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Press

Oct
27
2011

SEI Survey: Wealthy Parents Putting Off 'Money Talk' Until Children Reach Adulthood

Only 1 in 5 Have Communicated Wealth Hopes and Fears to their Families

OAKS, PA., Oct. 27, 2011 – While the majority of wealthy parents have strong ideas about how their children should use the wealth they will inherit, most are waiting until their children are well into adulthood to discuss those ideas, according to a recent SEI (NASDAQ:SEIC) survey. In fact, just over a third (36 percent) of wealthy parents have discussed their wealth and its implications with their children before the age of 21. Only 16 percent of wealthy families have had that discussion with children before the age of 16. The survey results point to a growing wealth communication breakdown in high-net-worth families – one that many believe is inhibiting the ability of future generations to sustain long-term wealth.

The survey, of more than 100 individuals representing families with an average net worth of more than $20 million, was carried out by independent research firm Scorpio Partnership. It suggests that there is a significant communication barrier between current and future generations related to the challenges and expectations of wealth. The majority of those polled (51 percent) said they have strong expectations for how family members use the wealth they will inherit, yet only 19 percent said they have communicated their hopes and fears about wealth to their families. Only 11 percent of respondents believe their children have communicated their hopes and fears about the family’s wealth with them.

“There is a communication breakdown in many wealthy families that must be fixed if future generations are going to sustain wealth for the long term,” said Michael Farrell, Managing Director for SEI Private Wealth Management. “Parents need to make talking about money a rite of passage with their children. The most successful families talk about finances early and often, making children feel involved, empowered, and better prepared for the future.”

The survey showed that when families do communicate about their wealth the results are often positive. Nearly half of those polled (43 percent) described the experience of having their families involved in financial interests as fulfilling or liberating, while slightly more than a third (39 percent) described the experience as challenging, frustrating, or uncomfortable. When families do share information about financial matters it is mostly in informal settings. Seventy-one percent of respondents said family members were made aware of financial interests through general family conversations, while 18 percent said the conversations took place in formal family meetings, and 11 percent were made aware at private bank/investor meetings.

The survey results clearly suggest that many wealthy families lack the level of comfort or tools to effectively communicate on wealth issues with their children. To help facilitate healthier and more frequent family wealth conversations, SEI has compiled the following set of wealth-talk tips. The tips include:

Start Early – It’s never too early to start talking to your children about money. The subject matter and level of detail may change, but it’s important to show children you are comfortable and approachable on the topic. Whether it’s over a game of Monopoly or about a child’s allowance, small conversations early will make the bigger talks you have to have later in life less daunting.

Initiate Conversations with Your Child – If you wait for your child to start the conversation, it likely won’t happen. Many children take a parent’s silence on any subject, intentional or not, as a sign that the topic is off limits. Take the initiative to start a money conversation with your kids. It will break down the invisible sound barrier and lead to healthier wealth communication habits.

Communicate Your Own Values – It’s important that children understand their parents’ values. Talk about what you want your wealth to do and what expectations you have for your children related to it. Sharing your values will help children embrace their own values and ultimately help create more productive financial behaviors.

Use Everyday Opportunities to Talk – Money talk doesn’t have to be confined to formal settings or family meetings. Talk about the issues and implications in the context of real life. Whether it’s paying a restaurant check or monitoring the performance of your investments, use everyday occurrences as teaching opportunities. The frequency and practicality will serve your children better than any formal annual debriefing.

Don’t Just Talk, Listen – Wealth conversations or any effective conversation must be two-way. Don’t mistake a lecture for a dialogue. Listen and respond to your children’s questions, thoughts, and concerns. If they know you’re listening they are more likely to open up, which will make the talks a lot more valuable.

The survey results are part of an ongoing series that SEI has developed in collaboration with Scorpio Partnership to help gain front-line insights on wealth goals, behavior, and issues of ultra-high-net-worth families. For more information about the survey series, please email SEIPrivateWealth@seic.com .

About SEI Private Wealth Management

SEI Private Wealth Management provides clarity into the complex issues faced by wealthy individuals and families so they can make better decisions for themselves, their families, and their communities. In September 2011, SEI Private Wealth Management, formerly the SEI Wealth Network, was named to the National Association of Board Certified Advisory Practices’ (NABCAP) Premier Advisor list, published by the Philadelphia Business Journal. SEI Private Wealth Management is an umbrella name for various life and wealth advisory services provided by SEI Investments Management Corporation (SIMC). SIMC is a subsidiary of SEI. For more information about SEI Private Wealth Management, visit www.seic.com/privatewealth.

About SEI

SEI (NASDAQ:SEIC) is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of September 30, 2011, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $395 billion in mutual fund and pooled assets or separately managed assets, including $151 billion in assets under management and $244 billion in client assets under administration. For more information, visit www.seic.com.