Help families guide their new grads to financial success

Graduation season is a great time to offer your perspective to clients looking to help their new grads start off on their own. Get tips to help empower your clients’ conversations, plus four graduation gift ideas.

Key Points

  • This spring, millions of college graduates will exit the stage with diplomas in hand to embark on careers; and for some, financial independence. But financial literacy is a subject that receives too little attention, especially from young adults. As a financial professional, how can you help? Don’t miss this opportunity to provide valuable service to your clients—and their graduates.

Trends affecting how graduates prepare for the real world

There's something different about this younger generation. It's what every older generation says about the last. Only this time, it's true.

Graduates entering the workforce this year represent the last of the Millennials (those born 1980-1995), a group some 80 million strong and a number that eclipses every other generation in America.1 The group is well studied (and publicized) for its tendency toward social responsibility, commitment to values, and emphasis on flexibility, life experiences, and individualism. Less talked about are Millennials' financial behaviors and attitudes toward investing. And herein lies the challenge for many of our clients with young adult children—and for our business.

According to Deloitte, many Millennials have an innate distrust of financial institutions (and money managers). What's more, they tend to be risk averse, with less than 30% of their wealth in the stock market.2

Meanwhile, Americans are living longer, with an average of 20 healthy years after age 60, according to the MIT AgeLab. The looming threat to Social Security from prolonged lifespans and diminished reserves would suggest that new grads should exercise their time advantage and get into the market. But how do you urge a 20-something to put aside income for an outcome as far off as retirement? After all, only 18% of 18- to 25-year-olds invest in the stock market.3

Lack of financial preparedness coupled with an increasingly strained safety net is one reason to encourage new grads to get into the market sooner than later. Another reason is because work itself is changing. According to one estimate, the so-called gig economy makes up 34% of the workforce and will increase to 43% by 2020.4 As the 1099 continues to outpace the W-2, future generations will likely need to be even more proactive about carving out their own financial stability.

How are parents responding to all this? Carrie Schwab-Pomerantz, president of Charles Schwab Foundation and personal finance expert, expresses her concern, "As a proud mother of three Millennials, I want to do my best to help them—and their peers—become fulfilled, independent, and productive adults. And I believe a big part of that is introducing them to prudent money management and investing." Learning basic financial fundamentals can go a long way—even for high-net-worth families whose children will one day need to manage an inheritance.

So the question becomes, How do we, as financial professionals, help this younger generation find stronger financial footing?

Graduation offers a timely opportunity to help your clients reach their grads to communicate the importance of building a solid financial foundation and good savings and investing habits that can last a lifetime.

Below are some ideas to help you create these connections for your clients and their grads.

Start the conversation

Consider creating a "resource kit" to empower you clients to talk to their new grads about finances. Include a conversation guide your clients can follow, and consider offering suggestions on topics like:

  • How to broach the subject
  • Setting up auto pay for regular bills
  • Record keeping (like tracking apartment deposits, tax receipts, etc.)
  • Helpful apps and online tools
  • Building good credit (
  • Budgeting best practices

4 gift ideas to help new grads become future investors

A 2017 study showed that Americans planned to spend upwards of $5.6 billion on graduation gifts—more than half of it cash.5 Perhaps, though, what the next generation really needs is guidance on becoming self-reliant, financially responsible adults.

  1. Match savings contributions. Opening a savings account can open the door to developing a savings habit. Parents can make the initial deposit and match a portion of their graduate's contributions. (Note: In 2018, you can give up to $15,000 per recipient without incurring the gift tax, $30,000 if you’re giving as a couple).

  2. Fund (or match contributions to) an IRA. Opening a tax-advantaged Individual Retirement Account (IRA) could be the right move if the graduate is freelancing or ineligible for a 401(k) through their employer. Roth IRAs, funded with after-tax dollars, offer tax-deferred growth and tax-free withdrawals, and are a practical option for those with smaller incomes.

  3. Give stocks with youth appeal. Gifting stocks that appeal to young graduates is an effective way to pique their interest in investing. Think about what appeals to them: biotech, technology, or socially responsible investments. Be sure to include the grads in making the decision.

  4. Consider gifting appreciated stocks. Gifting appreciated stocks helps build the graduate's assets while reducing a parent’s capital gains. This could also be a good time to start a conversation about generational tax planning.

Creating legacies

Beyond providing thoughtful service to your current clients, you can use graduation as a chance to connect with the next generation.

"Statistics suggest that something like 42% of next-generation investors prefer to work with an advisor near their own age. And I don't think it's as much of an age preference as a life-stage preference," says Alan Moore, co-founder of the XY Planning Network and a Millennial himself. "It's more about how you relate to your clients and the life stages they’re navigating. If you're an older advisor, relating to someone in your grandchild's generation can be a big challenge."6

Do you have a junior advisor ready to take on more responsibility? Introducing them to your client's children could help dispel any notions that Gen Y (or Z) may hold about their parents' advisor. Connecting advisors to future investors can also be a prudent step toward succession planning and building a legacy firm.7


During an important life event like college graduation, there is so much opportunity to deepen and establish relationships. As a trusted advisor, you are in a unique position to counsel clients and graduates in ways that benefit the entire family. You can pave the way for new advisors and the next generation of investors. And don't forget that graduation is often a life-changing event for parents as well. Use this time to revisit their future plans as children officially depart the nest.

We hope these ideas help you support your clients during this milestone event in their lives. 

If you're thinking about becoming an independent advisor, consider a custodian that invests in your success. Contact us to learn more about the benefits of a custodial relationship with Schwab.

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  • Cultivate young investors who aren't yet ready for a full-service advisory relationship by adopting and branding an automated investing platform, like Schwab's Institutional Intelligent Portfolios.



  1. Anthony Cilluffo and D'Vera Cohn, "10 Demographic Trends Shaping the U.S. and the World in 2017," Pew Research Center, April 27, 2017,
  2. Daniel Kobler, Felix Hauber and Benjamin Ernst, "Millennials and Wealth Management: Trends and Challenges of the New Clientele," Inside, June 2015,
  3. "Only 1 in 3 Millennials Are Investing in the Stock Market," Bankrate, July 6, 2016,
  4. Patrick Gillespie, "Intuit: Gig Economy Is 34% of US Workforce," CNN Money, May 24, 2017,    
  5. "Graduation Spending to Reach Record-High $5.6 Billion," National Retail Federation, May 17, 2017, 
  6. Alan Moore, "Financial Planning Isn't Just for Boomers Anymore," (presentation, Schwab IMPACT® 2015, Boston, MA, November 11, 2015.)
  7. Kenneth Kiesnoski, "How Financial Advisors Fail to Plan for Their Own Future," CNBC, December 5, 2017,

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