May 2004
As I heard the news of yet another young product manager pausing his burgeoning marketing career in mid-stream to head of overseas for a year (or more) – the ‘big OE’ – I couldn’t help but wonder what we’re teaching our kids about financial success, and planning for the future.
Far be it from me to heap scorn on the value of overseas experience – travel broadens the mind, and believe me, I know many minds that need a bit more broadening. But somehow I cannot quite see the value of taking a fine young mind, well-educated and just now becoming valuable to employers, overseas to pour beer or pick grapes, just for the sake of the experience. Perhaps he will find a marketing job, one that furthers his career and puts him on the international stage – but that doesn’t seem to feature as a pre-requisite of the long long holiday!
I couldn’t help but contrast this to another young man I met this week, certainly less educated, but more focused on his personal success. Here is a person who, having been left in charge of a younger family member at age 19, set out to make his way in the business world. With his partner, they now own multiple houses (with mortgages), and two successful businesses. At age 26, they are well on the way to being mortgage free by age 30! He told me his friends think he’s boring – always working, or thinking about work – but, ‘hey’, he said, ‘by the time I’m 40, I’ll be able to have all the fun I want…. all they can think about now is whether there’s enough beer for the party!’ An entrepreneur in the making – yes – but despite the business risk taking, he is insured to the hilt against the unexpected which could take away his ability to reach his goal. I was amazed….
Two contrasting approaches to life – which led me to think about what I’m teaching my own children, and how pleased I felt when the older one suggested we think about getting her “an appreciating asset” for her 21st birthday. She’d almost never made any suggestion for previous birthday presents, so I asked her why she was doing so now – “well, I’m just worried that you might buy me a car or something like that”, she said, “and if you’re going to spend that much, I’d much rather put it away towards owning my own home by the time I’m 30”.
This magical target – home-ownership / mortgage free by 30 – seems to be becoming quite the rage amongst our more conservative, maybe more responsible youth. Some of them are talking about the contrast they see between parents who had their families young, and those who delayed until they’d had their overseas experience, built their careers and so on. My daughter puts it this way… “I just don’t want to be dealing with a 14 year old when I’m 50!”
Personally, I’m one of the seemingly few of my peer group who had my kids in my mid twenties. At 45, I’m looking forward to maybe 15 years or more of asset building (and overseas travel) after my kids have left home, well educated and without student loans, because, having been back in the workforce for 15 or so years since I had them, we could afford to pay for their university educations without compromising our retirement plan.
Why should advisers and planners care about this? At Synovate, our surveys consistently show that the people who take financial advice tend to fit the same mould – already asset rich, often old or even retired. It is the next generation coming through however, who seem more in need of a ‘plan for life’ – that long term view that takes in not just where and how they will invest their assets already accumulated, but rather what their plan is to accumulate those assets, and when.
That ticking biological clock, that tells women it’s now or never as they approach 40, should perhaps be overtaken by a ticking financial clock, telling people their earning time is running out.
Now I’m not suggesting there’s anything wrong with parenthood at 40 – but surely it’s only viable if they’ve actually spent the prior 15 or so years doing what younger parents do when their kids finally leave home – accumulating that nest egg that will give them the lifestyle they want in the future. As I see it there are essentially two ‘sensible’ routes through life (for those who are going to have families)...
- Take your recreation early, by delaying career and family, but pay for it later by having to work longer and harder before retiring;
- Or focus those early years on career and family, and enjoy a long period of accumulation and recreation in your later years.
Too many people seem to think they can have both – and then feel cheated when they find they can’t.
Perhaps if the reason most people who take advice are older is because, from an adviser’s point of view, the young are not worth having? But wouldn’t it be great if, rather than wait for people to have the assets for you to invest, advisers extended their services to their clients’ children – the next generation of clients. How about some sort of ‘package deal’, a service offered to children of existing clients, that would enhance the next generation’s value, and at the same time build that kind of bond with the existing client base that only comes from taking an interest in their offspring.
So get out there talk to the “kids” – they’re not all just interested in whether there’s enough beer for the party. You may be surprised what you find.