Q&A: ABBY RAPHEL

What to do if your kids don’t know the meaning of money.

By Richard Bradley

Abby Raphel, executive director of the New York-based Redwoods Initiative, specializes in helping children of high net worth parents learn how to handle their wealth.

What is the Redwoods Initiative?

A nonprofit organization focused on education and family sustainability. We work with the next generation, ages 18 to 30, and we teach the basics: personal development, financial skills and philanthropy.

Why would wealthy families need Redwoods?

When members of the next generation inherit money or get involved in the family business, there’s a learning curve. They’re young. They need to learn about finance and philanthropy.

How does it work?

The core program is three days, 10 a.m. to 3 p.m. It costs $6,000, and most of the sessions are one-on-one. We start by having participants rate themselves from 1 to 5 on wealth management basics — their knowledge of the markets, macroeconomic knowledge, taxes, wills and prenups, confidence in selecting and working with an advisor. Then we know whether they know what a stock or a bond is, or do we have to tailor the curriculum for something more advanced?

Why aren’t parents teaching this material?

For many parents, there’s a fear factor when it comes to talking about estate planning and getting their kids involved in the wealth management process, or even just sharing with them that they have an inheritance. So if you have someone come in and teach, it takes a little bit of that tension away.

How do young people feel about discussing these issues with someone other than their parents?

Everyone signs a confidentiality agreement. It says that this program is for the young person, even if the parents are paying for it. We can talk about their hopes and dreams in a way they might not be able to with their parents. Are there gender differences in how the participants talk about money? In the assessments they fill out, the young women rate themselves lower than they really are given the knowledge that they have.

Do the young men rate themselves higher than they really are?

(Laughs) I’m not going to say that. But the men have had more conversations about money and typically have had more experience dabbling in the stock market.

What qualifies you to teach these skills?

I like to say that I’m an outsider to the wealth management industry. I majored in psychology, specifically curriculum development. I also have an extensive background in leadership development and public speaking. I was hired by Highmount Capital in 2005 to create these programs. I thought there was opportunity to grow in this niche, and in July 2010 we incorporated as a nonprofit.

What happens next in the program?

We introduce the basics of finance — 25 terms to understand a portfolio, from cash to fixed income to equities and alternatives, diversification, index funds, due diligence.

And after the vocabulary?

We’d most likely have them identify core values and attitudes, as well as beliefs, behaviors and opinions about wealth. We would have a budget exercise. We would also teach how to read a portfolio statement and follow up with questions to ask your advisors.

When should parents think about sending their kids to Redwoods?

If there is an impending transition — an inheritance, for example — or if the children are getting more involved in the family business.

Do you see many children who’ve already made financial mistakes?

We’ve had some young people come with $10,000 in credit card debt even though they have a $1 million portfolio, or who at age 25 have never paid a bill in their lives.

How do you measure success?

Success is young people being more confident about discussing these issues with their family, or engaging with their advisors on their own, or becoming involved with philanthropy.

Abby Raphel can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .

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