Lori and Roger Gervais: Episode 556

Transcript

[0:00:30] DA: You’ve spent years building and protecting wealth that you one day hope to pass on to your children. But as you dig into that planning, fear starts to creep in. You’re worried that lacking proper experience or financial education, your children will fail to preserve your family’s wealth for future generations or even worse, squander it. In their new book, Pass It On. Roger and Lori Gervais show you how to transfer not just your wealth but also the family values that will enable future generations to preserve and grow what you’ve built, mixing financial knowledge with client stories and nuggets of wisdom, Roger and Lori will set you up for success as the steward of your family’s wealth and give you the peace of mind that your children are prepared to inherit that responsibility. Hey listeners, my name is Drew Applebaum and I’m excited to be here today with Lori and Roger Gervais, coauthors of Pass It On: Transferring Wealth, Wisdom and Financial Smarts to Future Generations. Lori, Roger, thank you for joining, welcome to the Author Hour podcast.

[0:01:26] Lori and Roger Gervais: Thank you for having us.

[0:01:28] DA: Let’s kick this off, can you give us a rundown of your professional background respectively?

[0:01:33] RG: For me, I pursued engineering for about a decade and went on to get a graduate degree in finance and also my chartered financial analyst designation. And then moved in to the finance world and joined Lori about 11 years ago, and have loved every minute of it.

[0:01:55] Lori and Roger Gervais: For me, I went to school for finance. I headed down that path pretty much right out of high school, just having my own interest in managing money and managing my finances and out of college, I got an entry level position, at our current firm that we’re in now and then quickly worked my way up to becoming a financial advisor, and then certified financial planner and now I’ve been in the investment business for nearly 20 years now.

[0:02:27] DA: Was there inspiration for this book? Was there an “Ah-Ha” moment, and why was now the time to write it?

[0:02:33] RG: Yeah, I think there was absolutely at least one “Ah-Ha” moment, just did a little bit of background for Lori and I, pre-formal education. We both grew up in the state of Maine, we grew up in a very rural area, and money wasn’t something that was part of the formal curriculum — which I think is consistent with the rest of at least, the United States. We muddled our way through, we had the good fortune of finding these wonderful careers where we got exposure to how people had helped their families be successful through education and experiences. Over the years, we had really developed a desire to want to communicate that success to our own children and throughout time, we gained more and more insight to what made family successful, especially in communicating the topic of money and it was probably within the last five years that the catalyst actually got us the move on writing a book, to communicate this message, primarily to our kids first and foremost, but as we had a good friend who was about our same age had four children about the same age as our children. He thought he had some form of pneumonia, was battling that and about a week into battling what he thought was pneumonia, he found out that he had a rare form of cancer that was attacking his heart — and within a three to five month window, he was gone and that really moved us to think about the things you don’t want to think about and we wanted to get this message on paper for our kids. It’s not about technical analysis or fundamental analysis of the stock, this is a message about what money really means to us about our family vision, the things that we want our kids to carry forward if we weren’t here.

[0:04:38] DA: What do you hope for families to accomplish by reading the book?

[0:04:44] Lori and Roger Gervais: We’re hoping that they could walk away with at minimum — a few nuggets of how they can have these money conversations with kids, how they can share stories and surround them with history and examples of how their wealth was built. What their values are and what they want their kids to do with their money and making sure that their kids are financially literate and even ready for that responsibility when and if they were to inherit money. We want them to walk away with at least a handful of nuggets that they can dive into that, helping their kids. I think, a lot of times, when I say kids — by the way, I mean, everything from five years old to 55 — there’s all sorts of financial conversations over the years but so often, people are just not comfortable talking about this conversations. So we’re hoping this book helps spearhead that and kick things off for folks to be good family stewards.

[0:05:44] RG: One thing I would add to that Drew is, we also hope that they walk away with a message of your kid’s view of money is going to be either it’s intentional or unintentional, you’re going to provide that education to them, they’re watching you just like any other aspect of life, they watch your spending habits, they want your saving habits and if you don’t talk about it and you don’t show them by example, it’s not going to matter a whole lot what kind of formal education they might get later in life, they’re going to – they’re going to follow the – probably very similar path to what their parents did.

[0:06:22] DA: Did you two learn any of these methods growing up or is this what you maybe wish you would have learned from your parents growing up?

[0:06:29] RG: I think it’s a mix actually, I will say, for instance, with my parents, I certainly learned a lot through the modeling. I can give you stories of you know, if I was going to want to buy something, I had to go earn that money myself and I’d pick strawberries, I rake leaves, and babysit. The list goes on over the years. I learned if you wanted something, you had to work for it and there’s plenty of other stories I could share growing up — I’ll give one — but it’s things like just displaying that a credit card, you don’t use a credit card unless you have the money to pay for it, you know? You’re just using that to build credit example. Or, the fact that when I had a phone bill in high school, I had to pay for that, little modeling examples is how they acted and behaved but I’ll tell you, my parents didn’t sit me down and teach me about compound interest or how to investment in the stock market. To answer your question, there are many stories and anecdotes in the book that things that we grew up and learned and value — but then there’s other things, the other stories that stem from our experience as professionals that we’ve seen other families do. so it’s a mix.

[0:07:44] Lori and Roger Gervais: For me, most of the money experiences when I was a kid were very negative in the sense that they saw the struggles of not having a lot of money. I also saw what I would consider the negative health effects of not having money or not really even having the opportunity to make material amounts of money. So, those experiences certainly has stuck with me and later in life, I did have more positive experience and parents that really pushed for education which was — let’s say, instrumental in helping me get out of the negative experiences and wanting those ways on the two heavily.

[0:08:31] DA: Let’s talk about the transition for you two, from riding Harleys to focusing on the wealth of your family?

[0:08:40] RG: I think the first word that comes to mind in the intro of the book is managing risk, and Lori and I’s experiences and it’s funny to advisors and as parents and even as an engineer, I would say, that was something that we thought about a lot and as you move through different phases of your financial life or life in general, I think it means different things to you and when it was just the two of us, that was a risk we were willing to accept and quite honestly, we just didn’t think about a whole lot. But once we started having children, it was something that became top of mind, you have somebody else to care for, you’re responsible for, you want to make sure that their financial wellbeing is going to be there perpetually, and even if something happens to you and you really changed the course of our thinking as it related to risk management and how we manage money.

[0:09:40] DA: Do you still have the Harley stored away, just in case one day you want to get out there?

[0:09:44] RG: We do not. No, that was a part of the risk management strategy.

[0:09:51] DA: What are some ways to create a family vision for the financial future of your children and how do you start that conversation about the future of wealth with your family?

[0:10:03] Lori and Roger Gervais: I think when they’re young, you’re not going to have a big formal discussion like that, you’re simply going to work it in to conversations and every day modeling, either asking them or modeling through example, what the purpose of money is, what it means to us, how we view using it to have an impact on the family, to have an impact on the community and you just sort of live it and talk it through and explain what you're doing with your money. As you’re getting older, and you can have those more adult conversations. Some people may formalize it, really put it right down on paper and have a formal meeting with their family and talk it through of what do they envision for this wealth? You think of families like the Rockefellers. That makes sense — but it also makes sense for folks of more modest means than the Rockefeller family, but you can be formal about it or casual about it, but the bottom line and back to what Roger mentioned earlier as it’s the modeling, the understanding, the knowing where the money came from and expressing your values, your value system and what you envision to occur with this wealth and how money is viewed within your family and that’s really what it’s all about.

[0:11:32] DA: I think one of the more heart-warming stories in your book is you created a family bank with your children which I think is super cool. Can you tell us about that family bank?

[0:11:41] RG: Yeah, it’s a lot less sophisticated than what it might sound like on the story book. It really boils down to an excel spreadsheet and that excel spreadsheet has three tabs in it. Ana, Will, and Jack. And each month, we talk about it, there was a period of time where we were really disciplined about printing it and honestly, it’s become more of just talking about it and looking about it the way I’ve been looking at it electronically and talking through how the numbers arrived at. They get an allowance, it’s deposited, they earn money around the house, we deposit the money, they do get paid a hefty interest rate which you couldn’t get out on the market today but it’s been a healthy way to talk about the concept of interest and the benefits of saving.

[0:12:35] DA: Yeah, you talk about teaching your children financial literacy to providing them with financial experiences like you just mentioned the money management. Are there other ways to do this?

[0:12:44] RG: Certainly, on the spending side, we try to talk to them about that and the family bank has really created a platform to have those discussions. The most rewarding thing for Lori and I is if they want to buy something, they come to us which has happened recently and then very rewarding is when they come to us and say, how can I earn it? When they understand the pluses and minuses associated with managing their own money, in their family bank account, it gives us the opportunity to talk about spending and being responsible about spending their earnings is maybe a better way to put it. When they ask for things, we’re able to say, is that worth it to you, this is what your account will look like after you buy that and it’s been really interesting to see how that can curb their desires and the behaviors and quite honestly, help them become more responsible with their own money at their early ages and we’ve seen a lot of evidence of that in our own children.

[0:13:50] Lori and Roger Gervais: I think if I could add to that also, we’ll also save little nuggets like all right, well, okay, thanks for letting me know you’re interested in that, it was something you want to ask for Christmas or why don’t we wait a couple of weeks and see what you're still thinking of that and the way two weeks concept came from my grandfather. That’s something he always said and it just gets people to pause actually quite frankly with our kids most of the time, they forgot the asked for the item two weeks ago. It just gets you to sit back and realize that you know, there’s just so many things advertised out there, our point of purchase kind of things on the shelf that they forget about in a couple of weeks. But if they come back to and it’s something they’re seriously considering, then of course, it’s healthy, it’s healthy to enjoy things, purchase things but you’re setting a tone for you don’t spend just to spend, is this something you really desire? You're really going to use, is it worth spending your money on?

[0:14:52] RG: One of the more most recent experiences that just came to mind that made us chuckle is, we’ve talked about investing more so with our 10-year-old daughter. She kind of understands it and we’ve taken the opportunity when we’re at a publicly traded company — let’s say McDonalds for example, I think we talked about that in the book. We have talked about how you can invest in equity state in a company like that and that conversation just went by the wayside probably two to three years ago and just two weeks ago, my daughter asked me if she has enough money in the bank to buy a stock. That was kind of rewarding and if nothing else — it was feedback that we have been having the right conversations and sometimes as a parent, I think you often wonder are any of the conversations you’re having actually getting through in a way you hope they will.

[0:15:53] DA: Now how early is it to introduce these concepts to your kids? Are you spoon feeding stock advice at the breakfast table?

[0:16:03] RG: No, not at all. We probably just inherent to Lori and I’s relationship and our jobs, our kids probably hear a lot more in the background than the average. I am not sure if that is healthy or not, but this is anecdotal — but we have seen recently — so our kids range from age four to 10, and there is one right in the middle at age eight, and the four year old was not collecting allowance until recently but he quickly gained an understanding of his siblings who are getting money — And when they went to the store, they could buy candy without really needing to solicit mom and dad too much and he has since asked, “When am I going to get an allowance?” I am not sure that there is a black and white answer on what age the conversation starts. I am sure it is different for every family and every family has different values. So I don’t think Lori and I would put a stake in the ground. I think the general message is it is important to have these conversations and make the kids part of these conversations.

[0:17:17] Lori and Roger Gervais: And I think another important message it can be as simple as they witness how you spend money or you running around the store frivolously or you’re looking at and sticking to a list you know? And keeping with your list. Are you tithing at church? Do they see you donating? So some of it in those younger years you might neither be talking too much about it. It’s just watching your behavior but sneaking in little snippets and how you – You know if you are making a donation maybe in the fall time here, you might want to mention just so they can hear and see and feel that you give back to the community. It can be a little comments here or there. It doesn’t need to be a big discussion at the age of four about how to invest in your first stock. It doesn’t have to be like that at all.

[0:18:06] RG: I think it is important for us to note as well, we are talking a lot about our own life and our own children and most of our professional experiences with the parents or grandparents of adult children, and although it is on a different scale, much of the conversation we are mentioning right now is applicable throughout age ranges. The very successful families that we see are communicating with their kids regularly and much of the same topics that Lori mentioned. Whether that be spending or understanding how to spend or being responsible to spending, those same conversations are very relevant as the kids grow older and get their first jobs. The family bank concept as well, we see that carried through adulthood whether that be the parents lending money for the children to buy their first home, or provide a down payment, or in many cases, provide a small business loan. So all of these points that Lori and I are trying to communicate about talking with your kids. I just want to be clear that our experience and our opinion is they are very applicable throughout the age ranges, throughout adulthood as well.

[0:19:24] DA: I’m glad you guys mentioned that because strategies do change as your kids grow up. So I love that you mention in the book there are ways to get teens on board by giving them more responsibility with managing their money. What does it look like and what kind of responsibilities would you give a teen?

[0:19:41] Lori and Roger Gervais: There is a few ideas there to start with. I mean you can have them handle the grocery trends. They can understand, “Okay, we have X amount of money to cover the groceries for the week,” and they can see how that works and how it evaporates quickly when you’re at the store or to the target trip or you have a hockey tournament that weekend and you allot them a $100 to cover all of their food and games and whatever it is you’re going to be doing for the weekend. But giving them these little challenges where there is really not going to be harm if it doesn’t work out, you know, if they get the answer wrong. You want them to fail early when it is simple. You want them to try these things, be challenged and stressed by it but you know there is really no harm in it at these ages — but giving them those examples of how to manage money and other things like being accountable. I mentioned earlier about how when I was in high school we didn’t have cellphones back then. But we had – it was long distance phone calls to my high school friends and I had to pay my own phone bill. That is how it worked in my household. So what that was teaching me was accountability. If I am going to talk to my friend for an hour long distance, I am going to pay for that. It is okay if that is what I choose to do but it is just teaching you to be accountable for your actions. No one is going to be there and save the day all the time and pay for things. So just different nuggets in that perspective of accountability, saving towards a large item like a car or it could be smaller than that of course as well but those are things you can do to get those teenagers going before they are off on their own in college trying to manage these bills.

[0:21:28] RG: I think if I was to just boil it down to Lori and I’s philosophy throughout the age ranges, one of our primary objectives is to have the kids have the internal motivation, the self-motivation to be responsible with their money regardless of how much money they have and our experience outside of talking about money but just in raising kids in general, trying to use external motivation meaning dictating or telling them what to do is usually not a path to success. And maybe you get some short term wins but long term that doesn’t seem to be a successful strategy. So if we can get them to internalize these concepts and ultimately start feeling self-motivated from the inside out, that would be ideal for Lori and I.

[0:22:22] DA: Yeah, you mentioned kids don’t really learn this stuff in schools but you want them to learn these techniques and is there a strategy to learn financial smarts and I mean more than just saving in the piggy bank but talking about long term investments and stocks and bonds?

[0:22:39] RG: I think we are progressing since I was in school, I feel like some of the curriculums now we’re even seeing with our oldest child, they are talking about money and commerce I will say but I think it is still challenged even up through high school you don’t see a lot of it. I think parents should look for opportunities. I think there are third parties or I know there are third parties that offer education. But again, at the end of the day if the parent isn’t modeling what behaviors they want to see it is probably not going to do you a lot of good to go pay for a class or push your kids to take the class.

[0:23:28] DA: Yeah.

[0:23:29] Lori and Roger Gervais: Roger talked earlier about that internal motivation and we have been talking a lot so far about these younger years when they are in that pulse and we are talking a lot about that because I think building that foundation first is ideal. So if you are a younger parent right now working through this that’s great but we are talking a lot about that because to Roger’s point earlier, you know most of our professional life, we are working with the grandparents or parents. You know they have adult kids where they’re living in fear of how that estate plan is going to work out. Will their kids figure a way all the inheritance and they want their kids to be responsible with it. I am kind of book shelving this, you know I am saying okay, we are talking about the younger years but we are talking about that out of concern for those older years, the fears that we see in people who have built up wealth and they want their kids to be smart and educated, financially literate and they want them to do good with any money that they inherent and that they will make wise decisions. So it is a building block approach. You start when they are young, if you didn’t well, you can still start now and you just keep building upon all of that so that you do feel good. The clients that we work with, I mean they are thinking constantly about taking care of their kids all the way through their passing. You know they want to make sure of course their kids and grandkids are taken care off. So it is a building block approach really.

[0:25:00] RG: And maybe one other angle to answer your question related to how on the educational side, the other hurdle I think for parents especially as kids get older in finding a formal curriculum is your kid might not have any interest in learning about finance or the stock market or how a mortgage works, which I think is okay. I mean that is not everybody’s interest. Lori and I certainly are conscious about that with our own kids. They don’t want to map our passion for the finance world to our kids. We want them to do whatever they desire to do, whatever they are going to be best at and in lieu of education, formal education, the other thing we encourage parents and grandparents to think about a lot is building a team, a virtual family office, if you will, around your wealth and your money that can be there as trusted advisers to your kids. So they don’t have to be experts in how to pick a stock or how to manage allocation. Or which insurance policy might be best for their family, what they do need whether then and necessary is a team of trusted advisers that can put them in a good place.

[0:26:19] DA: Yeah, you guys mentioned this in the book and I think it is a really, really wise decision but at what age is it appropriate do you think it is to bring your children to meet your financial team?

[0:26:31] Lori and Roger Gervais: You know I think it goes back to a family desire honestly because it might be okay in your family to you are swinging by to see your financial advisor about something and you bring your five year old along, or your 15 year old along, or your 25 year old along. Each family is going to have to decide what makes sense to drivel that knowledge into your relationship. I don’t think we can say this is the line in the sand of what age is appropriate to that respect. That is going to be a comfort level and it depends where you started with these building blocks that I mentioned, you know? How are your money conversations going with your kids? Have you built up to that level where they can be sitting in a room in a meeting with you and your financial adviser or just waiting in the car while you are inside? You know that will all be up to the family.

[0:27:27] DA: Yeah. Hey, Lori and Roger, writing a book especially like this one, which will help so many families is no small feat so congratulations.

[0:27:35] RG: Thank you.

[0:27:36] Lori and Roger Gervais: Thank you.

[0:27:36] DA: If readers could take away just one thing from your book, what would it be?

[0:27:42] RG: In my opinion, it’s that everybody can have a different perspective on money, and so we can serve successful. The important thing to consider, as it relates to money and your family, is communication and I think we hear a lot in the media and society in general about a lot of the technical things about business, the best next investment and you should do this or you should do that. Well, Lori and I’s experience and opinion is yes that is a part. It is on the periphery though, the real nucleus to having successful financial and family relations is communication and education and it can mean different things to different people.

[0:28:40] DA: Lori and Roger, this has been a pleasure and I am really excited for people to check out this book. Everyone, the book is called, Pass It On, and you could find it on Amazon. Besides checking out the book, where can people find you?

[0:28:50] Lori and Roger Gervais: They can find us on LinkedIn, on our business Facebook page or on our website, gervaiswealthmanagement.com and we really try to put some educational articles out there to help people along and that would probably be a nice place to start.

[0:29:10] DA: Awesome, Lori and Roger, thank you so much for coming on the show today.

[0:29:14] Lori and Roger Gervais: Thank you. Thank you for having us.

[0:29:18] DA: Thanks for joining us for this episode of Author Hour. You can get Lori and Roger Gervais’s new book, Pass It On, on Amazon. Also, you can also find a transcript of this episode and all of our other episodes on our website at authorhour.co. For more Author Hour, subscribe to this podcast on your favorite subscription service. Thank you for joining us, we’ll see you next time. Same place, different author.