It is okay to help your family financially.
As I have stated in the past, I am Nigerian-American. My parents immigrated to this country in the late 70’s to provide me and my siblings a better life. Coming from Nigeria, my parents were willing to do whatever they could to give us a better life. They paid for tutoring, maintained strict rules to protect us, and worked long hours, all while focusing on our individual development. This is a common theme amongst foreign-born parents who have immigrated to America from collectivist societies.
Relationships with a Financial Advisor
As financial advisors, we must deliver advice that is tailored towards our client’s specific needs, however, we too often ignore cultural background in tailoring our advice. That is why I am focusing on this topic, so immigrant parents who are navigating financial planning have comfort and confidence entering into a relationship with an advisor.
Part two of this discussion will be directed at individuals who do not come from a typical family lineage that has generational wealth.
Creating Unique Cultural Financial Plans
My family is from the Benin tribe in Nigeria. Our family practices a tradition where when a child receives their first paycheck the parents would take that check and split it amongst the family all over the world and the family prays over the success of the child. These type of traditions influenced me, and even though my parents do not have a set contract with me regarding finances, I feel the responsibility to take care of them throughout retirement even if they do not need it. Financial planners who understand these type of cultural backgrounds and traditions can help the family build out effective plans for their finances. For example, you can create a financial plan which takes into consideration input from the family, and expected payment amounts from the children on an ongoing basis. This is what makes this profession beautiful, we are allowed to create unique plans for individuals.
Whenever I was a dumb 16-year-old kid listening to Drake’s Nothing Was the Same album trying to holla at my homecoming date, my mother would tell me in her Nigerian accent:
“My son, the only girlfriend you should have are your books.”
How do we proceed?
My mom didn’t give advice just to be funny, this came from a place of care. This was part of her drive to make sure we were educated, in hopes that that education would allow us to live a life that her and my father dreamed of for their children.
It’s common in Wealth Management to advise clients to refrain from overfunding college expenses, so clients maintain retirement funds. I understand the methodology, but for clients coming from a collectivist-cultural background, the thought of not paying for their children’s schooling, even if it burdens them, can almost be offensive. So rather than disregarding the idea, use alternative options to help these clients come to an appropriate solution. For example, advise them to consider setting up a trust for the family. The trust can operate as a potential intra-family loan for use as an alternative to student loans, or a child’s first home purchase after college. This allows an advisor to:
1. Give advice that is beneficial to the client while respecting their cultural backgrounds.
2. Create customized financial plans for the client.
3. Prevent clients from overfunding a 529 Plan which can be difficult to liquidate.
This is what makes financial planning unique!
It’s Okay - Just Talk About It
It’s important to understand as you are searching for a financial planner that yes, their competence matters, but you don’t have to sacrifice your cultural beliefs and practices to receive tailored, financial planning.
A lot of us come from countries, where for generations, this is all our families knew: sacrificing for the betterment of one another.
Moving to another country is hard enough, but raising children in a foreign country is an even bigger challenge. From experience, I have noticed the gaps between me and my parents are not only generational, but cultural. This is where communication becomes important.
It is always helpful to educate your children about money and finances from an early age. This lays the groundwork for a strong financial future, and can teach them the value of money, and encourage them to take ownership of their own finances. All be it might be to encourage them to save their own money for a new bike they want rather than receive it as a gift. I have found that when I had to save my own money as a child to pay for something I wanted, I always valued it more and took better care of it. Instilling good money habits is one of the best gifts a parent can give a child.
This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.