by Amy Florian
Amy Florian is CEO of Corgenius, a company specializing in training
financial professionals how to interact with grieving and emotional
clients. Her Web site is www.corgenius.com.
Sending a child off to college is more challenging than it
appears at first glance. As advisers, you are accustomed to
concentrating on the logistic and financial requirements. Equally
important and more wrenching, though, is the emotional aspect of
this transition.
You may think this is out of your purview. Yet the younger your
clients are, the more they expect you to care about the broader
picture of their lives. As Lewis Walker wrote in the February 2008
Journal of Financial Planning: "What clients experience,
largely based on the conversations they have with you, is what they
remember and what they will refer. If they say, 'Wow! No one ever
talked to me about that, or asked me about that before,' you are on
the right track." When you establish yourself as an insightful
guide through these often emotional transitions, you build loyalty
that keeps parents on your client roster for the long term, and
hopefully lays the foundation for bringing their children on board
as well.
Strategic Beginnings
Remember that parents go all too rapidly from holding babes in
their arms, to holding hands while crossing streets, to reaching up
to hug young adults who may tower over them. They try to support
their child's emerging dreams even as they begin to let go. Through
it all, their hearts struggle to balance their hopes for the child
with their fears and insecurities. They feel deeply responsible,
and more than anything else they want to do the right thing. This
is the emotional milieu as your clients prepare to send children to
college.
Your best course of action is to open the door and allow them to
talk about this mixed bag of feelings. They may decide not to
pursue it and stick just to business. But if they go through the
door and confide their feelings, you get a better sense of how to
serve them emotionally and financially. At the same time, they feel
understood and they see your advisory relationship as having value
and depth beyond merely choosing investment strategies.
Your underlying purposes, then, are to:
- Demonstrate to the parents that you understand and support them as their child grows
- Promote open discussion and honesty about financial matters between the parents and their teens
- Allow the teen to feel respected as a maturing individual and involved in a process that will have profound implications for him or her
- Genuinely help the family while increasing the likelihood that you will retain that child as a client through college and beyond
Most likely, you began the process when the child was quite
young, asking parents about aspirations for their child's education
and implementing appropriate savings strategies. When you revisit
those strategies during review meetings, invite the parents to tell
you more about their child. Take notes on the personality, favorite
activities or sports, any risk-taking and rebellious
characteristics, natural abilities, etc. Most parents are happy to
talk about their children, and it increases the level of
relationship you have with them. It also gives you insight into the
child as a person.
As the child grows through elementary school, initiate discussions
concerning the level of funding parents anticipate providing for
college. Some parents may not wish to fund the entire cost of
education, requiring the child to contribute through personal
savings, a job, or scholarship awards. This may cause teens to be
more invested in their education, and some studies have found a
correlation between paying for education and their success in the
first post-college job. Yet, the studies are conflicting and
inconclusive; the only clear negative effect is that grades
decrease when college students work more than 20 hours a
week.1 So some parents decide to fund the entire
education, believing it will free the child to study, explore, and
be involved in extra-curricular activities without having to worry
about money. Still other parents may develop scenarios in which
certain behaviors or grade thresholds result in higher levels of
funding. You will find proponents on both ends and along the entire
breadth of the spectrum.
It is not your job to judge the parents' choice, but to encourage
discussion. Acknowledge at the outset that while parents want to
provide for their children's needs, they do not want their
financial support to be taken for granted, nor do they want it to
be wasted. With that in mind, note some of the characteristics you
learned in previous discussions (that is, one family may have an
exceptionally responsible child, while another struggles with an
overly dependent or rebellious one) and ask how those attributes
figure into their decision. Throughout the discussion, reassure
parents that they are making the best decision they can at the
time, that there is no single right answer, and that the answer can
always change in the future.
A Plan in Action
Bring the child into the process no later than the age of 13 by
arranging a brief joint meeting in the office. This could most
easily be an addendum to the annual review meeting. When the family
arrives, make sure you greet everyone, specifically telling the
teen you are happy to meet face-to-face. Then provide the teen with
soft drinks and a comfortable place to wait while you conduct the
review meeting with the parents. When you have finished that
portion of the proceedings, bring everyone together.
Address the teen first, asking what he or she thought when asked to
attend a meeting with a financial planner. Listen carefully to the
answer, correct misperceptions, and provide information requested.
Then begin getting acquainted by asking a few questions yourself.
Remember, teens are notorious for one-word answers. Make sure you
ask open-ended questions that cannot be answered with a simple
"yes" or "no." For instance, "As you think about going to college
in five years, what is one thing that excites you and one thing
that scares you or causes doubts?" As the teen talks, take brief
notes that you can later complete and put into his or her file.
You'll use these in subsequent meetings, when it is always helpful
to refer to something the teen said previously.
Finally, invite the parents to join you in explaining the steps
they are taking to save for college. It is not necessary to go into
detail, especially about the amount or nature of funds; in fact,
remind everyone that you will have more detailed meetings in coming
years. At this point, you are simply introducing the subject and
assuring the teen of both appropriate transparency and involvement
in a process that will have a profound impact on his or her
future.
During the teen's freshman year in high school, plan another joint
appointment. A couple of weeks beforehand, invite the parents to
write a letter to their teen that they will read aloud to begin the
meeting. Writing a letter gives parents the opportunity to
carefully think through what they want to say, and then a concrete
way to express their feelings to their teen in a controlled and
professional environment. In it, they can talk about their love,
hopes, and fears for their child, their support for the child's
dreams, and their own desire to make wise decisions. In other
words, it is the emotional component behind the financial
strategizing. In most cases, it changes the entire tenor of the
meeting, grounding the discussions in the context of family
relationship rather than keeping it strictly a business
meeting.
Be prepared that some parents will choose not to write a letter. In
some families, emotional aspects simply are not discussed. Or
perhaps, the parent-child relationship is strained at a given time,
and it seems artificial to them to write such a letter. Although
most parents and their teens benefit greatly from the exercise,
remember that you are always inviting, always opening the doors,
and then following their lead.
After the letter is read at the meeting and the teen has a chance
to respond, you can join with the parents to explain the proposed
levels of college funding. Though the reasoning behind it will vary
from family to family, the most important outcome is that teens
understand the contribution they are expected to make so they can
begin forming their own plans. They may take their high school
studies more seriously if scholarship money counts toward their
portion of the expenditure. They may take on a summer job and begin
a serious savings plan, hopefully guided by you. Regardless, it can
prevent arguments and surprises later when the teen knows up front
what will be expected.
At least once a year from then on (possibly as an adjunct to your
annual review), schedule a brief meeting or telephone conference
with the parents and teen to assess the level of savings for all
parties, determine whether any plans or expectations have changed,
and answer questions they may have. In addition, keep apprised of
the colleges under consideration and make notes in your files about
anticipated costs. Make sure to include tuition and fees, books,
room and board, travel, and other expenses, all of which are easily
accessible on the Web sites of the respective institutions.
Finally, consider scheduling a yearly appointment with only the
teen for financial education. According to the Ameriprise Financial
New Retirement Mindscape Survey of 2006 and the December 1, 2009,
issue of Advisor Perspectives, the top financial priority for 61
percent of parents with financially dependent children is helping
their children become more financially savvy. In fact, these
concerns "often outstripped worries about their own retirement
preparation ... Boomers frequently feel they have not set a good
example for their children ... Moreover, many indicated they felt
their children would not listen to their advice, but would respond
better to an outside, professional opinion." When you provide
financial counseling to a teen, you relieve some of the parents'
stress while building a trusted relationship for the future.
Throughout the process, continue to do emotional check-ins,
remembering to use open-ended questions. Some sample queries for
parents could include:
- "Last time you said you felt your daughter was too immature to handle a high-pressure college situation. Is that still how you feel, or how have things changed?"
- "You've always tried to do your best for your child, but there is never any guarantee that your decisions are the right ones. What decisions are causing you the most anxiety right now?"
- "As they prepare to send a child to college, most parents bounce back and forth between feelings—they are excited for their child and yet fearful for them; they are sad because they will miss their child and yet looking forward to the freedom from teen schedules and demands. Where do you find yourself in that range?"
Seeing It All the Way Through
Don't stop the process when a child leaves for the university. Continue asking parents how they feel about the empty bedroom, the student's level of responsibility, and their own degree of assurance about their decisions. During breaks, meet with the students to talk about the college experience and their personal finances. Educate and support them, increasingly treating them as clients in their own right.
In other words, in all that you do, try to keep a balance between the financial and emotional aspects of this transition. In doing so, you serve the family members well, and you ensure future business. You will know you have succeeded if the parents and their children walk appreciatively out of your office saying, "Wow. No one ever talked to me like that before."
Endnote
- Gordon Van de Water, "The Effect of Part-Time Work on Academic Performance and Progress: An Examination of the Washington State Work-Study Program," in Rick Kincaid ed., Student Employment: Linking College and the Workplace, Monograph Series No. 23, South Carolina University: National Resource Center for the Freshman Year Experience and Students in Transition (1996): 57–67.
When considering the effects of student employment on academic achievement, the amount of time spent working is a determining factor on whether the overall effect of employment is positive or negative. In a study by Van de Water (1996), student grades tended to improve as students worked more hours per week, up to a total of 20 hours per week. After 20 hours of work, the number of hours worked had a negative relationship with GPA. In addition, students who worked 10–20 hours per week performed better academically than students who worked fewer than 10 hours, more than 20 hours, or not at all.
