Generational Planning: 11 Signs You May Need A Financial Adviser

Family Ties

Mcintosh (center) helps the Wynne-Allen Family with all aspects of money management. (Photo by Hayley Murphy)

Avery Allen isn’t your typical 12-year-old. Unlike most of his peers, he doesn’t see his parents as a limitless source of financing, nor does he assume that his own financial acumen will develop on its own.

That’s why Allen recently turned to Alfred McIntosh, a certified financial planner, for help deciding on a good investment strategy. “My parents bumped up my allowance,” says Allen, whose desire to work with McIntosh at the Los Angeles-based McIntosh Capital Advisors Inc., surfaced after the youngster completed a six-week financial course based on the book Rich Dad, Poor Dad. “With the increase I also took on more responsibility for my own money,” says the youngster.

Allen took that new role seriously. He asked the financial planner if investing in stocks and bonds was an option for a 12-year-old. He also wondered what options (beyond a traditional savings account) someone his age might have for growing his money.

In Avery’s case, says McIntosh, the key financial concern is cash flow, or the “need to make money” through sources such as allowances, gifts from relatives, and part-time jobs. “When you work with someone this young, the primary focus is on generating some income and investing it in a way that allows them to buy the things they want,” says McIntosh, who sees the pre-teen years as a transition time for most children as they begin to realize the value of fiscal responsibility. “If you can instill that understanding before they go off to college, they’ll wind up managing their finances more effectively and avoid the credit card debt that many graduates have.”

McIntosh gave Avery all the information he sought. McIntosh, who works on a fee-only basis (receiving compensation directly from clients on an hourly, percentage of assets, or flat annual fee basis) is no stranger to the Allen family. Avery’s parents, Harold, 50, and Allyson Allen, 45, have worked with McIntosh for three decades. Avery’s maternal grandparents, Tony, 70, and Vivienne Wynne, 71, are clients as well. The Allens first worked with McIntosh to get their finances in order, and have since introduced their young son and Allyson’s parents to the planner for advice on preparing for his own financial future. In this article, we’ll look at some of the lessons this multigenerational family has learned.

Starting in the Middle

Young Avery’s consultations with the family financial planner are becoming a rite of passage in the Allen family. Harold and Allyson were first in line to sign up for McIntosh’s advice in the early 1980s. The relationship started when Allyson needed guidance on properly allocating assets within her 401(k) retirement plan. “At the time I didn’t even know the difference between a fee-only and a commission-based planner” says Allyson, a physician’s assistant, “but Alfred came highly recommended by a friend, so I set up a meeting with him.”

Allyson’s initial list of financial planning needs included retirement planning, cash management and budgeting, tax and insurance assistance, investment advice, and portfolio management. Those needs have changed somewhat over the years as the Allens had children (along with Avery, they have a 6-year-old son, Harrison) and progressed in their careers (Harold is a medical sales professional). The couple, for instance, worked with McIntosh to set up 529 college savings funds for both of their sons. As the years went by, their planning shifted away from cash flow management to retirement planning. They moved from a comprehensive planning program to a more “modular” approach wherein McIntosh provides specific services instead of a broad plan. “[Their]  focus has changed, most recently about five years ago, when they enlisted me to help with portfolio management and investments,” says McIntosh, who manages 401(k) plans for both Allyson and Harold. “Alfred now manages our entire portfolio,” explains Allyson, “which includes stocks and bonds that fit well with our plan for retirement.” The Allens and Wynnes agree that having a planner who takes a holistic approach to their finances has been beneficial, since many pieces of the puzzle (college savings, retirement planning, portfolio management, and so forth) are interrelated.

As the Allens and many other investors discovered last year, financial planners deliver more than just advice and counsel. During the recent stock market downturn, the Allens worried that the kids’ 529 accounts–which they plan to use to pay 50% of their higher education cost, says McIntosh–were shrinking. “I kept calling Alfred for reassurance,” says Allyson, who typically meets with McIntosh in person once a year and consults by phone and/or mail on an as-needed basis, for example, when her quarterly 401(k) statements arrive in the mail and need attention. “He reminded me that the same situation occurred in the 1980s, and that we came through it just fine.”

The Allens are on track to achieve their retirement goals, according to McIntosh. They are contributing at least the corporate matching percentages to their corporate 401(k) plans and are also putting money into their Roth IRAs. He predicts that the couple will need about $1.86 million in liquid assets to realize their retirement lifestyle (which includes the purchase of a beach home).