Why your kids should meet your financial advisor

Key Takeaways

• Inheritances often come with complicated decisions involving investments, taxes and arranging eldercare. Decisions become easier if your financial advisor already knows your heirs, healthcare proxy and power of attorney.
• TIAA Wealth Management’s “householding” program allows your adult children to work with your wealth management advisor and have access to the same TIAA products and services.

Summer. It’s the perfect time for building sandcastles on the beach, for taking the boat out on the lake—and for something decidedly less fun but no less valuable: introducing your adult children to your financial advisor.

Melody Evans, a TIAA vice president wealth management advisor based in Portsmouth, N.H., urges clients to arrange such meetings now so they can avert a situation in which the first time she meets the next generation is at a time of crisis. “When it comes to dealing with incapacity planning or inheritances, having your children get to know your financial advisor now ultimately makes things much easier in the future,” says Evans. Plus, should your children choose to work with your TIAA financial advisor, they will have access to financial planning products and services that they might not qualify for on their own (more on that in a moment).

Evans prefers scheduling these get-to-know-you meetings in the summer because it tends to be a more relaxed time for adult children with young families. “Summer tends to be a little less chaotic with kids’ schedules,” she says. “Young parents might be a little more open to such meeting now than they would other times of year.”

Regardless of when the introductions happen, it’s important they take place. With baby boomers shifting into retirement and beyond, the United States is now on the verge of the greatest generational wealth transfer in history. According to financial intelligence firm Cerulli Associates, boomers and members of the Silent Generation are expected to transfer $73 trillion to their heirs by 2045, with most of that money going to children and grandchildren.¹

“Wealth transfer requires generational planning,” says Surya Kolluri, head of the TIAA Institute. “It’s why it’s important for adult children to have a handle on their parents’ finances, even if it’ll be another 10 or 20 years before inheritances and financial caregiving become pertinent.”

With all that money can come a boatload of complicated decisions involving investments, taxes, family homes, estate planning, required minimum distributions (RMDs) and possibly arranging long-term eldercare. The decisions become easier if your financial advisor already knows your heirs, your healthcare proxy and your power of attorney.

What is householding?

While Evans wants to meet clients’ children regardless of whether they ultimately choose to work with her, there are financial advantages for the next generation if they do choose TIAA.

TIAA embraces householding, a business practice that allows the children of wealth clients to qualify for TIAA products and services by piggybacking off their parents’ account balances. In other words, if the parents qualify to work with a TIAA wealth management advisor, the adult children or grandchildren will generally qualify too—even if the younger generation doesn’t have enough assets on their own to meet required minimums (generally $250,000 in assets with TIAA if held outside an employer plan or $1 million if all of their assets are in an employer plan).

Moreover, if you already have money in one of TIAA’s managed account offerings, Private Asset ManagementPrivate Asset Management (PAM) or Portfolio AdvisorPortfolio Advisor (PA), your children are generally eligible to open a PAM or PA account as well. You may be eligible to benefit from such piggybacking since the annual fees charged by PAM and PA are based on a sliding scale in which fees go down as assets under management go up. (Talk to your TIAA wealth management advisor for specific information on PAM and PA fees and minimums.)

Obviously, TIAA and other financial companies have a business interest in promoting householding. Financial companies don’t want to lose accounts when assets transfer from one generation to the next. But the benefits of householding for the next generation can be substantial.

“Someone who’s 35 years old and midcareer may not have robust financial planning services available to them because, frankly, they haven’t built up enough wealth,” says Evans. “With householding, they can work with mom and dad’s TIAA portfolio manager to invest $100,000. Or they can meet with a wealth management advisor once a year to discuss whether they’re contributing enough to their 401(k) or whether they should open 529 college savings plans for their kids.

“We can help them build their own financial plan.”

How to start householding with TIAA Wealth Management

Talk to your TIAA wealth management advisor if you need information on householding or how generational planning can help you and your family. Don’t yet have an advisor? Schedule an appointment.

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