There comes a time in a client’s life when saving for their children’s education while saving for their own retirement can become a delicate balancing act. Throw in other competing priorities, such as paying down a mortgage, and they may feel like they’re auditioning for Cirque du Soleil!
With the rising cost of tuition and living expenses today, it’s not always easy—or cheap—to save for post-secondary education. As your client’s advisor, you might feel like you’re juggling right along with them—maybe even trying to pull a rabbit out of a hat when it comes to new clients seeking your advice in the eleventh hour.
The good news is there’s a threefold opportunity here: for your clients, their children and you.
Why not offer financial advice to your clients’ teenagers? Not only could you potentially help ease some of the parents’ financial load, you could also help empower the kids to contribute to their own education and other financial goals. Financial literacy is so important. Getting kids started early on a rewarding savings path is truly a gift, and one that could lead to a lifetime of financial security. For you, it could mean deepening relationships with clients and building new ones right within the family, which is especially important when it comes to estate planning and intergenerational transfer of wealth.
In Canada, paying for post-secondary education is expensive. Tuition and other compulsory fees are expected to have tripled from 1990 to 2017, with Ontario students paying the most.1 For the 2012-13 school year, the average undergraduate student in Canada paid $5,581 in university tuition fees. Factor in other compulsory fees, books, living expenses and transportation and the cost of a four-year university education is estimated to reach over $80,000; of that, residence is estimated at about $31,000.2
That’s for one kid.
Imagine if you had five.
Welcome to Adele Mossman and Mike Werbowecki’s reality.
Adele, Mike and funding their five daughters through university
In 2002, Adele and Mike came together as a couple and eventually blended their families to form their own group of seven: two parents and five daughters. When they first settled under one roof, the youngest two girls were eight (they’re two weeks apart). The eldest was 18 and just going off to college (before attending university for a bachelor’s degree followed by a Masters).
In the years that followed, all five daughters either went to university, or they’re in the midst of attending. Collectively, the daughters hold one college diploma, two bachelor degrees, one Master’s degree, and three bachelor degrees are in progress. Adele says the total price tag will be roughly $340,000. While Mike and Adele both started RESPs early on for their girls, it still wasn’t enough to cover tuition and living expenses when they needed it.
So how are they doing it? Both have good jobs, it’s true, so they’re managing through drawing on savings and carefully monitoring to ensure their eventual retirement plans won’t be compromised. But from an early age, they also set expectations with their daughters, advocating they had to own their education and care about it most—and that meant being financially involved too.
“From early on, we’ve always told the girls they needed to contribute,” Adele says, who adds she believes this from both a financial and philosophical perspective. “It’s not always equal, but it’s fair—so what those contributions meant for one daughter could be different from another based on what kind of part-time or summer job they had and whether they lived at home. But from an early age, they always knew it wasn’t going to be a free ride. At all. And they had to contribute.”
From an early age, they always knew it wasn’t going to be a free ride. At all. And they needed to contribute.”
– Adele Mossman
Adele says that, on average, each daughter would contribute between $4,000 and $6,000 a year toward her school year by working at part-time and summer jobs. She and Mike agreed to cover the rest. The total ranged from between $18,000 and $23,000 a year living away from home (four out of five did), depending where they attended school.
“[Our daughters] have been fortunate because we’re agreeing to be investors in their education,” Adele says. “But they had to know what they wanted to do, where they wanted to go, and then come to us with a proposal of what it was going to cost,” Adele says. “And we only agreed to cover one degree. And one wedding!” Adele’s eldest daughter, Stephanie, is 30, married and now expecting her first child.
Stephanie set a trend with her sisters when she decided to take a year off in between high school and college, which gave her the opportunity to work and save money. It was around this time when Mike and Adele encouraged Stephanie to meet with a financial advisor. Two of the younger daughters followed suit, each taking a year off in between schools to save money. All five worked with an advisor to help ensure their finances covered their educational goals.
It’s never too early
The Mossman-Werbowecki ‘kids’ are not alone. Robert Bartman, now 40, knows what it’s like to meet with an advisor from an early age. He was 16 when he first met with his parents’ financial advisor, and his two younger brothers—ages 14 and 12 at the time—joined him.
“Looking back, I’m glad my parents sent me to an advisor as a kid. At 16, I was much more willing to listen to a third-party advisor than my parents!” Robert says. Working with an advisor at an early age helped Robert pay for four years of university on his own, living away from home. He completed his degree without debt, so when he started his first job at age 23, he was able to start saving for his future financial goals, including his retirement.
“I taught piano lessons to a lot of students and was a musician at more weddings than I can remember,” Robert says, “but I learned about work ethic, how money can work for you if you respect it and how the possibilities are endless with the right planning.”
It’s never too early to start saving for a brighter future. Reach out to your Sun Life Sales Director today to learn more about Money for Life—Sun Life Financial’s customized approach to retirement and financial planning.* With resources, tools and marketing materials, we’re here to help you start the conversation with clients.
And maybe even their kids.
* Only advisors who hold CFP (Certified Financial Planner), CH.F.C (Chartered Financial Consultant), F.Pl. (Financial Planner in Quebec), or equivalent designations are certified as financial planners.
1 “Degrees of Uncertainty: Navigating the Changing Terrain of University Finance” report by the Canadian Centre for Policy Alternatives, September 2013.