Affluent Teenagers Interest Money Advisers

Financial advisers love baby boomers with big money, but serving them can mean coming to grips with quite another species: their affluent teenagers.

Advisers are inviting the teens to client meetings, bringing family dynamics experts to the table and asking their clients probing questions -- all aimed at examining the money attitudes being passed from one generation to the next.

For financial advisers, who are increasingly paid by fees tied to assets under management, capturing a realistic picture of the teen set is key to building relationships with these young people, who will someday control their family money and make decisions about who should manage it.

Seventy-three percent of teens say they feel a strong sense of responsibility to wisely manage money they receive from their family; in contrast, 25 percent agree with the statement "I should be able to buy anything I want," according to the survey of 210 teenagers from high net worth families and 272 wealthy parents of children under the age of 18 commissioned by the wealth-advice unit of PNC Financial Services Group Inc.

The survey, released yesterday, found 10 percent of teens plan to live off family money for as long as they can. When it comes to working, 70 percent of teens disagree with the notion that they can slack off because their families will always provide the money they need and 24 percent of parents are concerned that family wealth will discourage their children from working hard.

"We were encouraged to see young teens were not as bad as the media makes them out to be," said Bruce Bickel, a senior vice president at PNC and a former Presbyterian minister who counsels wealthy families. "They do have a pretty good understanding of the work ethic."

One reason many affluent teenagers are relatively well grounded is that wealth in America is primarily new wealth, not old money, said Keith Whitaker, director of the family dynamics practice at Wachovia Corp.'s Calibre advisory unit, which caters to more than 200 families with at least $25 million of investable assets.

Children of first-generation wealth have experienced the transition from a middle- or working-class existence to affluence, Mr. Whitaker said, but the problem is that their parents are often ill-prepared to guide them through the world of affluence because they themselves don't have a lot of experience navigating it.

There can also be generational divides over what constitutes an extravagance or a necessity for a teenager, said Linda Leitz, a financial adviser in Colorado Springs, Colo., and author of "The Ultimate Parenting Map to Money Smart Kids."

For instance, grandparents raised during the Depression might think it extravagant to buy a teenager a car, but a car might be a necessity in families where both parents work long hours. Ditto laptops, cellphones and other accoutrements of modern life.

"The whole question of what is an entitlement has evolved as the world has evolved," said Ms. Leitz.

Financial advisers can be well placed to help families work through these questions and make sensible choices that give teens a good financial foundation.

This can start with making sure teenagers are receiving an allowance and that parents are clear about its purpose.

"Many people feel that an allowance is an entitlement to their children," said Mr. Bickel, and they're concerned about sending the wrong message by handing their kids money. But a properly structured allowance can impart vital lessons about budgeting, saving and giving, advisers said.