Trying to link apple watch to child's iphone

My son has an iPhone 15, which is linked to my account through Family Share. I have parental controls on it that makes him have to ask me before he purchases anything, allows me to control his contacts, and sets app limits. He is turning 13 soon and we have purchased an apple watch with cellular and gps for him for his birthday. It will pair with his phone, but when I try to set it up with his phone, it tells me I must update security and has me set a passcode for the phone. I did that, but then it still gives me the same error. The phone is running the latest IOS. Any ideas?