Do your adult children need financial advice?

If you have already accessed financial advice and reaped its benefits, you might be considering recommending it to friends and relatives.

For many, financial planning has been a tool to help plan retirement and ensure they’re protected later in life. And while advice is an extremely valuable resource in your 50s and above, adults in their 20s, 30s, and 40s may gain enormous value from taking advice earlier in life too.

Indeed, your adult children might be:

• Earning a competitive wage
• Purchasing, or already living in, their own home
• Setting up their own business from scratch
• Getting married or starting a family.

Although they’re responsible adults with their own path in life, many may not be thinking about the crucial aspects of achieving financial freedom – and the online world could complicate things further.

Here’s why your adult children might need financial advice in today’s economically uncertain world.

It’s important to build retirement wealth decades in advance

You’d be amazed at just how effective early retirement planning can be for achieving financial freedom.

Indeed, if you started planning for your retirement in your 40s or 50s, you might wish you had begun this process earlier in life – and with financial advice, your adult children might be able to do just that. This is especially important if your children are not yet at their peak earning years; contributing even small amounts early in their careers could make a huge difference later.

Here’s an example, published by Nest, demonstrating the power of early pension contributions. Malik and Sam pay £200 a month (including employer contributions) into their pensions over a 10-year period. But Malik made their payments between the ages of 22 and 32, whereas Sam made theirs between the ages of 32 and 42.

Even though both savers paid £24,000 into their pensions over a decade, by the age of 60, Malik (the early saver) has £125,000, whereas Sam has £77,000 (assuming a 5% annual return).

With the help of a financial planner, even your young adult children could begin taking meaningful steps towards achieving financial freedom in retirement, using the power of compound returns to help them maximise their wealth.

Advice could help your children shield their wealth from unexpected health events

For a young person just getting started in life, it may be hard to imagine being too ill or injured to go to work or earn a living. Yet for many this becomes a reality, and without a package of protection in place, your adult children or grandchildren may be at risk of financial hardship.

According to the most recently available NHS data, in 2021, there were 4,201 cases of cancer diagnosed in people aged between 20 and 40. This pales in comparison to the 26,097 cases diagnosed in patients between 40 and 60; nevertheless, cancer risk is still present in even very young adults.

What’s more, Stroke Association says that in 2022/23, 15.9% of stroke incidents happened in patients under 60 years old – up from 14.2% in 2013/14.

Of course, there are also injuries that can occur unexpectedly, from sports injuries to car crashes and everything in-between, that may require time off work in order to recover.

While we all hope that our children will never experience these hardships, life’s surprises can arrive at any moment. If your adult child has crucial bills to pay, like a mortgage, plus young children who depend on them, these incidents could be even more difficult to bear.

After working with a financial planner, your adult children may at least be financially prepared to absorb the shock of an illness or injury that puts them out of work. A bespoke package of financial protection could help to ensure they don’t lose out financially and can focus entirely on their health and wellbeing.

Professional guidance could help them manage an inheritance

If you have made plans to pass a large amount of wealth down to the next generation, it’s important that your adult children gain the knowledge needed to manage these assets.

For instance, you may already be offering your children financial gifts for Inheritance Tax (IHT) purposes, reducing the value of your estate over time.

Read more: The Great Wealth Transfer is here – will you get it right?

With this injection of capital on the horizon, your children may benefit from forming a relationship with a financial planner now, rather than later.

Your children can make informed wealth choices while avoiding online “experts”

Ultimately, financial advice is about achieving your most treasured ambitions and goals. These are unique for each individual, and if your child needs guidance, we’re here to help.

One distinct barrier to financial education and knowledge, for many millennial and Generation Z adults, is that the online world can be distracting, overwhelming, and even misleading. There are plenty of “financial advisers” online who proport to be experts in investing, mortgages, and saving – when in fact, they’re unqualified and may lead even savvy adults down a dangerous path.

Indeed, the Financial Conduct Authority (FCA) is even taking legal action against a select few “financial influencers”, also known as “finfluencers”, who have been marketing an unauthorised trading scheme on social media.

With your adult children very likely to be social media users, it’s crucial for them to be aware of the pitfalls that online “advice” can bring.

Fortunately, working with a registered professional could be a game-changer for your adult children, who will always have a port of call for queries and questions without worrying that the advice given will be misleading.

You can always check the FCA Financial Services Register to ensure the person you or your child is dealing with holds the necessary qualifications and is FCA regulated. Remember – when investing, doing so through an independent financial planner could increase the level of consumer protection you benefit from.

Get in touch to connect us with your younger family members

If you believe your adult children could benefit from bespoke financial advice, speak to us today.

Email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate estate planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts. 

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

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