Starting custodial account conversations

Kate had a dilemma. Years ago, she opened a custodial account designed to help her son Leo launch into life as a young adult. Now, he is a high school senior fast approaching the age when the account will transfer to him. The quandary? Kate never told Leo about it. She didn’t know how to raise the topic and kept putting it off. She knew he was a responsible kid, but was he ready to manage the money? And what if he was upset with her for not telling him sooner?

The situation Kate has ended up in is fairly common—not knowing how to start a conversation with your child about the money you have saved and invested for them. One way to get unlocked is to view the initial conversation as the beginning of a planning partnership, rather than a “one and done” announcement of a wealth transfer. Think of it as the start of a shared learning journey around financial planning and wealth—one where conversations help your child prepare for handling the money.

Help your child make sense of the opportunity

A developmental approach to planning focuses on supporting your child’s growth. Think of yourself as a partner who helps them make sense of their life and financial future. Talk with them about the opportunities the money creates and set up ongoing dialogue to help them learn how to navigate the complexities of financial planning.

Here are 5 coaching hints, each with conversation starters, to help you start talking with your child about the custodial account that will soon transfer to them.

1. Share a feeling

If you’re hesitant to tell your child about the account, use the skill of Process Out Loud—saying what you are feeling and thinking in a way that invites your child into a conversation. First, identify your emotion and share it using a feeling word (e.g., hesitant, worried, excited). Then, express a thought and ask them what they would like to talk about.

• “I’m unsure how to raise this, but I think we should talk about an account I set up for you. Can we find some time to talk about it?”
• “I’m a bit worried, because I don’t know how the conversation will go, but I’d like to talk about some money I’ve been saving for you. How would it feel for me to share some details with you?”

2. Tell the story

Talking about the meaning and purpose behind the money is a powerful way to start a dialogue with your child. Their story is connected to your story and your family story. Why did you set up the account? What were you thinking and feeling at the time? What was your intention? How do you see the money fitting into your child’s life going forward?

• “I was inspired by Grandma Ruby’s strength and determination in building her own business and wanted that kind of opportunity to be possible for you.”
• “I had to work right out of high school to support myself, and I wanted to give you more options than I had at your age.”

3. Express a wish

It’s natural to have fears—about everything from how your child will react to how they will handle the money—but you don’t have to let those fears drive the conversation. Instead, focus on your wish behind the fear. Talk to them about the future you envision for them, how you want to partner, and the opportunities you hope the money creates for them.

• “I want you to feel more secure and self-assured than I did at your age, and I hope this money can help make that possible.”
• “My wish is for you to pursue your passion in life, and I want to support you in doing that.”

4. Be curious

An initial conversation is a great opportunity to show genuine care and interest in your child’s perspective. Hold off on going to solutions or sharing your views. Just explore their thoughts and feelings using open-ended questions starting with “how” and “what.” And follow up with questions about any key words they use (like nervous, worried, excited) or about planning for the money.

• “How are you feeling about the account? What makes you nervous?”
• “What are your first thoughts about the money? What do you want to know about how the money is managed?”

5. Imagine "what if?" scenarios

One approach you can use is to help your child imagine possibilities to expand their range of choices. You can do this through “what if?” scenarios. Surface “what if?” options and then help them explore their thoughts and feelings about each one. Then encourage them to reflect on those options as a way to think through their planning priorities.

• “What if you took a gap year before college to see the world?”
• “What if you invested this money in the stock market?”

Think of this as the beginning of an ongoing partnership

As an adult and parent, you know a lot more about finance than your child. But if you adopt an “I know better” approach, you may not create the safety and dialogue they need to learn and grow. Think of yourself as a peer embarking on a shared learning journey led by your child’s interests, needs, and questions.

You can use these hints and conversation starters individually or in combination, at one moment or over time. Wherever you begin, you can set the stage for an ongoing dialogue with your child around financial planning and wealth.