their parents, and 47% of all young investors are supporting their portfolio with cryptocurrency.
It’s a very, very different world than the one their parents navigated, and one that is ever more complex and speculative.
Engaging generational opportunity
The situation presents a huge opportunity—not to speak of moral imperative—for financial institutions to foster trans-generational loyalty and institutional prosperity with their clientele. With some simple family engagement strategies, we have the opportunity to steward our clients across generational gaps to produce better outcomes for banks and families alike.
1. Begin the conversation early for your customers
As it stands today, the average age at which parents involve their children in financial conversations is 28, which means that for most of their economic formative years they are self-taught. That’s nearly a year and a half after they have given them grandchildren.
Most financial institutions are already engaged in relationship banking strategies with their clients, and it’s never too early to bring family wealth planning into the conversation. Opening bank accounts for kids to teach them about basic financial principles are excellent starting places for multi-generational thinking. College funds for a newborn member of the family plant the seeds for a fertile garden of realizations about the power of wealth and perpetuity down the road for the benefactor.
Always be thinking, “what will this child value when it’s their turn to plan?”
2. Include, include, include
The less frequent experiences most families have with banks are typically the most consequential. The basic architecture of a mortgage and the metrics of loans and refinancing is the language of wealth building. These moments are the perfect opportunity for families with teenagers and young adults to begin familiarizing them with these essential processes.
Every parent hopes their child will someday buy a house of their own, and they should be empowered by institutional representatives to invite their budding speculators along! It’s a great family engagement strategy to bring people closer together and concretize the triangle of generational wealth building: parent, child, and institution.
3. Find the digital intersection between generations
There is no doubt that Millennials and Gen Zers were born into the digital age of finance, but their parents brought it online. 76% of account holders—regardless of age—have an online bank account, and mobile banking is already a pan-generational experience.
Apps are a fantastic opportunity for parents to relate financially to their kids because they are ubiquitous and familiar, and the data is in: when the FDIC ran a program in 21 school districts across the US to encourage elementary students to open savings accounts, the ones that included mobile banking were some of the most well-received.
Digital products are an excellent tool for including all family members in the types of investments, accounts, and liabilities that are part of their collective picture of wealth, and in a language, everyone is eager to speak.
4. Legacy planning shouldn’t be scary!
Of course, many of us don’t want to think about words like “estate” because it reminds us of something scary. However, it’s a critical conversation and one that can be framed in a positive way that brings families and institutions much closer together.
Look: legacy planning is not about death, it’s about life, and bridging a moment to create continuity and hope. Institutions that escort families and their legacies from one generation to the next build something so much more important than a business today: they are part of a narrative of loyalty and prosperity tomorrow.
It’s about a better future for everyone
It can be challenging to think so far down the road when exhausted parents are trying to put food on the table or a teenager is just beginning to discover who they want to be. These are exactly the moments that your institution can take a step towards them to help meet their needs and create that better future we’re all dreaming of.
Family engagement strategies are some of the most vital—and most rewarding—work we have the privilege of sharing with our clients, and if we are good stewards, with their children and grandchildren as well.
The Postage is dedicated to helping financial institutions use online resources and tools to build lasting, meaningful, long-term relationships with their clients. With a portfolio of online legacy planning options, digital lock boxes for important documents and memories, and secure production of final wishes and future notes for your loved ones, the Postage will help your financial institution engage families and build the kind of trust and loyalty that will last for generations.
