Wealthy parents in the US recognize the importance of discussing wealth planning to their kids, but not until they turn 21, a recent study by SEI reveals.

Wealthy parents in the US recognize the importance of discussing wealth planning to their kids, but not until they turn 21, a recent study by SEI reveals.

According to the study, 36 per cent of wealthy parents have discused their wealth and its implications with their kids before the age of 21. Only 16 per cent have had this discussion before the children turned 16. SEI says the results highlight a "wealth communication breakdown" in high net worth families - a concern that possibly threatens the ability of future generations to sustain long-term wealth. 

The findings were gathered with the help of Scorpio Partnership and were based on the responses of more than 100 individuals, representing families with an average net worth of at least $20 million. 

"Parents needs 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," said Michael Farrell, managing director for SEI Private Wealth Management. 

Of the respondents, 51 per cent said they have strong expectations for how family members use the wealth they will inherit, but only 19 per cent said they have communicated their hopes and fears about wealth to their families. Only 11 per cent believe their children have communicated such concerns with them. 

Among the families that do discuss money matters, 43 per cent said doing so felt "fulfilling or liberating," while 39 per cent said it was "challenging, frustrating, or uncomfortable." In terms of how the discussions came about, 71 per cent noted that family members were made aware of financial interests through general family conversations;18 per cent said the talks happened in formal family meetings, while 11 per cent were made ware at private bank or investor meetings. 

To try and address the lack of communication, SEI listed several "wealth-talk" tips applicable to families, including encouraging parents to start money talk early, initiate conversations with children, communicating values and expectations of wealth, using everyday opportunities to talk, and listening to what their children think about the subject. 

The survey is part of a series of studies with Scorpio Partnership, with the goal of gaining insights about high net worth and ultra-high net worth individuals and families in the US.