When Liam broke his iPhone, he walked into an Apple store and, to his delight, promptly received a new one. His 10-year-old younger brother Aiden—an Apple stockholder—wasn’t too pleased.

“That couldn’t possibly be good for their margins,” he mused.

While Aiden didn’t understand the nuances of customer service or the numbers in his annual investment statement, he did grasp one basic concept: it’s not good business to give away free phones.

Colleen Moorehead, Liam and Aiden’s mother, and in charge of marketing and investor communications at hedge fund manager East Coast Fund Management, made sure her boys were exposed to the principles of money at a young age.

Moorehead and her husband have also bought nieces and nephews stocks as birthday presents. One niece, who ended up in the investment business, credits the Bell stock gifted by her aunt and uncle for sparking her early interest in investing.

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“Part of raising children means they will inherit your wealth,” says Moorehead. “But part of their upbringing entails realizing they need to also build their own.”

The role she’s played in her kids’ economic initiations is similar to the one all good financial advisors could play in enabling the financial fitness of their clients’ children. Moorehead says many of the high-net-worth advisors and brokers she’s worked with think of families in their entireties. “Successful advisors offer services such as family trusts. Once you have a family trust, it’s incumbent on you to meet the kids,” she says.

“As a retail broker in 1983, I developed a course teaching women financial literacy. Our kids need to be taught the same,” she adds. “Economic literacy gives power and independence.”

Bind your book

Susan Latremoille, wealth advisor with The Latremoille Group at Richardson GMP and author of It’s Not Just About the Money—The Whole Life Approach to Wealth Management, says financially mentoring clients’ children is a great way to offer value to current clients while building a relationship with the next generation.

A client’s daughter who attended one of Latremoille’s seminars later approached her and asked, “Will you take me?” Latremoille said yes. That’s her usual answer when dealing with a family, even if the kids don’t have the usual $2 million to qualify for her practice.

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“Many times those adult children will help settle the estate,” she says. “We only have 100 clients, and we want to be all things to a few people rather than be meaningless to a lot of people. It works better if we keep it in the family.”

Some of Latremoille’s clients ask if they can bring their 18-year-old children for an introduction because they want her to form a relationship with the next of kin. Typically they put some money into an account in the name of their child and request she work directly with their son or daughter.

The meeting demystifies the severe aura of a financial practice. “It can be intimidating for young people to come to formal finance offices. But once they lose their inhibition, many ask sophisticated questions, like how the recent quantitative easing might impact their portfolios, or [mention] how they’d like access to emerging markets,” Latremoille says.

Once the relationship is established, Latremoille constructs an investment policy statement. “We talk about specific types of investments and if the money is for higher education, buying a house, or long-term investment,” she says. “We determine their time horizon and they examine how risk-averse they are. We educate them about building wealth through a portfolio approach and investments they can understand. And like with their parents, we review their account once or twice a year.”

Get ’em young

Kids can absorb information about financial matters, but parents are not getting support from the most expected quarter—schools. Canadian school curriculums have typically lacked money management training, and Montreal-based Philippe Racine’s entrepreneurial success is glaring proof. Three years ago, he wanted to teach his two daughters about money. He searched for educational materials, but aside from bulky manuals, he didn’t find much.

Undaunted, he founded Ekomini.com, the world’s first interactive, web-enabled piggy bank. Although Ekomini—a play on economy—doesn’t teach kids how to steer clear of high-interest loans, pass up houses they can’t afford, or avoid Earl Jones, it does teach them financial basics.

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“We encouraged our girls to set themselves concrete targets. Every time they had a new demand, our reaction was, ‘Let’s start saving,’ ” says Racine.

Racine integrated this deferred-gratification concept into his digital piggy bank. With the help of relatable characters and a virtual town called Ekominiville, the game literally teaches money doesn’t grow on trees.

The response has been overwhelming. When he launched in 2010, Racine wasn’t prepared for the slew of product requests he received from major banks in more than 20 countries. This pent-up demand for financial literacy is partly due to the global recession, which has made the economy an overriding concern for most households. “It’s become easy to introduce this concept to parents, and to pitch it to bank managers and financial advisors,” Racine says.

In Canada, Racine is already selling his product to ING Direct and National Bank, as well as several independent credit unions countrywide. As part of a direct-marketing campaign, these credit unions are inviting customers and their kids to play Ekominiville at their branches. He’s also working with a group of financial advisors who plan to use the piggy bank to introduce new educational funds to its clients.

While Racine is honing his product, the Canadian education system seems to have awakened to the financial training trend. Most provinces will soon mandate school boards add basic financial literacy to their curriculums, starting from Grade 1 right up to Grade 12.

For Moorehead, financial literacy is a combination of helping kids manage the money they have and teaching them about investments. When her son Aiden—the astute Apple stockholder—wants a new pair of skis, he doesn’t say, “Mom, can you give me $400?” but rather, “Mom, how will I make $400?”

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After children learn how to earn and spend their allowances, the next step is management—helping them to see what their money can do for them, and to learn it takes work to get what you want. That takes time and discipline.

Latremoille agrees. “It isn’t necessarily a good thing to leave children money and not instill in them the ambition to work for themselves,” she says.

Spend, save, share

Next comes sharing. And just like financial literacy, life lessons on philanthropy can start early. When it comes to her own kids, Latremoille believes nothing is more empowering for the family than committing to a bigger cause. But while saving and investing have an obvious action-reward relationship that even kids can grasp, the subtler rewards of philanthropy can be harder to teach.

To make sharing an important part of her kids’ financial training when they were growing up, Latremoille made saving for charity an inextricable part of their allowance allotment. “Each had a charity piggy bank and part of their allowance always went in there. That was their first exposure to the idea that part of whatever you take in should go to charitable causes,” she says.

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When they became older, Latremoille set up a donor-advised fund at the Toronto Community Foundation (TCF) to provide more structure to their giving. She assigned them—19 and 15 at the time—donor advisors of the fund. Her kids also attended a seminar sponsored by TCF to help identify their philanthropic leanings.

Her daughter used her portion to sponsor raincoats for schoolchildren living in the rain-soaked mountains of Ecuador. Her son, who played saxophone for his school band, supported the Regent Park School of Music, which provides music lessons to underprivileged children.

Experts concur it’s important for all parents to raise financially fit and socially responsible children. And when parents teeter between coddling and disciplining kids, that’s when financial advisors can step in and provide the right tools to make their clients’ kids understand mom and dad’s money doesn’t fall out of machines mounted on walls—it has to be earned, budgeted and saved.

Where to start

Mollie O’Neill, CFP, a financial educator for more than 20 years and founding partner of Brigus Learning, says finance is more about moulding behaviour than it is about teaching the arithmetic tenets of simple and compound interest.

“Start teaching kids about choices as early as two,” says O’Neill. “Ask them, ‘Do you want to wear your red shirt or your blue top?’ The whole idea is to make children realize the world is not infinite.”

It’s also important to show that there’s a clear connection between choice and consequence.

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O’Neill used to teach a college-level financial planning class. Each semester, she’d inquire how many of her students packed lunch. Most did not. She’d then ask if they had any idea how much they’d save if they made a sandwich at home. Most didn’t. O’Neill would then ask her students to think of a wild desire they thought they could never afford.

She vividly recalls a student who wistfully said, “There’s this enormous teddy bear in the window of a store and it costs a hundred dollars.” But she could if she packed her own lunch for just two months.

“The core of financial literacy is teaching kids how to make informed choices,” O’Neill says.

Age four or five could be the perfect time for parents to provide an allowance, and use trips to the grocery store to show them how to comparison shop. By age 12 or 13, parents can set up small trading accounts for their kids, and let them make investment decisions in tandem with their financial advisors.