Taking Care Of What Matters Most...

Caleb M. Lopez, MBA

Investment Advisor Representative

03/05/2024

I hope you are well. As I announced in February my wife is pregnant and we recently had our first ultrasound! Our baby is healthy, though we do not know their gender yet, as our doctor’s office does an anatomy scan at the 20 week mark. The coming of my first child, coupled with a new industry research report, influenced my education piece this month. Entitled, “Taking Care Of What Matters Most”, this education piece is a reflection on family, wealth, and legacy. A new survey/study has shown that one of the most important parts of wealth management to families is having someone help them take care of their family now, and after they are gone. An increasing number of clients of mine, and of the wealth management industry more broadly, have expressed a desire to have their advisor more deeply integrate their families into their financial plans. This can come in many forms which we will discuss today. I do recognize that not all of my clients have families. I still think despite this, these clients can benefit from thinking of their legacies, even if they do not come in the form of children or immediate and extended family. Without further ado, let’s dig in!

Several times within the last six months, clients of mine have asked me to meet with members of their families whether that be children or siblings, to make sure that someone was helping them take care of their finances like I help my clients take care of theirs. This coincided with the coming of my first child as well as a new study that showed that clients of wealth management firms are interested in their immediate and extended family members being included in their financial plans. This has led to me doing financial consultations with the children of my clients and taking some “family clients” of those who are clients of our firm already. While I usually only take clients in the university system, it has become increasingly apparent to me that I need to be able to serve the people who matter most to the university faculty/staff member that I serve!

Family is so fundamental to our human experience. The first people we know are our parents or caregivers and, for better or worse, we share parts of them with us. This has been such an interesting experience as I look at ultrasound photos of my first child. Our baby doesn’t know anything and we will be their first introduction to the world (which is both scary and exciting)! Even in the spiritual domain familial metaphors are central. As a Catholic, I refer to God as my “father”, even while maintaining he has no body/biological gender. This is the doctrine of “divine filiation” which I find more and more interesting as I age. The point of those above reflections are to draw the following point: wealth is not merely material. Stocks, bonds, and annuities have material value, but also represent both an investment in an tangible industry/company that produces goods, as well as represents for us what we wish to accomplish with the hard earned funds we have acquired. For many of us, the value we see in our accounts represents stability, taking care of our families, significance, and generosity. My heart was warmed by a story of a client of mine who is a professor at the University of Michigan, who would take clients of hers out to eat. Even though it would cost several hundred dollars to feed all of the students, she still picked up the tab because in her words, “I can afford to do that now”. This is a practical example of the immateriality of wealth, generosity, and why I find meaning in what I do.

So how can you use your wealth to take care of your family beyond their physical needs? If you have small children, keeping them fed, insured, and clothed is likely where your focus is! As well keeping their basic needs met, you can also start talking to your children about money at a young age. Tell them what it is, what its for, and how it should be properly used. Financial education, like most other forms of education, starts in the home. For those who have children that are older, I have done meetings with children of clients of mine to offer them conflict-free advice on how to set up their retirement and financial plans. Some client’s of mine have kids are just starting their first professional careers and they are happy to have a trusted advisor review their situation with them. These one time consultations are at no cost to either the client or their children. If the situation is simple enough (maybe one employer plan and some general questions) the consultation would be sufficient. Depending on the situation, they may even become, “family clients”, of our firm. If they have multiple previous employer plans that need consolidated, desire supplemental savings, received an inheritance, have high income that makes planning more intricate, or desire a fuller type of service, it may be appropriate to have them as full advisory clients. In this case, I may even be able to add them to the existing family pricing so you both can pay less in planning fees. The above study I referenced showed that wealth management clients want to know that their wealth will not be lost by the next generation. One way to do this is to establish a family plan with a wealth management firm. It may be initially uncomfortable, but having everyone on the same page about how assets should be distributed after your passing can help avoid confusion and reduce the risk that mistakes could be made. The family plan would be a game plan, kept in your file in our office, for how assets should be distributed as a part of your estate plan. This would be more than just beneficiaries and percentages, but what you wanted done with your wealth after you are gone. I would encourage clients of mine to consider adding a 1% or more donation from their estate to a church or nonprofit.

When I worked for an estate planning firm in the beginning of my career I worked with a client who had no children. The clients wanted to give their estate to someone who would appreciate it. They picked several animal shelters in their area that they reached out to to get their EIN number for their estate planning documents. The animal shelters were thrilled that the clients added them as their beneficiaries. This was a very heartwarming experience, and the clients got the benefit of seeing the excitement of the nonprofits during their lifetime, as well as the benefit of knowing they will make a difference after they are gone. I would start thinking about questions like: "How do I want to be remembered? What do I want my legacy to be? How can I help those who are less fortunate than I am? What do I want my kids to know about wealth?". In this way you can start to formulate an idea of what your wealth is for. During your lifetime, and after your gone, we can Take Care of What Matters Most!