How Much Should Your Adult Kids Know About Your Money?

Upticks: A Financial Planning & Investment Podcast

Jake Falcon and Cory Bittner discuss the appropriate level of transparency parents should maintain with adult children regarding finances, estate plans, and potential

Key takeaways

• Jake Falcon advises young investors with three or four figures to prioritize low-cost index funds or ETFs rather than paying an advisor fees for basic product placement.
• The hosts agree that financial advisors are typically best suited for clients managing seven-figure portfolios where complex tax planning, asset location, and individual stock management are required.

Main topics

• Financial transparency with adult children
• Investing strategies for young adults with small capital

Notable quotes

"A plan is financial organization. And again, if you're old school and you want to write it on paper or you have it digitally... boom."

Conclusion

The episode provides actionable guidance on balancing family transpare

Transcript preview

Speaker 2 (0:03) Welcome to Uptix with Jake Falcon, founder and CEO of Falcon Wealth Advisors. In this podcast, we help high net worth individuals overcome financial complexities. We do this by enhancing financial literacy and discussing topics in a language free from industry jargon. Now, on to the show. Speaker 1 (0:21) Welcome back to Uptix. I'm Jake Falcon, the founder and CEO of Falcon Wealth Advisors, and I'm joined by our co-founder and CFO, Corey Bittner. Corey, welcome back to the show. Jake, thank you for having me back. You're welcome, Corey. You got any updates for our audience today before we get into it? Speaker 3 (0:37) Just waiting for a baby in three weeks. Three Speaker 1 (0:39) weeks. Three weeks from today. You've got the name picked out. Are you telling anybody but me? Yeah, we've told a lot of people. You want to tell the show or no? Let's do it. You ready for the reveal? Speaker 3 (0:47) You have a sound effect for me? I don't know. Next week. Next week we're bringing Speaker 1 (0:50) sound effects. Yes. You're going to tell everyone? Go ahead. Yeah, why not? His name is going to be Maxwell. Maxwell James. Maxwell James. My middle name. Also the same middle name as my father-in-law. Bob. Bob James. Robert James. Robert James. Maxwell James. How are you going to spell Maxwell for all the audience? They may want to buy you some custom clothing. M-A-X-W-E Speaker 3 (1:08) -L-L. Speaker 1 (1:09) Now, is Maxwell family? Nope. A movie star? No. A best friend? None of the above. Cassie ex-boyfriend? Ooh, haven't asked that one. I don't think so. So good for you, Maxwell. Cool. Strong name. You're going to call him Mad Max? Mad Max. Mad Max and Crazy Daisy? That's right. They're alter egos. They're all what? They're alter egos. Alter egos. Crazy Daisy. And Speaker 3 (1:34) Mad Max. And Speaker 1 (1:34) Mad Max. Well, cool. Good luck. And you'll be on the show a couple more times. The plan is to keep the show rolling. We'll see how that goes, though, Corey. But, you know, take as much time as you need. Thank you. Enjoy the birth of your son. Yeah, it is. A few weeks. Speaker 3 (1:49) It's Speaker 1 (1:49) an Speaker 3 (1:49) exciting time. It feels like the walls are closing in a little bit. It's hard to conceptualize the newborn with a toddler at home. Well, Speaker 1 (1:55) this is your choice. Speaker 3 (1:56) That's right. Speaker 1 (1:58) It's game time. I have to remind that to myself. I got a newborn. I got a five-week-old. Bram is five weeks. And I get to remind myself when he's screaming, and I don't know why, I did this to myself. True. Oh, I did it to Rachel. True. And now Speaker 3 (2:12) you're doing it all for him. Well, kind of. Sort of. Speaker 1 (2:15) Yeah. Speaker 3 (2:15) But at this point, everything you're doing is just to keep him going. Keep him going. Keep Speaker 1 (2:20) him healthy. Speaker 3 (2:20) Keep him developing. He's a Speaker 1 (2:21) good kid. He sleeps well. Good. That's important. All right. Today, Corey, we're going to talk about how much your adult kids know about your money. But I had something else I wanted to talk about speaking of kids and money because historically we've helped our clients' children invest their money. But what I've realized is that after doing this for 20 years, it doesn't make sense a lot of the times for us to open an account for our clients' kids because they don't have enough money to invest the way that we invest. So I want to throw out some things. There's no prep for this. I've been thinking about this actually, and I wanted to make this an Instagram reel, but instead I'm going to just do it on our show here. So my question to you is somebody comes to you, calls you, it's a client's kid, and they have three figures to invest. What do you tell them? Three figures. So I mean hundreds of dollars. Hey, Corey. Hey, Corey Bittner. I got $400. I need to invest. What should I do? What do you tell them? By the way, for compliance, this show is not advice. We're talking generally speaking here, so I don't want you to name any specific investments. But what do you tell someone that's got three figures to invest? What would you tell them? Speaker 3 (3:28) I'm assuming that they have like an emergency fund. Ah, good start. Yeah. That would be the first point. Speaker 1 (3:33) Agree. I think you first off, even if you only have a few hundred bucks earmarked to invest, you have to have a financial plan. So, okay, let's assume they have a plan. Let's not assume, though, that they have emergency savings. Let's just say they call you and they, Corey, I got. three figures to invest, what should I do? What would you Speaker 3 (3:51) tell Speaker 1 (3:51) them? If Speaker 3 (3:52) they had the money to invest, what I would tell them is that if they need to establish a plan, move past that. That's good. The practical advice from a financial standpoint is like, you need a simple, low cost way Speaker 1 (4:05) to invest and diversify the money. Yeah. Speaker 3 (4:07) Not actively managed individual stock. Speaker 1 (4:10) portfolio. So you would suggest some sort of index fund? Yeah, I think Speaker 3 (4:13) that's a useful way for someone with a little bit of money to invest, to start building some equity in something. Yeah. Speaker 1 (4:21) I Speaker 2 (4:21) think that's a good way to do it. In fact, I think that's where ETFs, for example, Speaker 3 (4:25) can make a lot of sense. Speaker 1 (4:26) Yeah. So two things I want to add to that. I would agree with you. I would say, first off, how much do you have in savings? Yeah. This is assuming they have an emergency fund. and they don't have any credit card debt, and they've done all the other right things, they're like, all right, I'm ready to start investing. I also don't think they need to hire an advisor. So they shouldn't be paying an advisor a fee to get into this index fund or this product. And I would ask them, where are you going to get your next three figures to invest? So let's say they had $300. I'd be like. You can't just really put something $300 in one time and expect that to really work. Where are you going to get more money to add to this investment? Where is that going to come from? Because one and done doesn't work. You can do the math on $300. You're going to have to live 1,000 years for that to really be, or I Speaker 2 (5:16) shouldn't say 1,000. Speaker 1 (5:16) You're going Speaker 2 (5:17) to Speaker 1 (5:17) have Speaker 2 (5:17) to Speaker 1 (5:17) live probably 100 years plus, 200 years maybe, for that to actually mean anything. So I'd want to say don't pay an advisor anything to go invest the money. Because you're just wasting your money on fees. And two, where's the next one? Okay, so what about four figures? So let's say they've got thousands of dollars but not quite $10,000. Then what do you tell this person? So again, it's not somebody just walking in our office. This is one of your best client's children. Say, Corey, I've got the plan. I've got all my emergency savings. I don't have any credit card debt. I've got $5,000. We'll say, what do Speaker 3 (5:50) you tell them then? What would you tell them? The same thing. Speaker 1 (5:52) Yeah. I Speaker 3 (5:53) don't think it would be very different. The Speaker 1 (5:54) different thing I would change is I think they should have multiple index funds. Probably initially I would say start with one. At this point, I would start diversifying my index funds, you know, maybe have a large cap, a small cap. Again, this is not advised international. Speaker 2 (6:08) So Speaker 1 (6:08) again, I'd go back to your plan and see what your plan needs, but I'd have more than one index fund. Yeah, and another Speaker 3 (6:15) consideration would be what type of account should you put the money in to invest it, right? Speaker 1 (6:19) Yeah, and that one, I don't think that's right. I think that's, let's go on to the next one. I think it'd be six figures. Let's say they've got six figures. So now they've got 100 grand, 200 grand. Then I think asset location matters more. So then is it Roth, brokerage, 401k, IRA? What else would you tell them? Is now the time to engage with an advisor if they got 100 grand? Is that too early still? For us, it might be. For us, it might be, yes. I Speaker 3 (6:42) think. My belief is the answer to that is yes, actually. Too Speaker 1 (6:46) early? Yeah. That you need a plan and you need to Speaker 3 (6:49) understand what you need to do, but it doesn't mean that you need to hire an advisor. Even Speaker 1 (6:53) at $100,000 to invest. Yeah. And we have some clients that have that. And again, you and I are here to help people and our team is, but I'm really trying to get our practice more towards who we add the most value for, and that's for people with seven figures. Right. And it's going to sound self-serving. Of course, Jake, you want all millionaires. But the reality is, Corey, you and I, the way that we invest money for our clients, we literally buy and sell individual stocks and bonds. And we'll have anywhere from 35 to 65 or so stocks in these portfolios. And you can't do that with 100 grand properly. You can't have 10 or 20 bonds plus 35 to 65. I mean, you kind of can, but not really. And then you're talking about rebalancing and adding and selling and asset location is obviously still important. All those things. Tax planning becomes more important at seven figures. And your mistakes are six figures when you have a million dollars. You make a mistake and lose 10%. You lost 100 grand. Right. So the mistakes get bigger. So I think people with seven figures definitely should be working with an advisor. They shouldn't be in any products. And they should be focusing on tax planning more so, asset location even more so, income planning even more so. So that's where we really, where we shine is that we, our team is equipped to advise our planners, our traders, our account managers. They're really best suited for those types of individuals because those are the types of complex problems we solve. So this, I'm glad we talked about it today because it took a lot longer than a one minute reel. But so again. Very early. Make sure you've got a plan. Start with low cost. Don't pay an advisor. Don't pay an advisor. Don't pay an advisor. Maybe pay an advisor. But again, we're never suggesting paying an advisor to put you in a product was my point. Right. Products aren't bad if you're not paying an advisor. Products are bad