[Fin Talk] 3 Tips for Long Term Wealth Planning for Fathers
Updated: Jun 21, 2021
By Arlyn Tan
Fathers are perceived as the sources of strength and stability in the families because of their traditional roles as breadwinners and decision makers. In psychological studies, the nurturing fathers’ involvement can be crucial to the cognitive and emotional development of children. Thus, their absence can upend the family dynamics and its dreams which can range from college education, travel experiences and mentoring moments.
As a sole breadwinner or a main contributor of family income, fathers are expected to have contingency plans in the event of his absence or he can’t perform his roles secondary to illness or changes in his life plans. This does not only involve simply purchasing life insurance, but it is more about preparing the family members to thrive and continue living.
Having a “Plan B” is similar to having a spare tire during a long drive. There is a conscious effort to plan and execute the strategies to make sure that the dreams of your family are achievable despite life's “flat tires” scenarios. The father will need to instill leadership, accountability and stewardship. Stewardship is acknowledging the fact that one is entrusted to perform the roles of a leader in managing the resources well, and not feeling entitled as a potential heir. This includes the activities related to the allocation of family assets, business succession, and decision making of family matters.
Here are the three strategies that father figures can have for their children to remember you as a provider and steward.
1. Invest TIME with your children. It is in the conversations where you can influence, lead and teach them the value of relationships, skills, and grit.
Leading by example and inspiration will shape their character. A father who demonstrated optimism, creativity and grit during a crisis teaches the children the lessons without instructing them. When you invest in improving your skills, they will become lifelong learners.
Storytelling and activities can nurture relationships. You can share stories about family members or personalities who persevered through hard work and became successful. Soft and technical skills are equally important in achieving success in work and business.
2. Create a financial generator which can serve as the family’s cash engine. Consult a financial advisor to know how much your family would need for investments in education and expenses for its daily living while they are experiencing blackouts. Do you have emergency and education, and medical funds set aside? If you are running a business, does it have enough cash to support any situation when the founder is sick or suddenly passes on. In reality, when the father has raised enough cash as a financial generator, your family is blessed. Everything is taken cared of.
During the assessment of a financial advisor, you may see the gaps which will encourage you to utilize several financial tools to create a robust financial generator.
Insurance is a financial tool that provides liquidity when sources of cash flow dry up. It is also used as a back-up for future requirements like education and medical funds when the breadwinner is unable to come up with the funding for any reason. Insurance comes in the form of life insurance, critical illness insurance, disability insurance.
Investment is a popular financial product that boosts the growth of savings which can beat inflation and address future needs. The assets range from property, stocks, mutual funds, bitcoin, businesses to plain time deposits. By setting goal-based funds, you have the confidence that all areas are taken cared of. With time, consistent contribution and discipline, you will be able to prepare the financial generator you need for retirement and other life goals.
3. Prepare your succession strategies.
As a strategic wealth consultant, I have encountered families who were united in building their assets for decades but drifted apart during its distribution. I feel sad that I see the sources of blessings become a curse. This motivated me to deep dive on the possible causes and share to my clients on the ways to prevent unnecessary strains in family relationships.
Training your children with life skills will enable them to preserve your wealth and be utilized according to your heart’s desires. When the family members have healthy relationships, managing family resources and wealth becomes stress-free. According to Roy Williams of the Williams Group, “when you start building the family as a team – with roles and performance standards – then all of this mystery, the dogma, the entitlement, the affluenza stops becoming a factor.”
The family relationships will influence the positive outcome of succession planning and training. It is inevitable for the father and mother to determine who becomes the next leader, negotiator, accountant, finance and strategist of the family. Communication will play a vital role in collaboration instead of competition among family members.
Since this activity takes time and energy, you may want to seek the help of family advisors in the design and implementation of these strategies.
Fathers will not always be present to provide the protective hugs. When father figures acknowledge this reality, they become intentional in empowering the family members to aspire for self-reliance and responsibility instead of ownership. Balance this with building an economic resource which will allow the spouse or trusted person to carry out your father roles in your absence. Leaving the children with material wealth in an orderly manner makes you a responsible provider but teaching them life and leadership skills render you a steward who leaves a legacy bigger than yourself and that can last beyond your lifetime.
Happy Father’s Day to all dads and father figures! You will always be a hero that your children will remember.
Arlyn Tan is a Strategic Wealth Consultant. She helps individuals and organizations on how to maximize the value of their money through risk, health & wealth management. Her mission lies in making sure that clients achieve 3 things. First, they reach their milestones on time with sufficient resources. Second, they protect them from the impact of economic losses secondary to unexpected events. The third and most important is that they enjoy meaningful and balanced lives.
LinkedIn/Twitter: Arlyn Tan