Financial Education for the “Next Generation”


CR 1

July 9, 2018

Our firm is committed to helping young people increase their understanding of money and investing. This is best illustrated by the annual program we run each summer at Cambridge in the UK. Recently we were lucky to have an opportunity to provide some of the Cambridge information to a group of students from Costa Rica. The 14 students and their teachers were visiting Atlanta to obtain some exposure to the financial world, along with enjoying some of the other more obvious attractions offered by our city.

The students attend La Paz Community School which was founded in 2007 to address socio-cultural gaps prevalent in a region with an economy based on agriculture and tourism. The school is small with some 330 students from preschool to 12th grade.

During our session we examined the power of compounding, which according to Einstein is the eighth wonder of the world. The great man noted that: “He who understands it earns it, he who doesn’t pays it”. We also examined credit cards and debt, the investment world, and the dramatic impact of thinking long term. Lively discussions ensued. You could see minds being challenged with new thoughts, reflecting on the consequence of a dollar spent versus a dollar saved, and understanding how essential it is to be fiscally disciplined.

We asked the head of the program if she would provide feedback on how the students felt about their brief financial immersion. Her comments were informative “They talked about the fact that when we went shopping after the workshop they put more thought into what they were buying. They also were starting to think of ways that they could begin to make some investments. They understood that the stock market would give them higher returns over time but they know that they should have access to a bank account. And the most important thing they learned was the power of habits. To create a habit of saving now will make a difference in the future.”

Our firm puts a lot of weight on helping train the next generation to ensure that, as potential beneficiaries of hard-earned capital, they are equipped to be responsible trustees of that wealth for their families, for their communities, and ultimately for those that succeed them.

One of the tools we employ is simply sitting down one on one with our clients’ children and going over the basics. This could include explaining inflation linked bonds, or growth oriented stocks such as Berkshire Hathaway, Microsoft, or Apple. When significant funds are at stake, we might use involvement in Family Limited Partnerships or Foundations to help educate family members. These are wonderful tools as teaching instruments.

The simple fact is that we have moved from a time when few families had any capital outside the equity in their home, to an era where significant sums will be passed across generations. Moreover, employers have moved away from defined benefit plans to defined contribution plans, such as 401(k)s. The onus is now firmly on the individual to make smart investment decisions, and it pays to start the learning process early!

Nick Hoffman

CR 2