Advisors, regulators take on youth market

The Canadian Securities Administrators recently launched a contest and a range of interactive web content designed to enhance the personal financial awareness of youth. While there is no indication that the youth of today are going to be any less prepared than their parents were in managing wealth, the financial industry and advisors alike recognize that increasing financial awareness at a younger age may boost receptiveness to the benefits of financial advising.

The Financial Fitness Challenge for Youth, the CSA’s latest financial education program, is targeted to those aged 15 to 21 and runs until April 30. The organization has launched different variations of the program in the past, but this year’s incarnation is web-based, offering interactive games and a quiz where one participant will get the chance to win $750.

The program is augmented by resources and literature from each of Canada’s provincial and territorial securities commissions that teachers can use in the classroom. Topics covered include investing basics, financial resources and personal budgeting.

“There has been a lot of interest from teachers,” says Patricia Trott, who helps oversee the program for the Ontario Securities Commission. “We don’t do a follow-up to see how well the information is being received, but every year we’ve had an increase [in participants].”

The CSA estimates that more than 20,000 students visited the website, a number Trott expects will be surpassed in 2007, since the contest has already generated 19,000 hits on the website with almost two weeks to go.

It’s not just at the institutional level that a concerted effort is being made to improve kids’ understanding of finance; some advisors have taken it upon themselves to engage their clients’ children in the family’s financial planning process.

Jeanette Brox, a CFP with Investors Group in Toronto, says her financial planning focus is on the family, rather than the client, so she tries to get the children to take an active role in it.

No matter how young kids are, you can set up a plan that teaches kids financial responsibility, she adds. The nine-year-old son of one of Brox’s clients is a child actor in commercials. Most of the money is invested for him, but his mother allows him to keep some to learn sound spending habits. In much the same way that a financial planner might help a family budget to buy a home or save for another large expense, Brox is helping the child budget for a family trip to Italy.

Other children can learn through similar techniques, such as through allowances, she says. Brox tries to keep it interesting by using examples about investing they can relate to.

“I do little projections for them, and they feel special too. It’s exciting for them,” she says. “We’ll talk about things like how the markets fluctuate, so when would be the best time to buy your hockey equipment.”

Brox says it’s worth the the extra effort to establish long-term multi-generational clientele. She’s been a planner for about 15 years, so the first wave of kids she’s worked with are beginning to graduate from university and turn into clients. For example, one of these such clients is ready to purchase his first home.

Doug Lamb, a CFP who runs Spera Financial, has also seen his clients’ kids grow into clients, although his approach has been different from Brox’s. When he works with families, he takes into account financial planning for the kids, but much like other values, he says, learning financial responsibility is going to be instilled by the parents.

Lamb warns that it’s not an advisor’s role to get involved in parenting concerns. He does offer advice on things like curbing children’s spending habits. At the end of the day, if he’s giving good financial advice to the parents, and they’re following it, he finds the children will tend to be receptive to sound financial planning as well.

The one commonality he’s noticed with financially responsible kids is their parents don’t bail them out every time they needed money.

“The worst thing they can do for a kid is to bail them out. If you do bail them out, it won’t solve the problem, it will just happen again. You’re not doing them any favours at all, and they’ll never learn to sit down and do that planning,” he says.

Advisors interested in the CSA’s program can freely access the material through the CSA’s website.

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com

(04/17/07)

Mark Noble