A recent bank of Mont- real survey found one in three young adults are living with Mom and Dad — a figure that is raising alarms among experts and educators.

They fear those young adults don’t have the emotional stamina and financial knowledge to make it on their own. The latter issue is where financial advisors come in. You can take a role helping clients educate their kids; many advisors are rising to that challenge.

The survey polled 1,205 Cana-dians between the ages of 21 and 34 in Halifax, Montreal, Toronto, Winnipeg, Calgary and Vancouver. It found almost one in three are still in the parental nest.

There are many reasons for this, says boomer Peggy Grall, a 58-year-old psychotherapist and transition coach in Freelton, Ont.: “Kids today face different economic realities than we did. When we were buying our first homes 30 years ago, house prices were much more affordable. In many Canadian cities today, a starter home is a couple of hundred thousand dollars.”

The trend has affected Grall’s family. “My niece has moved back with her parents,” she says. “After university, she found herself US$80,000 in debt. She kept taking student loans. And her parents, my sister and her husband, like having their kids with them. They like being their friends.”

Diane Kirkland, a financial advisor with Edward Jones in Pitt Meadows, B.C., is a 54-year-old boomer whose son also returned home two years ago to finish his studies. At 27, he’s now finished his program and is planning to move out on his own again. “Sometimes they just can’t make it out there on their own,” Kirkland says. “They need to save up money to try again.”

HELP IS CRIPPLING

But parents’ attempts to help their children can sometimes cripple them. The boomers are the first generation in history among which large numbers have bonded as friends with their children, Grall notes. “With boomers’ high divorce rate, many single parents reached out to their children and bonded with them. Now that Johnny’s 25 or 30 and should be out on his own, it’s difficult to let him go. It means losing a friend.”

But befriending a child can undermine the younger person’s work ethic. “We are a generation that broke the rules,” she adds. “So, we don’t want to impose rules on our children. We want them to like us. And because many of us are affluent, or want to appear so, we hire people to clean our houses and mow our lawns. Johnny and Jane never had to do any work around the house.”

The same attitude applies to financial matters, she says: “Save part of their allowance? No, we didn’t want to enforce tough rules because we wanted our kids to like us. And many of us haven’t done much saving ourselves.”

The public school system is also to blame, says Tom Hamza, president of the In-vestor Education Fund (www.investored.ca), which is funded by Ontario Securities Commission settlements: “Personal finances courses are not compulsory in high school in most provinces. Many young people have no idea that, properly managed, they may be able to double their money in seven to 10 years. So, it’s up to parents, prodded by their financial advisors, to see that children get a financial education.”

Advisors can play an important role. Edward Jones, for example, offers clients’ children an hour-long seminar called Raising Money-Smart Kids. It’s broken down into four modules: saving, spending, donating and investing. “A six-year-old who gets a weekly allowance of $1 can divide it into those four pools,” says Scott Gerlitz, an Edward Jones advisor in Rocky Mountain House, Alta.

The same approach can be taken by 25- or 30-year-olds. Granted, they’ll have lost the effects of compounding they would have enjoyed had they put money to work earlier. “If you start putting money into an RRSP at 21, you’re at a definite advantage over the person who starts investing at 29,” Hamza notes.

Gerlitz recently started working with the 16-year-old son of a client, and plans to meet with this young client about three times a year. “If you can learn to drive at 16, you can learn to drive your financial life as well,” he says.

His first meeting with the youth focused on the time value of money. “Time is critical,” he says. “The longer the money is in the investment, the less you need to take out of your pocket.”

@page_break@ “IN TRUST” ACCOUNTS

Gerlitz also talked to the young man — who has a part-time job — about money management: di-viding his earnings among saving, spending, donating and investing.

This April, Gerlitz’s young client filed his first tax return in order to build up RRSP contribution room. Gerlitz has set up an “in trust” account for him with his parents: “When he turns 18, the plan is to roll that money into an RRSP.”

Within the “in trust” account, Gerlitz has also set up an unregistered account, with an initial contribution by his young client of $500: “This will be for emergency funds and lifestyle purchases down the road. When he turns 18, we’ll make further investment decisions.”

Hamza says two factors have a big impact on a young person’s financial future:

> Debt. “A student can easily have $20,000 in debt upon graduation from college or university — often a lot more,” Hamza says. “Advisors and parents need to get these people moving to clear this up.

“Given how easy it is to get credit, managing debt is essential,” he adds. “A young person’s expenses today are different from when the boomers were young. Take cellphone bills: miss a few payments and it’s difficult to catch up.”

> Budgeting. “When a young person is going away to university, parents or their advisor need to sit down and discuss the expenses the student will encounter over the year and the money available to cover them,” Hamza says. The student needs to know his or her inflows and outflows. “Undergraduates can go through their year’s budget by December.”

Advisors should be open to working with clients’ children. “Who’s going to inherit a parent’s portfolio down the road?” Kirkland asks. “If you let these young people go to another advisor, that’s where their parents’ assets will go.” IE